J Simmons

Not speaking for Chaz, of course, but as I recall one that is being treated for addiction is considered 'disabled' under ADA. Maybe being treated for being a smoker, even before smoking has stopped, might make this person ADA protected. HIPAA delineates under what circumstances a wellness program may operate and give incentives without violating HIPAA nondiscrimination.

Thanks, John, your wording was not only more precise, but spot on the situation at hand.

Suppose the plan document merely specifies payout will be made within 60 days of the end of the plan year during which the distribution triggering event occurs, but the plan has operated by paying out during the year, in response to each triggering event. May the plan simply stop that practice and begin distributing out during those 60 days following the end of the plan year or would that de facto amend the plan beyond the latitude permitted by IRC § 1.411(d)-4, Q&A-2(b)(2)(ix)?

You might want to search/post that question at http://www.workforce.com/phpBB/viewforum.p...rum=52&1676

Geez, I'm glad those Regs are only proposed--and hopefully with a January 1, 2029 effective date.

Hi, BTG-- See private message sent to your BenefitsLink mailbox. BTW, if you address me as Mr Simmons (uncomfortable as that is for me), Larry asks that you address him as Mr Sieve.

Since you coined the term in 401a4 context, maybe I owe you a dime each time I use it.

-5 is one of those fluffy requirements where all of the relevant facts and circumstances are considered in determining whether the timing of a plan amendment or series of plan amendments has the effect of discriminating significantly in favor of HCEs.

Larry, suppose a plan has 21&1. Plan is sponsored by dental practice. Another dentist that's practiced for 5 years separately from the plan sponsor buys into the dental practice, effective November 1, 2008, when the dentist will become an employee of the plan sponsor. The dental practice amends the plan to make it 21&0 on November 1, 2008, and then amends again on November 2, 2008 to reinstate the 21&1. If I understand your position, this could be done with -5 impunity because it is all within the latitude of 410. Is that right?

I'm suggesting that -5 (which applies to plan establishment, amendments and terminations) might apply to a change of the pool of benefiting employees (all within the latitude of 410), not that -2 or -4 applies to a static situation of minimum age and service requirements within that 410 latitude.

I for one certainly appreciate a concrete 'straight forward and certain' test over fluffy. Would you ACP test separately or as a whole?

If you relax below 21&1 and allow into the plan, do not the elective deferrals of those individuals have to be taken into account in the ADP testing (whether separately or with all) in being deemed to pass 401a4?

Thanks, Larry. My thinking is that if you earlier do not take full advantage of the 410 exclusions--imposing, for example, no age and service requirements for those employed as of a certain date--you create one pool of benefiting employees. Then when you change and tighten up the age and service requirements (imposing the 21&1), there is a second, smaller pool of benefiting employees. You then compare the two pools of benefiting employees, before and after, per Treas Reg § 1.401(a)(4)-5 to determine if that change discriminates significantly in favor of HCEs, taking into account all the facts and circumstances. Looking at the reach and breadth of a loan provision (not the timing of its addition, change or discontinuance) is a BRF current availability/effective availability issue under Treas Reg § 1.401(a)(4)-4. However, I think that when that loan provision was added or is changed or discontinued, Treas Reg § 1.401(a)(4)-5 calls for an examination of the timing and a before-and-after comparison to determine if that discriminated significantly in favor of HCEs, even if looking at matters as they stood before the change separately from those after the change, each standing alone might be sufficiently available to pass BRF muster.

Fender, Is your client referring to having to have an independent annual audit done and the report attached to the Form 5500?

Treas Reg § 1.401(a)(4)-5(a)(1) includes the following-- Emphasis added. Whether an amendment (or series of them) is discriminatory-- Treas Reg § 1.401(a)(4)-5(a)(2). Maybe because the amendment in essence from no age or service conditions for those on payroll on date of plan establishment to imposing 21&1 immediately thenafter cannot be 401a4 discriminatory because such latitude is allowed under 410. (It would seem to me if an amendment exceeded such latitude, for example, 24&3, you'd have qualification problems without the IRS needing 401a4 anyway.) Would then under similar logic Laura's posted situation be exempt from 401a4 discrimination if ACP testing passes? Since Treas Reg § 1.401(a)(4)-5 is a facts-and-circumstances test, IRS opinion, notification, and D-letters for plans would not provide any cover for such an issue anyway. As Tom likes to say, just my 2¢.

David, Would that then be an amendment from liberal to restrictive eligibility rules and subject to nondiscrimination analysis under Treas Reg § 1.401(a)(4)-5(a)?

In re-reviewing the 2007 regulations set to take effect 1/1/2009, I note that the requirement for a plan document is one imposed as a condition for tax-deferred contributions to a 403b contract. That is at least how the regulatory language reads. I did not find where in the 2007 regs there is an affirmative duty placed on the employer to establish a plan document, even as to an employer that has to date operated a non-ERISA 403b program without a document. Nor did I find anywhere in the 2007 regs where it requires of an employer that might choose to adopt a 403b plan document which 403b contracts the employer must include in and maintain under its 403b plan. Re-reviewing Rev Proc 2007-71, section 8.01 speaks in terms of the circumstances under which a 403b contract not maintained under an employer's 403b plan yet satisfies the requirement that the 403b contract be maintained under a 403b plan document. That provision is odd in that it assumes generally that a 403b contract not receiving contributions needs to be maintained under a 403b plan document, but the 2007 regs only require such to keep contributions going into the 403b contract tax-deferred. There is one provision of Rev Proc 2007-71 that suggests that an employer must have a 403b plan document and what 403b contracts be included. Section 8.02 provides "a §403(b) plan will not be treated as failing to satisfy the requirements of §1.403(b)-3(b)(3) if the plan does not include terms relating to those contracts" of employees if by 1/1/2009, the employer is a 'former' employee and no more money goes into the 403b contract. However, no part of Treas Reg § 1.403(b)-3(b)(3) specifies the an employer must have a 403b plan for the 403b contracts of its employees that must be included in an employer's 403b plan. Again, the only requirement of the 2007 regs seems to be that a 403b contract needs to be maintained pursuant to an employer's 403b plan in order to shield contributions from current taxation. The 2007 regs permit an employer to stop future contributions, i.e. to freeze its 403b plan. The 403b contracts would not be receiving contributions in 2009 and beyond, and thus not need to be maintained pursuant to an employer's 403b plan. The 403b contract of an employee would simply be a matter administered between the vendor and the employee, per the terms of the 403b contract between them. (It would behoove the vendor and the employee, the parties to that 403b contract, to take whatever steps may be necessary--other than that to be maintained pursuant to an employer's 403b plan--that the 2007 regs otherwise require.) I'm hoping someone can point me to authority, if there is any, that prohibits an employer that has operated to date (and perhaps through 12/31/2008) a non-ERISA 403b program without a document from simply stopping contributions on 12/31/2008.

The policy was owned by the DB plan. The DB plan was the policy's death beneficiary. The DB plan is a trust exempt from payment of income taxes. I would think then that there is no income tax if the insurance is paid to the DB plan. Those death benefits are a measure of the benefits payable to the EE's death beneficiary--that amount or, if higher, the present value of their accrued benefit. The payment, by whichever measure, is from the DB plan to the EE's death beneficiary, and thus is taxable income when so paid (unless rolled over).

I'm inclined to agree with ERISAnut. The ACP test applies on a yearly basis. I'm not sure current availability/effective availability of a BRF necessarily does.

LOL (or not). Good one, Larry. **********

Can it be fairly said, Don, that the plan amendment applies to all similarly situated individuals when it only impacts one that is the very target of the amendment by the employer? Maybe. Maybe not. But that question appears merely academic given the McGann result that makes doing so a violation of ERISA sec 510.

Why not amend the plan document first? The penalty/remedy is likely that each impacted EE may insist benefits payments based on the richer of the two coverages--based on either the current-quarter estimate or the prior quarter actually worked hours. For non-compliance, the plan's fiduciaries--those that choose not to follow the documents--could possibly be held personally responsible if the ER is not capable of making the payments.

Treas Reg sec 1.105-11(b)(1)(i) provides that a Dr Bob's fee doesn't smell like a premium to me--unless his fee is regulated by the feds or a state like an insurance company is. I agree with George.

I think the children are "designated beneficiaries." Treas Reg § 1.401(a)(9)-1:

Also check out Prop Treas Reg § 1.125-5(a)(2); don't match more than 4:1.