J Simmons

It depends on what the plan document provides. It's possible if either in-service distributions of the profit sharing benefits are allowed and the amount to be withdrawn derives from contributions made at least two years before withdrawal. It's also possible if the normal retirement age is such that he has already reached that age. If not but an amendment is considered, first analyze regarding whether doing so would, given the timing, be discriminatory.

Hi, Paul, The answers depend on a number of design options permitted under federal pension rules, and specified for your plan in the plan documents. The safe harbor k provisions either require a 3% of pay contribution by the employer for all eligible employees, whether they put into the plan or not. This is the Safe Harbor Nonelective Percentage. Alternatively--and again as would be specified in your plan document--the required employer contribution can be a $-for-$ match on the first 3% of pay that an employee might elect into the plan, and match equal to another 1% of pay over the 4th-and possibly 5th and 6th-percentages of pay the employee might elect. That extra 1%-of-pay match might be simply $-for-$ on the 4th percentage of pay the employee elects, and none on the 5th and 6th percentages the employee might do. With the required $-for-$ on the first 3%, this would translate to $-for-$ on the first 4% of pay, and that MIGHT be how your plan is configured. This is the Safe Harbor Match Percentage. A notice was required 30-90 days before the plan year began, specifying whether the required Safe Harbor contribution was to be the Nonelective or the Match. If your plan years are calendar years, then for 2006, this notice would have likely been dated and provided to employees in October or November 2005--if it was timely provided. Any other company contribution that is only made in response to an employee electing part of his pay be diverted into the plan is Non-Safe Harbor Matching. Your other question, about how much you'd have to contribute for the partner to get another $29,000 ($44,000 less the $15,000 you've already accrued in the plan for the year) depends on the profit sharing formula, again as specified in the plan. You should quickly hire a pension professional to look over the plan documents and advise you as to what to do.

The approach concerns me because of the permanency requirement for qualification. If Company A sets up a spin-off plan when it withdraws from the MEP and then quickly turns around and terminates the newly set-up spin-off plan, that belies that the spin-off plan was intended to be permanent when set up. If the spin-off plan is not qualified, that would make attempting IRA rollovers hazardous, and there could also be implications for the MEP for having transferred some of its assets to the spin-off plan.

Hey, Don, Glad you pointed out that there's HIPAA nondiscrimination issues as well as tax nondiscrimination rules that Nini will need to sort through.

Could still pass ACP with those zeroes. Some of those zeroes brought in might, for example, be HCE zeroes.

Michelle W, I do not use the Corbel documents (I drafted and maintain my own prototype DC plan), but is it possible to interpret or construe the "ineligible employee" provision of the Corbel document to mean ineligible to share in the allocation of a profit sharing contribution or does the context lend itself only to be read as ineligible for the plan entirely? If the amount actually contributed is allocated just among those for whom it was an accrual year, would that result in any of limits being exceeded (e.g., 415c)? Does the plan have eartagged accounts and the contribution was allocated in part to the employee who didn't have an accrual year? Do you have a written, advance directive from the employer as to what the objectives for the contributions/allocations were? I'm just kind of fishing here a bit to see what might be possibilities.

The full amount ($2,400) would have to be available in the health flex account on day one of the plan year. The prorata basis applies to credits the employee is given towards the payment for the health flex account. The health flex account elected for the year is yet $2,400, and it must all be available for reimbursement of qualifying expenses from day one. If the unpaid medical leave is not subject to FMLA, then you need to check what your cafeteria plan documentation provides regarding leave. If it is silent, I think they can yet submit claims--after all, the employee is on leave, not terminated.

Not knowing who's in the eligible and the excluded retiree classes, it's hard to say. But if any retiree who was a highly compensated individual is entitled to any HRA retiree benefit greater than any retiree that was not a highly compensated individual, then you have to test under 105(h).

I concur with Randy. In a non-QJSA profit sharing plan, if the employee dies before he quits, retires or may take an in-service distribution, spouse takes all as death benefits (except to the extent spouse consented to someone else being named the death beneficiary). If employee quits, retires or may take an in-service distribution, employee can remove all from profit sharing plan and place into an IRA and name whomever as the death beneficiary, leaving the spouse out in the cold. Hard to imagine how that makes any sense, from a public policy perspective.

Don't know of a case, but you might look to written agreement (if there is one) between the employer and TPA outlining what the TPA's duties are. Also, has there been any history of the TPA for prior years so notifying the employer about top-heavy status, or being charged specifically for analysis for top-heavy status? Failing those two, other employer-customers of the TPA might be a source for establishing that the TPA's normal practice was to determine top-heavy status and notify the employer.

Masteff's comment about checking plan language is, of course, good. Masteff's comment about termination date recorded in your HR/payroll system also has implications for any group health coverage you may provide employees, and COBRA continuation notices etc.

I think that since the contribution was declared, even though you're dealing with a profit sharing plan you probably have minimum funding issues under IRC 412 and the correction would be pursuant to the rules that apply under IRC 412. Declaring the contribution obligated that contribution to be made, just as if it had been required by plan provision.

Are HCEs ineligible for this special enrollment opportunity and the 2% match? If not, you need to look at the timing under 401a4 to make sure it is not, in and of itself, discriminatory. As for your testing, you'd figure for the year the ADR and ACR for each person, whether they are part of the special enrollment opportunity or not, just as you would if the opportunity was not provided. For those that are part of it, their 2% match would have to be included in computing their ACRs. For those that aren't, they wouldn't have any that match computed in the computation of their ACRs.

It's part of the anti-alienation requirement (IRC 401a13 and ERISA 206d). It merely refers to all ERISA plan benefits, it doesn't single them out for individual mention. There are special rule exceptions for QDROs and for certain judgments and settlements. Ask the one begging to differ what exception or rationale they are using for that position. They might be confusing rules applicable to non-ERISA IRAs, which Roth IRAs would be, but you're talking Roth contributions to a 401k plan governed by ERISA (unless its governmental, church, etc. sponsored).

I don't know that permissive aggregation goes so far as to render the targeted plan as a part of the tested plan for all reasons. The BRFs you mention are what happens to benefits after they've accrued, yet your permissively aggregating for the purpose of demonstrating nondiscrimination and minimum coverage in the accrual of benefits.

I too think "no". There are no hours of SERVICE. The pay is not for work or availability for work. It's a severance type pay.

Would letting full-time employees in immediately but not part-timers be a BRF that would need to be separately tested?

Take a look at S 1.414(m)-3©

I think that those with $200 or more of benefits must be given 30 days before default payout, and then it may have to be into automatic rollover IRAs set up by the plan if they had $1,000 or more. I would think setting up a new 401k plan and transferring the assets to it would be preferrable than violating those two provisions.

That's how I understand it. That's the significance of having a grandfathered 401k rather than being forced into the 457b peg.

Yes, GBurns, DOL Technical Release 92-01 does indicate that the general requirement that welfare benefit plans' benefits be placed in a trust is not being enforced. This opened the way for cafeteria plans to simply be funded out of the general assets of the employer. Presently, you don't have to create a trust for your cafeteria plan, but if you nevertheless do--by segregating some funds and eartagging them for the cafeteria plan--then you trigger all the requirements that apply to an ERISA trust.

I would suggest that you supplement the quarterly PBS's with a short statement that explains that each employee is 100% vested in the benefits shown on the quarterly PBS's he or she receives from the fund house, regardless of what is indicated on the PBS's regarding vesting. There would not be an 'updating' of the vesting info required as it will always be as stated in these initial supplemental statements: 100%. Unfunded mandates? I agree and now feel the pain of my state's governor.

Does the employer not have copies of the Forms W-2 that it issued to those former employees or Forms W-4 those employees filled out? Those are a source of SSNs. If the employer cannot produce those, and you have individuals coming forward, ask each person that might claim to be a former employee to identify the position they held with the employer, date of hire, date of termination, and then pass the info by the employer and have the employer confirm, deny.

As Jacmo explained, you'd need an ERISA trust document. You'd also need to have the trust independently audited each year. Your costs really start to escalate just for the convenience of naming the bank account to identify it as for the flex accounts.

Your 125 plan is, from the sounds, of it primarily or 'exclusively' funded from the general assets of the employer. In the past, your TPAs have had a cash-flow fund--assets advanced by the employer that the TPA used to pay claims etc. I've had concerns about that practice since the early 1990s in light of some conversations I had with Carey Gilbert of Fiduciary Intepretations at the DoL. He expressed that any segregation and eartagging of funds for the purpose of the cafeteria plan rendered it to be funded, even if just a cash-flow fund used by the TPA. To keep these funds as part of the employer's general assets and dispel the notion that the cafeteria plan was funded, I've recommended that the employer establish an account in it's name, with no mention in the title or other account documents that it is for employee benefits, the cafeteria plan or anything specific--just take the account in the name of the company, nothing more. Set it up so that the TPA may write checks against it, as well as the employer. This would make the 'funded' argument harder for DoL or an employee or the IRS to assert. Back to your question, if your cafeteria plan is funded out of the general assets of the employer, I would take the position that the unapplied experience gains like all funds in the hands of the TPA were and have always been general assets of the employer and that the TPA merely had access to them to facilitate its administration of claims. Following the rationale of this argument, these unapplied experience gains would belong to the general assets of the employer and could be added to your company's general bank account for now. However, you'll need to keep a ledger tracking these unapplied experience gains and have offsetting debits for plan expenses otherwise paid by the employer, such as for document updates, technical advice, etc. If at the end of a plan year there are yet more unapplied experience gains than such offsetting expenses, you'll need to deal with them per what your cafeteria plan documents and the regulations permit in this regard.