J Simmons

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.

Correct that he would have an RMD with regards to the 50%-owned practice's plan (and any IRAs he might have). As to the hospital's plan, he may not have an RMD per se so long assuming he does not own (nor is deemed to own) 5% or more of the hospital and has not for the last 5 years. However, the terms of that plan may require payout anyway.

401k Chaos, I think your MERP idea generally looks like a good fit. I don't have readily available the cite, but there's an IRS ruling that the insurance must be owned by the employer or the employee to be tax-free. It can't be owned in the name of a spouse, or a spouse's employer. As for reimbursing the premium payments that your employees might make on their individually owned health policies, this is permitted in the tax-free context. See Rev Ruls 61-146, 75-241 and 2002-3. However, you will likely run into problems of compliance with group health plan rules, like HIPAA special enrollment rights, COBRA continuation coverage rights and Pregnancy Discrimination Act rights. You could also do a cafeteria plan with all the benefits there, make the $300/mo/EE available at the employer's expense to be used by each employee for any of the non-taxable benefits, but not available as cash, and permit employees that want more than $300/mo worth of tax free benefits to agree to pay the difference through agreed-upon compensation reduction.

If it is just for employees of the business league, chamber of commerce or professional football league proper, then there should be no special recordkeeping to deal with. on the other hand, if the plan is going to be offered to employers that are members of the business league, chamber of commerce or professional football league, then you'd have a multiple employer plan that will need to comply with IRC 413©--and there is then the need to keep the records of the plan on a participating employer-by-participating employer basis, for testing and other reasons. One Form 5500 will do.

If any key employee in your situation makes any elective deferrals for 2007, then a top heavy contribution from the employer for the non-key employees will be required.

I would agree that if no payout has in fact been made within 180 days of notice of when given to a former employee after 2006 (or 90 days of notices given before 2007), you must re-notice before you can then do any payouts. However, if the 30 days runs out (and the date set in the distribution notice for proposed distribution date passes) with no response from the participant for whom forceout is applicable, you don't have to re-notice so long as the first payout is made no later than the 180th day (or 90th, as the case may be) after notice was provided.