Felicia

I meant a 403(B) plan that is not subject to Title I of ERISA, i.e., is not required to comply with certain laws/regulations relating to qualified plans that were issued by the Department of Labor.

Can a cafeteria plan provide that if the employee does not use up his beneifts by the end of the year, a contribution for the unused portion will be put into a non-Title 403(B) plan?

Can employer contributions be made to a non-Title I 403(B) plan if the employer contributions are not in the form of matching contributions?

Can Title I 403(B) assets be held under a trust agreement or are they required to be held in only annuities or under custodial accounts? Cites would be VERY helpful.

Thanks. I agree with you, Ellie. I think the confusion lies when an entity adopts a "plan" that looks like a Title I 401(a) plan.

It is my understanding that there are 403(B) plans that are not subject to ERISA even though the employer makes contributions. Section 4(B) of ERISA provides an exception for governmental plans as defined in section 3(32), church plans, .... 3(32) defines governmental plans as "a plan established or maintained for its employee by the government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." It seems to me that if an entity falls into one of these categories, it will not be subject to ERISA. Is this true, even if the entity adopts a plan document which indicates it is a 403(B) plan but spells out operational provisions similiar to a 401(a) plan; provides that the plan can be terminated at any time (although I believe 403(B) plans cannot be terminated); which has a summary plan description (without the Statement of ERISA Rights); and which appears to comply with other DOL provisions which are relevant to ERISA plans? In other words, can an entity comply with the Internal Revenue Code and certain provisions of ERISA without subjecting itself to ERISA? Does 4(B) "preempt" all other provisions of the Code and ERISA?

It is my understanding that there are 403(B) plans that are not subject to ERISA even though the employer makes contributions. Section 4(B) of ERISA provides an exception for governmental plans as defined in section 3(32), church plans, .... 3(32) defines governmental plans as "a plan established or maintained for its employee by the government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." It seems to me that if an entity falls into one of these categories, it will not be subject to ERISA.

Other than a couple of articles, I haven't seen anything on DROPs. From the articles, there appear to be qualification and ADEA issues relating to this type of arrangement. Am looking for official pronouncements. Are there any? If so, where can they be found? Has the concept of DROPs been approved by the IRS? Have plans been written using this concept and if so, has the IRS issued favorable determination letters?

Must clarify that the reason I asked this question in Retirement Plan Terminations is that I'm getting questions about rolling over assets which include the DROP portion of a terminated DB Plan.

Other than a couple of articles, I haven't seen anything on DROPs. From the articles, there appear to be qualification and ADEA issues relating to this type of arrangement. Am looking for official pronouncements. Are there any? If so, where can they be found? Has the concept of DROPs been approved by the IRS? Have plans been written using this concept and if so, has the IRS issued favorable determination letters?

Other than a couple of articles, I haven't seen anything on DROPs. From the articles, there appear to be qualification issues and possible ADEA issues relating to this type of arrangement. Am looking for official pronouncements. Are there any? If so, where can they be found? Has the concept of DROPs been approved by the IRS? Have plans been written using this concept and if so, has the IRS issued favorable determination letters?

The $75 fee is outside money which has to be paid up-front. We have been told that for truth-in-lending purposes, the amount financed is the amount given to the participant ($5K) less the $75 fee. It just sounded strange since the participant is getting $5K from the plan while the $75 fee is paid with outside money to the TPA.

A loan program has a $75 administrative fee which the employee pays at the time he requests a loan. The $75 fee is not distributed from plan assets. If an employee requests a $5,000 loan and receives a check for $5,000, is the amount financed $5,000 or $5,000 less the $75 fee? Cites would be helpful. Thanks.

If an employee becomes disabled and the company changes life insurance carriers during the period of disablity: is the employer obligated to cover the person with the new carrier? inform the disabled that there is a change of carriers? if he's not obligated to cover the person, must he give the disabled the option to take out coverage on his own? is life insurance coverage covered by COBRA? can the employer who failed to cover such person, now say that the person was terminated on the first day of disability? In essence, I'd like to know basics before approaching legal counsel. Cites would be helpful. Thanks. PS The employer has about 75 employees and is centrally located.

Has anyone seen the official annual limitations for 2001? If so, please advise where I can find them. Thanks.

An employer adopted a non-ERISA 403(B) plan which provides solely for salary deferrals. Upon an internal audit it was discovered that the employer was in fact making employer contributions for eligible participants for about 3 years. How does the employer correct this? Can this be corrected under Section 5.02 (1) of Rev. Proc. 99-13 as an Operational Failure? Operational Failure being defined in Section 3.05: (10) Any other failure to satisfy applicable requirements under Section 403(B) that ....results in the loss of section 403(B) status.... and is not a Demographic Failure, an Eligibility Failure or a failure related to the purchase of annuity contracts.... If this can be corrected using Rev. Proc. 99-13, how is this accomplished operationally? by a letter from the employer to remove the contributions? by a letter signed by the employee and the employer (this seems logical since the employee set up the account)

What constitutes a nonelective contribution in a 403(B) plan?

A teacher is contributing to a teacher's state retirement fund. The state plan is in lieu of Social Security. While working the teacher is receiving her deceased husband's Social Security benefits. When this teacher retires, can she continue to collect her husband's SS benefits and collect her retirement benefit through the teacher's state retirement plan? The state is Texas. Cites would be helpful.

Can a spouse who inherits an IRA by will (because the deceased failed to designate a beneficiary and therefore the estate is beneficiary) establish a beneficiary IRA? roll the assets to an IRA in his/her name? If not, what are the spouse's options reagrding the inherited IRA assets? Cites would be helpful. Thanks.

Are distributions from non-Title I plans subject to the spousal consent rules? Is spousal consent required for loans? hardships? Cites would be helpful. Thanks.

If a non-ERISA Title I plan permits loans and hardship safe-harbor withdrawals, is the custodial obligated to advise participants that they must first take a loan from the plan?

A church would like to set up a non-ERISA retirement plan for its employees. The church is part of an worldwide religious "entity" which is comprised of numerous churches. However, each church has its own tax ID number. Can the church establish a retirement plan solely for its employees?

Assuming a Section 125 plan is established mid-year and that the plan has two components: medical reimbursement and dependent care 1. Are the maximum contribution limits prorated for the short plan year? I.E., is the $5,000 maximum dependent care contribution prorated or can the full $5,000 be put into the plan? 2. I believe there is a "use it or lose it" policy which has an element of risk for the employer and the employee. Does this element of risk apply to both components? Can the employer chose to accept the risk for only one portion, say the medical reimbursement portion, while mandating that the employee only submit dependent care bills up to the amount he has contributed? Cites would be appreciated. Thanks.

Can a person who reaches age 70-1/2 this year make a contribution to a traditional IRA? IRS Publication 590 says no. However, the only cite I have been able to find that has the 70-1/2 age restriction is under Section 219(d)(1) of the Code. And, that section deals with deductibility of contributions. Cites would be appreciated. Thanks.

If a plan operates in accordance with hair cut provisions on a case by case basis, must an employer turn over assets to a participant's bankruptcy estate?