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Is the investment in the best interests of the plan? A fiduciary is required to examine the level of diversification, degree of liquidity, and the potential risk/return in comparison with available alternative investments. Potential investments should be compared to other investments that would fill a similar role in the portfolio with regard to diversification, liquidity, and risk/return. In light of the rigorous requirements established by ERISA, the Department of Labor believes that fiduciaries who rely on factors outside the economic interests of the plan in making investment choices and subsequently find their decision challenged will rarely be able to demonstrate compliance with ERISA absent a written record demonstrating that a contemporaneous economic analysis showed that the investment alternatives were of equal value. ERISA makes no direct distinction between fiduciary standards for DB and DC plans. There is no magic number but the plan should be in a position to withstand the DOL's close scrutinty. Does an analysis of the plan's liquidity needs take into account the possibility of benefit payments to the owners?

My recollection is: 401k to HSA: no transfers allowed. Individual can take distribution, pay taxes/penalties, and use the funds to contribute to HSA. HSA to 401k: no transfers allowed. Amts can be rolled over to another HSA however.

I believe disability payments would be excluded as fringe benefits because they are irregular and/or additional under 3rd exclusion in the plan's definition.

Yes as long as there is no discrimination in favor of officers, shareholders or highly compensated employees.

Thanks for the reminder%

May be corrected by retroactive plan amendment under EPCRS. Rev Proc 2003-12.

Thanks everyone for the responses. Special thanks to Kevin C for the cite. The plan is using those provisions in the 415 regs.

Good point, Tom! ABPT is about 47%, so if either plan can make contributions to (some of the 67) NHCEs to get ABPT to 70%, we should be in the clear. Maybe a large enough contribution requirement will wake them up to the need for better coordinated plan design!

Having a hard time understanding the mechanics of a rider in the insurance contract since the only contributions/premiums going into the plan/contract are employer contributions according to the formula in the plan document. Maybe you are saying the employer is paying additional premiums outside of plan contributions for the rider and the insurance company (not the plan) is going to make the disability payments? Interesting.

I was specifying taxable as wages as opposed to taxable as pension payments.

10% of the compensation at the time the participant terminates employment. Contributions are made each pay period.

MPP sponsored by a non-profit and administered by large insurance co. Forms of benefit allowable are annuities and lumpsum. Formula is straight 10% across the board. Here is the unusual part. If a participant terminates due to disability before NRA they receive a disability annuity credit of 10% of compensation until they reach NRA. Seems like a feature you would normally have in a DB plan. Are there any issues with making contributions based on past compensation in a DC plan, assuming that is what is going on here? Does it create additional testing issues? Is the employer actually making the addl contribution into the plan and paying them out as disability pension benefits taxable as wages and reportable on 1099-R? Thanks for any insight!

There was an acquisition in 2010 that created this scenario. Due to personality issues the companies do not want to share information with each other. The plans have different TPAs. After much negotiation the companies are willing to have the different TPAs share information as long as they do not share information with the company itself. Employer A is not a safe harbor, has a match formula of 100% to 4%, and does not pass 410b in the aggregate (5 HCEs and 12 NHCEs, ratio 28.66%). This is the plan we administer and has the issue. Employer B is safe harbor (basic match) and does pass 410b (3 HCEs and 55 NHCEs, ratio 218.91%). We do not have the 410b6 transition relief for 2012. Obviously there are design issues and timing issues, which are being discussed separately. Just looking for some ideas before we recommend legal counsel or EPCRS. Thank you!

Anybody wants to take a shot? Thanks.

You mean other than the IRS?

Yes, too late for 2012. It is a discretionary amendment.

We have a takeover situation where for 2012 Employer A of controlled group had a safe harbor plan, and Employer B of controlled group had a regular plan with ADP/ACP testing. They do not pass coverage separately under RPT or ABT. What are out options if the plans can not be aggregated for testing? Thanks.

Based on 2.05(3) of Revenue Procedure 2003-12 it would be an option to treat the catchup contributions as Roth contributions. The W-2 may need to be amended to show the Roth contributions with the proper code (AA for 401k plan).

What is the error on the W-2? Are the pre-tax deferrals included in the box 1 number? Edit: I think you are saying the catch-up contributions are included in box 1, right? The numbers do not add up because you are using 2013 deferrals of 17500 plus 182500 to get to 200000 gross, which means 4,500 catch up. I get the point though.

Essentially agree with both posts 9 and 10 above, but not with posts 4 and 8. The 401 k/m regulations themselves do not provide any exemption for church plans. A church seeking relief from the burden of nondiscrimination testing should carefully consider the merits of a 403b plan vs a 401k plan.

toolkit - surprisingly, I understand that a plan that satisfies 401 k/m is generally deemed to satisfy 401a4. That is not the point of discussion. Neither Notice 2001-46 nor the regulations provide an exemption from 401 k/m. To interpret the reference to 401a4 in the notice as an exemption from ADP/ACP testing is a job for the client's legal counsel. There is IMO nothing in the regs/guidance that would prevent the IRS from requiring a church 401k plan to satisfy ADP/ACP. As the OP noted, the exemptions available to a church under the 403b regs are broader and more lucid.

This is my understanding and opinion. Notice 2001-46 references 401(a)(4) and 401(a)(5) but not 401(k) and 401(m). It is quite possible that the IRS would require a non-electing church plan to satisfy the ADP/ACP tests. I am not aware of a more direct or clear pronouncement from the IRS.

A common law employee becoming a leased employee is a change of employment status. A common law employee becoming an independent contractor is a termination of employment, not a change of employment status. Provided the classifications are accurate, a leased employee and an independent contractor are treated very differently. An independent contractor is a "vendor" with presumably multiple clients. A properly classified independent contractor is never an employee by law. I am curious if there was something new on this topic in the webinar.

How is the vendor going to report these payments to the IRS? Is it too much trouble for the employer to make deposits to the trust from their own account?

Disaggregation applies to the ABT.