IRC401

Assuming that your client is a local government in PA, does it have authority to change its plan, or is it constrained by state law?

Did the sponsor comply with 204(h)? [i happen to think that suing over the failure to give 204(h) notices will be a lucrative product line for plaintiff's attorneys]. Did the sponsor ever issue an SPD that explained how the conversion worked ?

If an employer's basic medical plan uses insurance, and if the employer sets up an HRA, doesn't the employer risk getting sucked into the HIPAA blackhole (for lack of a better term by someone who does not prtend to be a HIPAA expert)?

Isn't 1.125-2 Q&A7 still a proposed reg. ?

Nonresident aliens with no US source income may participate in a DB plan because there is nothing in the law prohibiting them from participating. I have been told that many US multinational corporations do, in fact, have plans covering such employees. There is an issue as to whether they have 415 comp. One consultant told me that he questioned the validity of the IRS regs. Keep in mind that you may not need 415 comp. if the accrued benefit is less than $10,000 per year. The tax rules regarding distributions are extraordinarily complicated, and if you are using an outside service, they probably won't know how to deal with the payments. Expect to spend time trying to interpret tax treaties. Including non-resident aliens with no US income is not a good plan design strategy for those looking to use low cost service providers.

A number of hospitals (at the urging of Final Four accounting firms) are taking the position that medical residents are not employees in order to get FICA refunds. There is a Minnesota decision favoring the taxpayers, and apparently, some sleep at the switch IRS people have been granting refunds. If the residents are not employees they wouldn't be eligible to participate in a 403(B) plan because they would have no includible compensation.

See 1.411(a)-7(a)(1) and ©(4).

As far as I can tell, you lose it. If the Company goes into bankruptcy, the employees who have incurred expenses that have not been paid hadve claims, but if you haven't incurred any expenses prior to the shutdown, you appear to be out of luck.

415©(3)© has special nondiscrimination rules for determining 415 compensation for disabled participants (although since the 1996 Act took effect the rules have been relatively easy to meet). Do the rules apply to governmental plans? I can't find an exception. Thank you

The S corp shareholder needs to talk to a tax advisor. If there is an arrangement that the charity sell the stock, the IRS may deny the charitable deduction.

New Jersey appears to have a provision equivalent to IRC 104, but I don't see one equivalent to IRC 106. What is the authority for not taxing employer paid medical insurance under the NJ gross income tax? Thank you.

I believe that the answer to your question is in the 415 regs.

With any type of DC plan, you run the risk that with good investment results, the employee could end up with more than $35,000 (although I have yet to find a school district that didn't know how to invest poorly). It sounds to me like they want a target benefit 401(a) plan. However, they will need a 403(B) plan in order to make contributions for terminated employees. Is it a DB plan a possibility?

Check out the first abusive tax shelter on the Treasury's list.

I'm curious as to what kind of activity the fiduciary is planning that would be inconsistent with ERISA yet acceptable under state fiduciary law.

Does New Jersey still tax salary reduction contributions to cafeteria plans? If yes, do you have a cite to the law or regs? Thank you.

I thought that HIPAA applied only to group health plans.

If the employee pays on a pre-tax basis, the benefit is an employer provided benefit, the plan is subject to ERISA, and the employees have imputed income.

Assuming that Rev Rul 80-155 is still valid, any amounts contributed by the employer during the plan year must be allocated as of date in the plan year. There may not be any amounts left over to be allocated in the following year. Therefore, the plan may be in violation of the definitely determinable requirement. If the employee does not have 1000 hours, then there is no basis for an allocation under the plan. Any earnings on the advance allocation would themselves be allocations subject to IRC 415 and 401(a)(4), and it appears that the plan was being administered inconsistently with the plan document. I suspect that the employer needs to start running (a)(4) general tests. I don't know what your scope of services is, but I would be careful about representing that the plan is in compliance with IRS rules.

I am not aware of any special IRS rules dealing with Davis-Bacon plans. If the plan is a single employer plan, I am not aware of any policy reason why there should be a special rule.

Would investing trust money in annuity contracts with a 2-3% annual charge (plus other admin expenses?) be a breach of fiduciary duty under state law? Isn't there a cheaper way to run this plan?

Many of the discounted option programs allow the employee to pick and change the underlying investment on which the option is granted. Anyone have an opinion whether changing from an option on Mutual Fund A to Mutual Fund B would be a grant of a new option, taking the option out of the grandfathering rule (assuming that anti-abuse rules don't kill the option first)?

If you are including a leveraged ESOP in an average benefits percentage test, do you use ESOP contributions or allocations for the test? [There can be a significant difference.]

The original post stated that the plan would be a profit-sharing plan. It did not state whether there would be 401(k) contributions or individually directed investments. If there will be only profit-sharing contributions, the way to keep the costs down is to not have individually directed investments and to find a local CPA ot third party recordkeeper to handle the work. On second thought, find a local CPA or third party recordkeeper well outside of LA; they should be cheaper and more competent.

Unless someone can point to something in print to the contrary, I don't think that 404© protection extends to any amounts not invested by an affirmative election by a participant. Therefore, in order to keep a plan in compliance with 404© a plan amdinistrator should not accept 401(k) contributions made on behalf of any participant who doesn't complete an investment election.