Ron Snyder

I attended law school in Arizona with students from various Indian tribes. One of my classmates is now a judge on the Navajo reservation. I don't believe that tribal law is excluded from the law of the US. It is a legal system that is permitted by treaty between the tribe and the US. Rights may also be vindicated through Federal court. It is equivalent to state law in that once state rulings are issued, appeal to Federal courts is still possible. I suggest that the plan has 2 choices: obtain opinion of counsel with respect to the purported QDRO, or file under an interpleader statute/rule for the court to determine the appropriate division of the funds. In either event, the plan will need appropriate representation.

12AX7- Under IRC 1563(a)(2)(b), all that is required for a controlled group is 5 or fewer shareholders (you have 3) which own >50% of the ownership of the entity to the extent that the overlapping ownership is identical. It appears to me that you necessarily have a controlled group for all entities. Corp 1 Bro=40%, Sis=30%, Other=30% Corp 2 Bro=30%, Sis=40%, Other=30% Corp 3 Bro=30%, Sis=30%, Other=40% If Other is not the same person, the overlapping ownership between 1 and 2 is 60%, between 1 and 3 is 60% and between 2 and 3 is 50%. If "Other" is the same person (not related to Bro or Sis), the overlapping percentage is 90% across the board. In any event it is a controlled group. The only arrangement where it would not be a CG is: Corp 1- Bro=25%; Sis=30%; Other A=45% Corp 2- Bro=30%; Sis=25%; Other B=45% Here A and B are not the same person and the overlapping ownership percentage is 50%. It would not be a CG, but could be an ASG since more than 10% overlapping ownership and 1 is a service organization.

An aside to Lori- Nice to know that you are both domestic and a goddess. I thought you were a CPA or something mundane. Like your new sig.

Does this mean that the plan obtained the order, or that the plan was served with a copy of the order? You seem to imply the former, which would not be a proper QDRO in any event. Did the tribal court apply state law, federal law or tribal law? Are tribal court decisions appealable to state or federal courts of appeal (or other)? Whose rules of procedure are used in the tribal court? Do they have an interpleader statute?

Questions/Clarifications: 1. Is the "other unrelated person" for the other 3 corps the same person? If so, those are a controlled group. If not, the other 3 corps will be a controlled group if the bro/sis own >50% of the ownership in the corp. 2. Are both payroll corps in the same controlled group? All employees who receive their payroll through either payroll service company are eligible for the plan(s) of the controlled group to which the payroll service company belongs unless such employees are specifically excluded from the plans. Even if specifically excluded from the plan(s), they are included for nondiscrimination testing purposes. Note: Having 2 payroll companies may fool the health insurance company but does not affect the nondiscrimination testing for the health plans for tax purposes any more than it does for retirement plan purposes.

mjb is correct; no reversion is available from a VEBA, except for excess funds due to "actuarial error" in the event of termination of the VEBA and all benefits for participants and beneficiaries are fully funded.

The group you describe is not eligible for a true single-employer plan. The best you could do is provide a multiple-employer trust consisting of separate plans and separate sub-trustsfor each adopting employer. The testing still has to be done for each employer's group separately as well as on the group as a whole. Not much advantage in creating such a vehicle unless you are ADP or Paychex and want to include it as one of your services at a discounted price in order to obtain customers.

I don't know that it would be impossible to structure such an arrangement. Drafting may be tricky, and there are certainly 2 sets of nondiscrimination tests to run (1 for the HRA and 1 for the 401k), but it may be possible to create such a plan. That may explain why you are having a hard time. There are a myriad of articles about DC health plans (of which the HRA is 1 type) on http://www.definedcare.com/.

Don- Yes, it is true that the lion's share of accruals in a defined benefit plan are within the final few years. As originally envisioned by Congress, funding of retirement benefits was to be a "3-legged stool" consisting of: (1) Social Security Benefits, (2) An employer-provided pension benefit, and (3) personal savings. Replacement of a defined benefit or fixed contribution DC plan with a 401(k) or similar plan seeks to cut off the second leg and strengthen the third leg of the stool. IMHO, it is not in our best interest as a society to make that change. A 401(k) plan is an employee savings plan, and employer matches are nothing more than an incentive for employees to save. They cannot substitute for an employer-provided retirement benefit. An elective profit sharing contribution is simply what it is: a sharing of profits with employees based on their achieving certain goals. DC v DB (or hybrid) for the second leg of the stool is best decided for each employee group based on the funding available and demographics of the group. All groups need all 3 types of benefits. The best thing about 401(k), 403(b) and 457 plans is that they facilitate employee savings. The worst feature of such plans is that they allow employers to pretend that they are doing their part when all they have done is encourage employee savings.

You have a minor problem with mulltiple potential solutions. The MP plan can be merged into the PS plan. The 401k plan can be added as a new plan (with the existing 401k plan of the acquired subsidiary merged in), or the existing 401k plan amended and expanded to include all employees.

Are you enjoying having a discussion with yourself? You start off with an error of fact. Although section 401(k) was added to the IRC in the mid-1970s, no 401(k) plans were actually adopted until 1980 or so. Originally they were called "salary reduction plans". Thrift plans were very common among governmental plans in the early 1970s.

The 411 actuarial equivalence factors set forth in the document are determinative. It can and should be done either way depending on the doc. If the plan indicates a pre-retirement mortality discount, the PVAB is calculated at age 58 using both discounts. The same calculation at age 59 would therefore be greater for interest and mortality both.

This is not a message board item, it is a commercial item. Either advertise on BenefitsLink YellowPages, in various directories or engage a search firm to find you such a target firm.

Hawaii's Prepaid Health Care Act is located at: PHCA Good information at: Hawaii Uninsured Project HDoL Website: Hawaii Dept of Labor

As an alumnus of the ASU College of Law, I can only say that things must have changed since I graduated there in 1982. Nice to know that ASU is finally shedding the "party school" image.

Failure to comply with the plan's terms could result in the plan's being disqualified. If the client won't provide enough information to fix the problem, "just say no". The client is a problem and you are likely seeing only the tip of the iceberg.

You seem to be focused on UBIT rather than the PT issues. This is clearly a PT and needs to be corrected. Form 5330 needs to be filed with respect to the PT.

Professional politeness? Like in post #3 ("Blinky is wrong") or in post #7 ("Blinky, your lack of knowledge of the US Tax Code is obvious. Your credibility has diminished greatly. Your comments are fishy!"). How about post #10 where you respond to mjb who had agreed with you by saying "The reason you "can't see" it is because you "don't have" knowledge of the US Tax Code." You followed with, "mjb, please don't try to enter the realm of income tax law. Don't go there until you have a little knowledge under your belt." Or how about post #14, "mjb is also a borderline Game Show contestant with an attitude." Sorry, but you reap what you sow on this board as well as anywhere else. Don't expect politeness if you don't give it. I will not let anything you assert without citing chapter and verse go unchallenged. Do it right or go away.

The sales model being used in years past was to fund in excess of the 415 limit, terminate the plan after 5 years and pretend that the value of the insurance policy distributed was its current surrender value (even though the policy would increase 4 fold within 5 years). Such approach is the reason that IRS today is attempting to audit 100% of 412(i) plans. The problem is the same as for any overfunded defined benefit plan, and I have had to deal with several of those over the years. The choices are: 1. Make some really bad investments to eat up the overfunding. Life insurance is usually pretty bad, especially if you replace the current policy with a new whole life policy for example. If your client is a physician, you could convert the plan to a regular DB plan and let the client choose his own investments: that will use up the overfunding. 2. Other expensive incidental benefits could be purchased as well, including long-term care and disability insurance. 3. Reorganize the sponsoring corporation so that you have an empty sponsoring corporation (except for the plan) and sell the sponsoring corporation to a corporation with an underfunded DB plan so they can merge the plans together. If structured properly, your client should obtain about 70% of the overfunding for a price as a capital gain as well as avoiding the 90% combined taxes applicable to a reversion. 4. Do a reversion.

Some of the best ESOP attorneys in the country are in SF. That is the type of attorney you should speak with.

If I needed an attorney and didn't have a local referral source, I would go to Martindale and search for an A V rated attorney or firm that worked with ERISA and ESOPs.

You are as incorrect about me as you are in most of your posts. I am an attorney as well as an actuary, and have been in employee benefits for over 30 years, an attorney for over 20 years. (I first became an actuary and then went to law school.) I am a member of the Employee Benefits Committee of the Tax Section of the ABA (along with various subcommittees), and know many of the practitioners in this area from all over the country. I have never seen you at the meetings. Moreover, I challenged you to come up with a cite to the Code, Regs. or IRS ruling and the silence of your response was deafening.

You say The "unfortunate" part of this is not that the provider decided to shoot craps with his claim rather than be treated like other providers. He is gambling that the plan and participant would pay his higher charges (plus a reasonable attorney's fee) rather than incur legal fees. The appropriate way to deal with this behavior is by winning in court. The court will not be impressed by this provider's use of the legal system to jack up his collections. But to have rights, those rights have to be defended. Short of a full blown legal battle, the Plan's alternatives may include use of an interpleader statute, arbitration or negotiate a settlement.

No and I doubt it.

Unusual post. You don't define "private labeling" (sp), so its hard to respond. I didn't even know that "private label" was a verb. I private label, you private label, he, she or it private labels, etc? If you are setting up a new corporation and contracting the TPA services through another TPA who will render services in the name of your new corporation, the answer would be "yes". If you mean that an existing TPA firm would render services under a special DBA set up for your clients, the answer would be "no".