Ron Snyder

Moe- You claim to be an expert in the Internal Revenue Code and belittle others who disagree with you although they are obviously as knowledgeable and intelligent as you are. If this is the case, why not simply post a citation to the IRC (with which you profess familiarity), the Regs.? I have read Blinky's and mjbs posts for years and know them to be very knowledgeable. The trouble with your rudeness and arrogance is that you need to back them up with verifiable facts, citations, etc., rather than self-aggrandizing posturing. PS - I'm an ERISA attorney and an actuary with 30 years in the business and will match knowledge or wits with you anytime.

IRC Section 414(t). "Application of controlled group rules to certain employee benefits (1) In general All employees who are treated as employed by a single employer under subsection (b), ©, or (m) shall be treated as employed by a single employer for purposes of an applicable section. The provisions of subsection (o) shall apply with respect to the requirements of an applicable section. (2) Applicable section For purposes of this subsection, the term "applicable section" means section 79, 106, 117(d), 120, 125, 127, 129, 132, 137, 274(j), 505, or 4980B."

I don't know how other groups work. I am intimately familiar with 2 state teachers unions who sponsor a 125 plan and who have an administrative affiliate/subsidiary who administers the 125 plan. A local school district may adopt onto the plan through the collective bargaining process.

While my duty to my clients makes it impossible for me to divulge information gained in confidence, I can refer you to public information available on the internet. For Example

You might also look at Datair Datair.

The provision you refer to doesn't mean what you suggest, as examples under the Regs make clear. Therefore the corporation is not precluded from a deduction under the facts given. Contributions to a welfare benefit plan are not deductible under IRC §§419 and 419A, but if another IRC § authorizes the deduction, IRC 419 permits inclusion of the "qualified cost", consisting of "the sum of-- (A) the qualified direct cost for such taxable year, and (B) subject to the limitation of section 419A(b), any addition to a qualified asset account for the taxable year."

Damn Canadians ruin everything, even a perfectly good 401(k) plan. Next you're going to tell us that without the Canadian they cannot pass the nondiscrimination test. Your Canuck is SOL.

I presume that by "multiemployer fund", you are referring to a Taft-Hartley fund. There is no reason such a group, pursuant to a collective-bargaining agreement (CBA) could not sponsor such a plan. However, several questions and obstacles exist: 1. Does the plan exist pursuant to a CBA? (Was is bargained for?) 2. Would employers adopt on or participate by being signatories to the CBA? 3. Why would a "fund" sponsor the plan rather than the union? Most teachers associations bargain for, adopt, maintain and administer such flex plans. Other collective bargaining groups do as well. There is no big mystery here. The key to making it work is including it in the collective bargaining process.

To avoid problems, since you are weak in this area, make sure that the client has ERISA counsel familiar with governmental plans. You will need governmental plan documents, and your services don't provide them. You need to be familiar with all types of governmental plans to be able to guide the client appropriately. And, yes, sometimes a money purchase plan is appropriate, but it is more likely that a profit sharing plan (called a "401(a)" plan in governmental circles) is appropriate unless benefits are collectively bargained to a certain contribution level. I did a search of BenefitsLink for governmental plans and obtained the following. It is a good place for you to start: http://benefitslink.com/search/results.php...=&stopDate= There is also very good information located on Carol Calhoun's website: BenefitsAttorney

Here's a business idea, Pax. Maybe you should make the updated rates available on your website, and give us a link to them. Then you can drive people to your website, maybe drumming up some business. We used to be able to look rates up on the Gabriel, Roeder Smith website, but they don't update regularly like they used to.

Under 1., do you mean to say you're surprised at how few plan sponsors actually do the testing? If so, I'm similarly surprised...this client, a new client, had never heard of 105(h)... Yes 2. by statute of limitations, you mean waiting for the tax years to close? Yes 3. i'm not sure I understand what you're saying...for the current year, there is no doubt that since W-2s and 1099s have not yet been issued, they should probably do so when the reporting deadline approaches...well, on second thought, I guess they could let sleeping dogs lie here too.... Do testing and reporting correctly for 2006. Employer should make decision about prior years based on full understanding of issues. On a related issue, I'm only now doing related 409A analysis, but it looks like there could be some exposure there as well. Bring them into compliance by 12-31-06.

My thoughts: 1. It has been shocking to me how many companies maintain 105(h) plans (and even 125 plans) and do perform the prescribed testing. 2. The approach you mention is the approach I believe that IRS would consider appropriate. Forcing your client to go through with it will probably cost you the client relationship. The client may prefer to let sleeping dogs lie and hope the statute of limitations runs out. 3. Your approach for the future should be undertaken immediately. Amounts for the year to date may still be a problem for 2006.

Have the client pay the withholding and file a 1099. Hope for the best.

The answer depends on the insurance laws of each state. Only about 15 states even license TPA firms. The ECFC has a nice library with such information. If you are going to be doing a significant amount of flex administration, you may wish to join. ECFC However, you could contact each of the 3 insurance departments for less than the cost of a membership.

Our plan provides no vesting until the participant's NRD, and 100% vesting at NRD, as provide below: "FORFEITURES For a Participant who incurs a Severance of Employment prior to his Normal Retirement Date, Disability or death, or to a Change in Control, any amounts in his or her Nonelective Employer Contribution Plan Account will be forfeited and refunded to the Employer or applied as directed by the Employer." [Other sections deal with NRD, Disability, death and Change in Control.] The only reference to "substantial risk of forfeiture" in our plan occurs in the following section: "TERMINATION OF ARRANGEMENT BY ADOPTING EMPLOYER An arrangement may permit an acceleration of the time and form of a payment where the right to the payment arises due to a termination of the arrangement in accordance with one of the following: (a) The service recipient’s discretion under the terms of the arrangement to terminate the arrangement within 12 months of a corporate dissolution taxed under section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C.503(b)(1)(A), provided that the amounts deferred under the plan are included in the participants; gross incomes in the latest of – (1) The calendar year in which the plan termination occurs; (2) The calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (3) The first calendar year in which the payment is administratively practicable."

GBurns: You are correct in that a Section 105(h) MERP may not be an HRA. Without the rollover feature, the plan still has to comply with Regs 1.105-11, and with ERISA. benefitsnerd: I neglected to point out that insurance laws of some states do NOT exempt self-funded health plans of a single-employer or of a controlled group. (However, most do.)

Interesting issue. You need an ERISA attorney to answer this, not an unknown party on a bulletin board. I am an ERISA attorney and don't know the answer off the top of my head. However, I believe that you are not bound to provide coverage under those circumstances. You might also consult with your state insurance department which, although operating under a state law which mirrors HIPAA, has a wide latitude to promulgate rules and interpret the statutes.

This is a welfare benefit plan subject to ERISA. As such it requires a plan document and an SPD. This is an HRA, subject to the limitations and rules published by IRS in the RR and Notice relative to HRAs, and a couple of subsequent clarifications. The plan may require a form 5500, although as an unfunded plan it will be a simple filing. As you describe the arrangement, employer contributions are still tax-deductible. However, without complying with the HRA rules, the amounts reimbursed will be taxable to the employees and will need to be reported on form W-2.

Good point, Mike. We're not so far apart after all, especially compared to mjb and Gompers (Bonkers). rcline - Ms. Choate doesn't post here. I believe that Darrin Watson comes on the board from time to time, but he keeps plenty busy with his work.

mjb-governmental entities DO declare bankruptcy. See Orange County Bankruptcy

Your analysis seems to have morphed from PT to breach of fiduciary duty and violation of Calpers rules, irrelevant to the PT issue. Certainly a breach of fiduciary duty or actual conflict of interest could give rise to fiduciary liability. But a non-PT doesn't become a PT automatically simply a related non-disqualified person is involved. The IRS Temporary Regs give examples of what additional facts and circumstance would give rise to PT treatment.

More tales of tax-sheltered losses, presumably in a Roth IRA where it can do some real harm. The taxpayer is responsible for making the correct required minimum distribution. He/she should be prepared to show where the amounts come from. RMDs need not be made from assets which have no value. However, the balance of his/her IRA and qualified plan assets are still subject to the RMD requirement.

I don't enjoy disagreeing with Darren Watson or Mike Preston. But I still don't see it your way. More facts of the case: The fiduciary is one of the investment managers of CALPERS, charged with managing a $2.5 billion real estate portfolio. He locates a a shopping mall for sale through a licensed real estate broker for $6.5 million. On behalf of CALPERS he tenders an offer to S/M Mall, LLC for an amount close to the listing price, which is accepted by S/M. His sister is the manager and controlling owner of S/M Mall, LLC. Your analysis suggests that this is a PT simply because the plan purchases property from the sister. No showing of any of the elements referred to in the IRS temporary regs. (back-door compensation, leasing between the plan and a disqualified person, ongoing service arrangement, etc.), or any other detriment to the plan or benefit to the LLC. If you don't claim the foregoing to be a PT, then it is a facts and circumstances test, which I earlier suggested, and we're not really disagreeing at all.

While such purpose may be "useful" to retirees, it is certainly not useful to governmental units to handcuff them and force them into bankruptcy!

Have the employer adopt an HRA that includes a retiree medical benefit like this: Amount available for medical reimbursements at retirement age 65: $50,000 Amount available for medical reimbursements at retirement age 66: $40,000 Amount available for medical reimbursements at retirement age 67: $30,000 Amount available for medical reimbursements at retirement age 68: $20,000 Amount available for medical reimbursements at retirement age 69: $10,000 Amount available for medical reimbursements at retirement age 70: $-0-.