Ron Snyder

An "employee welfare plan" must cover employees but may also cover others. There is no "exclusive benefit" for welfare benefits like there is for qualified retirement plans.

There are several attorneys around the country with considerable experience in drafting governmental plans. Having done a modest amount of this myself, I would urge the client to engage one of those practitioners rather than adopt a prototype.

Dave Baker might suggest advertising on Benefits Link. There is an appropriate classification.

Maybe the problem was in switching to Windows 7 before making sure everything was working correctly. I won't be moving my company's computers to Windows 7 until SP2 is released. Haven't you learned about Microsoft by now? In fact, we may never move to Windows 7 and are exploring the possibility that our next upgrade will be to Apple hardware and software.

My response was to the post by allancoleman, not to you. I have spent the past several months looking for a good HSA trustee or custodian. In my searches I ran across HSA Bank, a subsidiary of Webster Bank, NA HSA Bank. They appear to specialize in HSAs and say the right thing on their website. It appeared suspicious to me that Webster's website makes no mention of HSA Bank. I therefore contacted the Wisconsin Department of Financial Institutions to make sure they were appropriately licensed (they're not listed on the DFI website as a licensed bank). They informed me that as a "national association" bank, Webster is not regulated by state banking regulators (but by the Feds), and that they were indeed a legitimate banking institution in Wisconsin. They may be worth a call.

That post wasn't particularly useful, as it doesn't even identify the state. Credit unions and the laws that govern them vary widely from state to state. Some are limited to employees of a single corporation. Others are open to individuals in a specific community. So there may be states in which many of the credit unions could handle such accounts as well as other states in which no credit unions would be available for such an account.

I don't share GBurns concerns about sponsorship of such a plan. There is no "exclusive benefit rule" for welfare benefit plans, so the fact that the PEO is not the primary employer is not of much consequence. It seems to me that the problem from Administaff's perspective is in combining FSA and HRA sponsorship. A client could potentially have an FSA and a "limited-purpose" health FSA, but how could they police that? It seems that any PEO could also be at risk of being in violation of IRS requirements in sponsoring either type of plan unless they also manage the core health plan. And it should never be a self-insured plan (and a MEWA) unless it operates in only one state and that state licensed them as a MEWA or as an insurance company (such as Texas).

Sounds like an appropriate time for the Plan Administrator to take advantage of the interpleader statute.

You are correct, it is a very helpful provision. We are using this nondiscrimination alternative test to allow larger contributions for HCEs to an HRA than for non-HCEs. Don't know the history but it strikes me as similar to rules that apply to qualified retirement plans permitting aggregation of benefit plans for testing purposes.

Would you like to share the answer you found?

Your next step is obvious: have your attorney write the plan's committee a letter (with a copy to the Bank's lawyers) stating your intention to seek penalties under ERISA for their failure to comply with ERISA and with the terms of the plan's document.

California has its own form that must be filed.

Attorneys are bound by the Code of Professional Responsibility, which prohibits inappropriate backdating. An attorney may be suspended or have his shingle revoked for dating documents back when the effect will be to change someone's rights, defraud (claim a tax deduction for which the taxpayer was not eligible), etc. See the Nixon Papers Case (US Supreme Court 1977). Therefore, most backdating is either illegal or unethical or both. (However, not fattening per se.) However, check the following examples using a calendar year entity: 1. The Board of Directors of a corporation meets on December 29th and adopts a proposed retirement plan, with 2 minor changes. The handwritten minutes are written up and the minor changes are made on January 3rd. What date should be placed by the signature. IMHO, it is not inappropriate to put December 29th under these facts. 2. A corporation considers adoption of a retirement plan in May, but doesn't get around to executing it until September. The plan is adopted retroactive to January 1st, the effective date. Backdating to May (or even January) would not affect rights, but would be inappropriate to execute and date until after the Board has considered it and voted. 3. An employer which has not yet filed its tax return adopts a remedial amendment intended to cure its lack of required language on March 14th, effective as of the beginning of the prior plan year. This is also specifically permissible, although there is no need to date the signature back.

The source for the extension is here: 6707A Website

Compensation that is deferred to a later year must be paid in compliance with 401(k), 409A or 125. Read the plan to determine whether or not: (1) it is too late for an employee to elect to defer into the 401(k) plan; (2) such deferral amount will be excluded from compensation for testing purposes> Or are you asking, "can an employer unilaterally decide not to pay compensation to which an employee is legally entitled"? If this is what you are researching, there are a number of court cases dealing with this issue. The employer loses. The corollary question is "if an employer fails to pay compensation due when it is due, but pays it later, does it count as compensation when it is paid or when it should have been paid?" Good luck on that one.

What does the plan's attorney say to do?

I would be concerned about the advice you receive from a Swiss firm about applicability of US laws (tax, insurance or otherwise) to the purchase of Swiss annuities. The information then can give you will likely be correct for Swiss residents, but may or may not be correct for US residents. Moreover, since so-called "Swiss annuities" are a form of variable annuities that provide a choice of index and a choice of currency, they are securities under US law. It is my understanding that recommending them to US residents would likely violate US securities laws. While writing a book in general terms is not a "recommendation" per se, having people contact you so that you can guide them through the process is likely to violate US securities laws. Be careful. You may come back from Switzerland unable to discuss what you have learned. You are highly focused on getting on IRS's bad side. The SEC is every bit as tough.

You meant "at most", not "at least".

Si, estan hablando de ti.

First- welcome to the Board from an old friend. The statute says a covered employee is an individual either described in 162(m)(3) or subject to 16(a) reporting under the ’34 Act. 162(m)(3) says a covered employee is the CEO or one of the 4 highest paid individuals subject to reporting under the ’34 Act. Of course, 162(m) is the compensation limitation for certain employees of publicly traded companies (i.e., subject to registration under the ’34 Act). Can the statute be interpreted as "reporting under the '34 Act or comparable statute"? Here neither the U.S. subsidiary nor its foreign parent is subject to reporting under the ’34 Act – but is the statutory definition for DC purposes intended to be broad enough to at least cover the CEO, regardless of ’34 Act registration status of the employer? If so, wouldn’t this also extend the restriction rule to closely held companies? Not necessarily. Congressional intent not to apply the statute to closely-held companies is clear. Don't you think that the SEC would respond to a ruling request on this issue?

Yes.

I tend to agree with you. The form seems to anticipate an non-profit association and asks relevant governance and policies questions. But they don't seem to apply to a VEBA which is a trust being used to fund medical (or other permitted) benefits. Unfortunately, N/A is not one of the boxes you can elect and if you insist in manually putting N/A on the form it will not go through processing. I would follow Nancy Reagan's advice.

Funded HRAs are also hybrids, somewhat inconsistent with previously established benefits tax principles. It is funded entirely with employer moneys. But contributions by the employer are not subject to payroll taxes and neither are distributions for medical benefits. This is true whether funded through a VEBA or other funding arrangement.

All benefits except for long term disability are self-funded; the LTD benefit is insured. Sort of a modern version of "widows and orphans" fund. A "widows and orphans" fund would, of course, provide death, not disability, benefits. Otherwise the would not be widows or orphans but dependents. For purposes of HIPAA compliance (portability, privacy) - is it an excepted FSA? Other type of limited purpose excepted benefit? This is a good question, first because it is not an FSA benefit at all, and second, because DOL has not bothered to provide an overdue similar exception for HRA or MERP benefits. I believe that even the DOL would not claim this was subject to HIPAA portability rules, but would likely would be subject to the privacy rules. I had a similar problem with a DOL audit of funded post-retirement HRA benefits in which the DOL required us to provide HIPAA portability notices even though the VEBA did not provide current health coverage. Or, if not excepted - is an "opt-out" not available because, though a governmental plan, its not fully self-funded? I believe that as a governmental plan, the plan is exempt from portability rules (along with other ERISA requirements). Being self-funded does NOT get them off the hook, however. Already posted to Health/COBRA/HIPAA Board with no reply... Not much luck here either, unless you count me.

This is the position that the IRS is taking in some audits, although you correctly point out that such benefits are excluded under 404(b). IRS tries to bring it back in under the 402(g) rules which don't contain a similar exclusion. The IRS has never prevailed in court on this position, and will likely not be able to do so. It is simply an issue they raise with some audits of welfare benefit plans which they believe to be thinly disguised deferred compensation plans.