rcline46

The average benefits test only measures HCEs against NHCEs, there is no need for any classifications.

" employer may not make employment conditional upon waiving participation in a qualified plan." This is the original Statement. Capital Cities was clearly about NOT being an employee, but an independent contractor. The IRS tried to make them employees, and therefore eligible for benefits. Therefore the case. So the contract merely stated as independent contractors they were not eligible for benefits. I see no waiver of any kind in this case as is posited in the opening statement. I DO agree it affirms the right of a plan to exclude a class of employees which I think we all agree is the best way to go.

mjb - I am ashamed of you! Capital Cities is not about waivers! In reading the decision the court specifically stated that a waiver was not involved in this case, because the contract specifically denied participation in the ERISA plans. The contracts made the Carriers independent contractors, and even the IRS TAM attempting to make some Carriers common law employees was retracted. Also note that the plans specifically stated that Eligible Employees did not include anyone who signed a contract which specifically denied the signees right to be in the plan. Although on point for the discussion (plan level exclusion which we like), it does not involve waivers.

This SCREAMS for EPCRS. If this were true, the client would have to get a written legal opinion from the attorneys as to why EPCRS is not necessary WITH an indemnification for all costs including contributions should they be wrong.

ERISA certainly permits a voluntary waiver of benefits by employees. Now lets say prior to hire I agree to waive benefits, which I cannot do until after I become an employee. Once hired, I now refuse to sign the waiver. If I am then fired, I file suit under 510 (I think this is the section) - dismissal in order to avoid providing benefits. Its a slam dunk the employer loses. Of course I have the papers from the employer stating that they require I waive benefits. Now if the employer will not put into writing that they require me to waive benefits in order to become employed, then they obviously realize they are in the wrong. OTOH, if I am hired as a Senior Bench Warmer, and that is an excluded class I might still have a beef under ADEA if all of the Senior Bench Warmers are over 40. But it is a much harder proof. Bottom line, it is not a VOLUNTARY waiver. I have a bunch of attorneys who will take the employees case.

I see veiled age discrimination issue in hiring, or I see a coerced waiver of benefits. I don't think it flies, and if under audit, the IRS or DoL speaks to those who waived...... Well I would not want to be in the employer's shoes. This should get a written opinion from both a labor and ERISA attorney.

It is a protected benefit. Once in cannot be removed for people/balances at the time in was in force.

Refuse to change and ask the auditor to get Technical Advice or his/her manager to respond.

Reread 2003-44, contribution is deductible in the year made.

At the risk of being pedantic, a 403(b) never has a trust, only custodial accounts. If invested in annuities then they are in the participants' names. If in mutual funds they are custodial accounts with a record keeper tracking individual accounts. You should review the IRC code itself and then the regulations on 403(b) plans.

You cannot have employees receiving different allocations (other than Gateway) and be in the same group.

How are you allocating the DBRA? Since the plan requires a definite allocation method, either you already have everyone in a separate group, or you have many receiving the same % or pay or flat $ amount. Anyway, do the DBRA and then top off anyone not getting the 5% / 1/3 gateway.

Did you all miss that 'filers are required to collect and retain Schedules B and P..'? They still have to be done, and sent to the client. The only difference is the originals no longer have to be forwarded to the EBSA. It will be far easier to send them in than to confuse the client.

And notice that he asked for a PDF copy which is very, very cumbersome to modify. As Mr. Presson points out we often have to go to great lengths to get copies of basic documents because clients 'lose' theirs, or the brokers bringing in business can't find them, and so forth.

Good question! The regs allow you to use any 414s definition of compensation to do your testing, and so do most documents. This means you could run the test using the same definition of comp as you did last year to demonstrate you pass, then rerun the test (pass or fail) to set the values for next year. It also means you can rerun last year's test using this year's definition to reset the numbers. However, I think you can just use this year's comp. The regs tell you what to do if the GROUP changes, but not if the comp changes. We just had an audit where we were using a 414s definition for testing and the auditor looked at what we were doing and approved it.

Read then new 415 Regulations, it is specifically addressed in there. However, only an EMPLOYEE can make deferrals. If there is no ee/er relationship, it does not matter what income the person receives or how it is paid. It is a violation of the exclusive benefit rule to let a non-employee contribute to the plan.

If it is a Corbel document, the language in the section permitting voluntary contributions also permits withdrawal of same at any time. I cannot speak to other document providers, but I would be surprised if it did NOT permit such withdrawals. Again, do not look in the distribution section for the answer. I apologize in advance for being so pedantic but documents have strange items scattered throughout and not always where you expect them.

CHeck the document under Voluntary Contributions, there may be special distribution options in that section.

The policy is an investment of the plan and the plan pays premiums. Like a KEY MAN policy only owned by the trust. There cannot be a separate 'deduction' or inclusion in the Normal Cost of the premium.

If this is what you are getting, request this be referred to the supervisor immediately as the questions are unclear. Kick it right back at them and request technical advice.

The EGTRRA amendment is easy - you darn well better have done it with your GUST restatement. If not, the Non-amender program is much better. Any IRS determination letters in the past? What kind of document? TRA 86 restatement?

On Mike's question - I think this revolves around the answer to the same question posed differently. If a class of employees otherwise eligible for the plan receives no contribution, is this the same as if that class of employees were excluded from the plan? If this answer is yes, and the class is determined on service, and the service exceeds 2 years, is this a violation of 410(a) (I think it is (a) here)?

And of course it must be amended to a crosstested plan, everyone in their own rate group so the formula requirements are met, again if you can amend after the plan is terminated. And I don't think you can make such an amendment to a terminated plan.

Give them a bonus check. No other way works well.

Did that person have 8 weeks accrued vacation and sick time for which they were paid? If so then there is an arguement that they did NOT terminate until 7/1. As 'The Prisoner' heard constantly - 'We want information'.