k man

look i started the thread by asking if anyone knew what was meant my a select group. i have since found a case that says it can be as high as 15% of the total workforce. all i am saying is if you allow too high of a percentage in to the plan you will lose the top hat exemption. it seems to be the result would be that you would have plan that would have to comply with ERISA.

why is it so difficult for you to understand? if you fail to qualify for the top hat exemption you are an ERISA plan. moreover, your plan is an ERISA plan that is not in compliance with ERISA. that would be the worst case scenerio but it would be a bad situation nonethless. also,you are oversimplifying the issue of the amount of people covered. it has nothing to do with the number of people per se and i never said it did. it is the number of participants as they relate to the total workforce.

that was not even close to my analysis. my point in mentioning discimination was that insofar as the plan is made available to a select group of employees you will not have to comply with Title I of ERISA. If you don't have to follow title I it only follows that you do not have to follow the applicable IRS code and regs relating to qualified plans. however, if you allow too many people into the plan you will have to abide by all the applicable discimination rules which you will not likely satisfy. hence, my point - the plan will be discriminatory and will not qualify as a top-hat plan.

maybe in your world prudence is not applicable. i don't know how you can say that it is not. the standards are far from clear in the area. although the Extebank case does seem to indicate that a plan offered to up to 15% of the employer's workforce can still qualify. the case can be found at 216 F.3d 283 for those interested. Moreover, i disagree with you about the type of client that uses a top hat plan. i would venture to say i far greater amount are used for executive deferred compensation and used in addition/in connection with a 401(k) or other qualified plan.

it is clearly a muddled area so i dont have authority on point. however, it would seem to be imprudent to offer it to anyone merely because they are an HCE. this is not a "select" group and would seem to be disciminatory over the NHCE's that do not get the opportunity to participate.

well i think you can rely enough to know not to offer it to ALL HCE's.

Is there an interpretation out there as to whether a NQDC plan should be offered to a select group of HCE's or just to HCE's. the issue here is my client wants to offer the plan to all HCE's and I dont want them to run afoul of the exemption from having to comply with ERISA.

pjkoehler, excellent post. i am reviewing the martin case right now but along the lines of an annuity option, do see any impediment to adding this provision to an existing plan?

the plan document presently does not contain alternative payout options. i assume amending the plan would not be a problem so long as the election is irrovacable. this would get around the constructive receipt issue. what do you think?

by way of plan design, what can be done to defer the inclusion of income in a NDC plan beyond separation from service? The law is essentially straight forward with respect to section 83 and constructive receipt. Can this be accomplished by putting additional restrictions in the plan? specifically i am thinking of a payout over a few years?

Belgarath, our plan document does not specifically credit service while the employee was leased so what is the statutory authority that says we need to credit service while they were leased? Are you saying that this is the way you would treat any other employee who was part of an excluded class but then changed status and was no longer part of that excluded class?

I do not believe it specifically credits service as temp/leased employee but it does permit you to exclude leased employees.

If an employee starts working as a temp via an employment agency and then gets hired by the employer, when is the employees commencement date for purposes of participation etc.? The plan also excludes leased employees. I believe it is the date that they are hired by the employer, not the date they start as a temp with the agency.

What is the "Caledar Year Election" and when is it used? I know what the calendar year data election is but am confused on the CYE

In prior years the plan exluded commissions from the definition of compensation. The employer know wants to use full compensation. Is it possible incorporating a more inclusive definition of compensation to be a cut back of benefits? For example, if this change benefits HCE's because they earn more commissions.

it would be applicable to the employer non elective contribution, not to the match. we dont want to use that type of product so TIA CREFF is out.

true i realized that after i posted but neverthless there are document providers that sell Individually designed 403(B) docs. the question is whther they will do the formula also.

i dont see that this post was answered but has anyone found a prototype that allows for cross testing in a 403(B) plan

It seems as though the disclosure is going to be required at some point regardless of whether or not the providor is a fiduciary. when i first got into this business a few years ago I was surprised to note that there were so many potential regulators (SEC, NASD, DOL and IRS), which for the most part are not working together when it comes to the investment aspect of retirement plans. I think this has to change. although the Enron matter is unrelated, it seems to be more evidence of the need for better guidance in the investment space of retirement plans.

I think it is important to determine whether the subsidies are coming directly from participants accounts as opposed to a payment made at the fund level for services performed in connection with participant level record keeping. If you read the Frost opinion you will note that it is only a prohibited transaction when a fiduciary is receiving the subsidies. if the record keeper is not a fiduciary the guidance says its ok to receive and not a PT. also, simply because the record keeper charges a record keeping fee in addition to receiving subsidies does make not make the subsidy a "kickback." in other words, but for the subsidy the record keeping fee would be greater. All that being said, disclosure and reasonableness of fees are still important factors.

The article on plan sponor implies that the plaintiffs are attempting to go beyond frost and aetna (the applicable DOL guidance) by seeking to have all payments under any circumstances deemed illegal payments unless they are paid back to the participants

i think the article incorrectly groups all sub t/a arrangments as if they are same making the point that the fees are coming out of participant assets and as such should be reimbursed. This is not in fact the case in many of the arrangements out there. Often the fee is something that is paid to the TPA in order to compensate them for the expenses associated with accounting and record keeping on the participant level. the fees are paid directly by the fund and not out of assets.

i know it is in the early stages but plansponsor.com pointed out that there are many in the industry that are against these fees.

i actually found a mention of the case in plansponsor.com but now id like to find out the status of it if anyone out there is aware.

do you know how i can get that article. is it online?