Everett Moreland

No federal agency insures the plan benefits. Any insurance of plan benefits would be provided under state law. It is unlikely that the plan benefits are insured. A court might require the employer to pay any benefits that cannot be paid by the plan.

The internal manual used by the DOL wage and hour division allows a plan to require 500 HOS to vest. I used this in a pension plan because the plan was accumulating lots of very small vested accounts for former short-term employees. The plan was amended to vest upon accruing 500 HOS or a $500 accrued benefit, or on death, disability, or normal retirement age. The plan was also amended to provided that forfeitures are allocated to other prevailing wage participants and do not reduce the amount of the employer's required contributions to the plan.

No

Interesting problem. Persons other than the employer may contribute to a qualified trust. It might be an exercise of fiduciary discretion when the trustee decides whether to cash the checks. All things equal, it seems a fiduciary would accept money from any source. So the trustee might need some rationale for not cashing the checks. This is not to suggest there isn't a good rationale, just to suggest it probably is a trustee decision to be made in the interest of plan participants and beneficiaries. One rationale might be that the documents don't allow the trustee to accept contributions from others than the employer. Another might be that the trustee foresees future trouble from cashing the checks, such as a claim by the participant after a change of heart or by the participant's estate.

Yes, the employer can establish a profit sharing plan and trust for the employer discretionary contributions.

No

You were not required to restate, just to adopt a GUST amendment. The IRS wants the plan to be submitted as a restatement, but the submitted restatement can be constructed from the plan and amendments; the restatement need not have been adopted.

Government plans will be subject to the 1.411(B)-2 regs to the extent they are based on 411 provisions that are the same as the provisions in the ADEA, primarily at 29 U.S.C. § 623(i) and (l). Most (perhaps all) of the 411 age descrimination rules are also in the ADEA. I recently dealt with this with a government plan that wants to add a cash balance formula to a traditional formula and provide participants the greater of the two formulas. My conclusion was that the cash balance formula needs to be an "eligible cash balance formula."

It might not be. My concern is that the employer might have failed to follow the terms of the plan, which according to the IRS is a disqualifying event. If the employer has failed to follow the terms of the plan, that failure should be corrected under RP 2002-47, by self-correction, if self-correction is allowed (which it probably is here), or by submission to the IRS. My point in my first post was to answer your question about whether it is possible to retroactively correct. Correction is possible, and probably also required to maintain plan qualification.

You might conclude after reviewing the plan document and Revenue Procedure 2002-47 that correction is needed to maintain the plan's qualified status..

If the employee returns from FMLA leave, the time counts to prevent a break in service for purposes of eligibility and vesting.

29 C.F.R. Section 5.5(a)(1)(i) and (a)(3)(ii)(B)(2) require prevailing wages to be paid "without subsequent deduction or rebate on any account" (5.5(a)(1)(i)), "without rebate, either directly or indiirectly" ((a)(3)(ii)(B)(2)). Some years ago I considered these regulations in the context of a profit-sharing plan that offset the profit sharing allocation for prevailing and non-prevailing wage work by the full amount of the (higher as a percentage of compensation) money purchase allocation for prevailing wage work. I concluded that these regulations do not allow the full offset. (I think this conclusion is common sense.) I then called the local wage and hour division and a representative there confirmed my conclusion.

http://www.nystrs.org/

IRS Notice 98-8, sec. VI.,

Is this a govermental plan? The IRS position is that a delay in adding contributions to the trust violates the trust requirement for governmental 457 plans. The IRS has stated that complying with the DOL rule satisfies the trust requirement.

MGB: Thank you.

Keith: Thank you. I've not found the Shultz memo. I would appreciated it if you or someone would post the memo.

Keith: Please expand on "they are looking at some creative ways to fight you."

IRC § 106 helps here

You are right; the vendor is wrong.

Read Revenue Ruling 2002-22

Unless state law provides otherwise, whether a local government is a plan fiduciary or responsible to administer the plan depends on what the plan says. Most local government plans with which I am familiar designate the local government as the plan administrator. The plan could allocate all fiduciary and admnistrative responsibilities to someone other than the local government, in which case the local government would not be a fiduciary and would not be responsible to administer the plan.

These plans are not intended to qualify under section 125. That's why the contributions are after-tax if the employee gets an election.

I've seen these and have my doubts. I would like to see more responses to your question. Here are my thoughts without the benefit of research: 1. This works for union employees if the contributions are required under a collective bargaining agreement and the employees cannot elect whether or how much to contribute. 2. This probably does not work for nonunion employees unless the contributions are funded by the employer. If the contributions are funded by the employees, the contributions probably are made under individual elections, even if not cast as such, and so are after-tax, because of state laws that prohibit wage withholding without the employee's or the union's consent. The way I've seen insurers try to get around the individual election problem for nonunion employees is to divide employees into groups and have the group specify by majority vote a contribution requirement that applies to all group members. The problem I see with this is that the group, consisting of nonunion employees, is not a collective bargaining unit and so its vote does not cause the wage withholding to be made under a collective bargaining agreement. So the employer risks penalties under state wage laws for illegal wage withholding.

The Quality Assurance Bulletin davef refers to is on the IRS website. It's the last 3 pages of the FY 2001 Employee Plans CPE on the remedial amendment period.