Alf

Definitely tough situations I am sure, but I'll bet that the IRS is strict on allowing A/C expenses and home swimming pool medical deductions and cafeteria plan administrators have to be just as diligent. Remote car starters is just another example of how broad the range of possibilities is.

Multiple Sclerosis and they can't come up with more traditional expenses? I would deny (dual-purpose, etc.), depending on what the plan permits. Also, I wouldn't rely too much on the A/C or home swimming pool examples. Very rare that you will find something like those that is defensible.

Yes. Just say no.

No canned amendment. The existing provisions of the plan will "just" have to be revised to extend the coverage period the desired amount. Also, decisions about how the run out is impacted and how terminated particiants run outs will be handled, etc. will have to be addressed.

It is clear that 457(f) plans are subject to 409A, so 457(f) plans are going to have to adopt a 409A concept of risk of forfeiture or be subject to 409A. If subject to 409A, rolling risks are not going to work.

I think they are subject to the ADP test like 401(k) conts. They can't have a complete pass on testing like catch-ups.

Let me guess . . . an S Corp? How much stock is being purchased? The facts and circumstances of the "indirect" prohibited transaction rules are going to be murder here where he is an outside shareholder, trustee, participant, and executive/employee.

Aren't forfeitures just a sign of poor employee communications? I contend that proactive companies can do a lot to keep forfeitures to a minimum in the first place (during the original 12 months) and that should be the goal. This 2 1/2 extension is just a band-aid and companies would be better served to focus on disclosure and communication upfront at enrollment and on an ongoing basis during the year. Will your VP of HR buy that?

Not just for 2006 and yes, you can use less than 2.5.

???

With a 15% PS, not many people will go for the deferral and that the extra administration of the deferral feature would not be worth the time and effort, but that is just my opinion!

You are not really citing anything official. Legally qualifed plans have to be maintained for employees and former employees cannot contribute, so the answer to your question I guess is no they cant. That answer does not depend on whether or not it is a governmental plan. Is that really an issue? Why didn't they make the rollover when they were employed? Why do they want to rollover a contribtion into an employer sponsored plan instead of trying to get it out asap??

We generally think of welfare plans as being contract rights that can be transferred from one sponsor to another in an asset sale, although they are just terminated in most cases. What about health FSAs? Transferring one in an asset sale seems so much like a rollover of the unused amounts that I am cautious. Simple example would be an asset sale where all employees go over to purchaser and purchaser wants to assume all plans. Can the health FSA go over?

Section 125 will tax everyone on the cash whether they take it or the coverage, but that probably won't be a problem because I assume it is structured so that no one keeps the coverage. I don't see any other obvious problems. It sounds pretty generous.

Yes. What are "inactive members" (insert Viagra joke here I guess)? It would be legal for a former employee with an account balance to roll additional money into a plan if that is what you are getting at, but it is unlikely that a plan would actually be drafted to permit it.

Prospectively, yes. Not a 409A problem. At a minimum, it has to be beyond the control of the participant. Ultimately, it is a contract that can be terminated, but the particpant can't control her distribution timing under 409A.

I can't get too excited about this. They (Coingress if the IRS can't) should just reapeal the use it or lose it rule. Won't this just delay the closing out of annual administration now? If our run out period for substantiating claims was 2 1/2 months, we are just going to have to expand it to a 5 month run out now, right??

Remember that it is not your money until your employer and the government say it is. These are retirement funds ultimately.

It is the ultimate trade-off to avoid tax. There is no legitimate way around it, but a Rabbi trust will get you some security for things other than bankruptcy.

If you can confirm that the employer never made a QNEC or QMAC, you are 2/3rds of the way there. Then, try and track down the actual 401(k) conts made based on W-2 records as Archimage stated in order to avoid the earnings issue.

Health FSA coverage is subject to COBRA. IF an employee was covered by a health FSA at the time of a qualifying event, she is eligible for COBRA wrt that amount, subject to exceptions, of course.

No CG btw X & Y.

BeckyMiller - If we go ahead with it, the securities will not have been acquired before '78. We assume it is still a 4975 ESOP, just not a 409 ESOP eligible for leveraging and UBIT exemption. I read RLL's statement to be referring to 409 and not 4975. Is this consistent?

Yes. We know that leveraging is out b/c the stock does not meet 409(l). The UBIT problem was apparently not that obvious though, so I wanted to see if we were missing some way around it. It sounds to me like there is no way economically (b/c of UBIT) that a non-leveraged S corp ESOP shoud be designed to be primarily invested in non-voting stock, correct?