AmyR

It is very strange to me the complete lack of information on the time-period issue for which someone is a DP. I would not think it is an unusual question?

An independent fiduciary is an idea I had not thought about. Thanks for that perspective. Plan owned/owns a parcel of land as a directed investment - 50/50 allocation between spouse and wife who were both employees and plan trustees. Ex-wife over a period of years took distributions of her 50% undivided interest and ate the taxes on the distribution so it is now out of the plan. So, arguably, the other 50% interest still in the plan has a higher value to her than to someone else.

Yesrod5 - sorry I missed your reply to this topic. I agree with your thoughts - in a literal world, absence of a look-back provision means there is none. Was hoping I didn't miss something in a ruling or memorandum though - made me nervous.

I have a somewhat related question. Has anyone worked with a plan that split in order to avoid an audit? The plan year end is 6/30. We are creating a 2nd plan that mirrors all provisions in the first plan, but each plan will be mutually exclusive for eligibility - old plan - all employees hired prior to 7/1/XX and new plan, all participants hired after that date. We will spin-off the assets to the new plan for the employees who will move to that plan. We are wondering whether we need to have an effective of 6/30/14 and have a very short plan year for the new plan, or whether that can be done on 7/1 and still be able to exclude the employees moving to plan 2 for purposes of determining if plan 1 is a large plan for the plan year starting 7/1/14.

Sorry jkharvey - I have yet to come across anything that would give me a clear answer on this question!

For purposes of 4975(e)(6) - has anyone seen a situation in which there was a look-back time period during which a former fiduciary of a profit sharing plan (who is now the ex-wife of the remaining fiduciary/sole participant) would still be considered a disqualified person? I would like to propose a sale of land from the Plan to the ex-wife, but don't want to get tripped up on any PT issues!

I have a question somewhat related to this post. Anyone have an opinion on whether an employer is required to include the taxable personal use of a business vehicle in section 3401(a) compensation (the definition of compensation used to calculate contributions under the plan)? Or if they have made the election not to withhold on this income, would they have the option to say that because it is not subject to withholding, it therefore is not included in comp under this defn? Thanks in advance for any comments.

Due to this new Opinion letter, we are receiving Schedule A's that contain both the commission paid to the broker, but also a "bonus" that is paid to the broker out of the insurance company's separate "marketing" fund (it is not charged back to the employer purchasing the policy). Has anyone looked at this issue as to how to report it on schedule A - i.e. lump it in with the commission or report it separately as a fee?

Thanks for the comment. Unfortunately, I am currently reviewing the hardship policy for my client that will state the rules (the document company treats the hardship policy as an addendum to the document and the volume submitter document does not discuss the hardship rules). So, I am trying to help set the rules for the administrator. The hardship policy drafted is a standard one for 401k plans, revised to state that it only applies to employer accounts (ps and match). As I reviewed the policy and researched the issue, I wasn't sure that the standard suspension language was required once this change was made. However, I can't find any commentaries that have come right out and said this. My client doesn't want to be required to suspend deferrals, as it is just one more thing to miss, but gives the participants the option to suspend. However, if it is a gray area, I guess it is better to make sure it is required.

I read these posts with interest, as I am currently working with a plan that has traditionally allowed hardship distributions from Employer profit sharing and match accounts only. Their recordkeepers could not tell them how much of the 401k accounts were due to contributions vs. earnings and this just seemed easier. The hardship policy that goes with the document basically states the 401k safe harbor rules for determining if there is a "hardship." My question is, in this type of situation, must the Employer require the participant taking the hardship distribution to cease 401k deferrals for 6 months? I would have guessed no, because it has nothing to do with the 401k rules, but I would appreciate hearing from others what they're doing in practice. Thanks in advance!

Thanks so much for your reply. I had seen that EBIA weekly Q&A and thought it was timely (for me at least), but didn't think it clarified who to count as a participant to determine if you are a small or large plan - did I miss something in the article? Welfare plans seem to often include as a participant anyone eligible, even if they don't elect to receive the benefit. Therefore, I was a little concerned the company's participant count could exceed 100 and cause a return to be required. The EBIA cafeteria plan manual says participants "includes covered employees plus COBRA qualified beneficiaries, but not children covered by a QMCSO." However, it does not clarify who is a covered employee. I guess the conservative direction would be to file and list all who are eligible to defer, but was hoping I was missing some guidance on this that would allow us to do away with that 5500.

For purposes of determining if a 5500 is required for a cafeteria plan that includes a health FSA, has anyone seen information on how are participants are counted to determine its status as a small or large plan? Is it anyone eligible to be in the cafeteria plan/health FSA? Or, is it more like the former Schedule F instructions which I believe referenced a participant as one who had deferred at least $1? The employer I am working with has over 100 employees eligible to participate in the health FSA, but only about 45 have been deferring. Thank you for any advice you might have!

Thank you for the comments. I did a little further review on Corbel's website and located their commentary on this checklist question. For the option that says terminated employees with a HCFSA shall continue contributions and reimbursements for the remainder of the Plan Year, the commentary says "this alternative REQUIRES terminated participants to continue in the plan through the end of the Plan Year." However, they follow this up later with a comment that this option "is the best alternative for limiting the Employer's risk of loss. However, the application of COBRA to health FSAs could override options a and b." (a is everyone continue thru end of year an b is everyone cease at term. date). I guess my question is, if COBRA overrides (and is only required thru the end of the year) and an employee turns down COBRA coverage, are they saying the employer can still require continued participation by term. employees for the period from their date of termination to the end of the plan year? Or, is the employee out at that point? If an employee turns down COBRA coverage and can elect out, what is the benefit in electing this option? As papogi mentioned, at that point, it's like offering everyone COBRA, the only persons who would stay in would be those that have not yet spent their accounts. A few examples from Corbel on this interaction would be helpful!

I am late in seeing these messages, and I don't mean to beat a dead horse, but I too have often wondered about this question for cafeteria plans, as the Sungard Corbel checklist for cafeteria plans offers as an option for terminated employees in a Health Care Reimbursement Plan the ability to "continue contributions and reimbursements for the remainder of the Plan Year". I have asked them how this interacts with COBRA, and I believe they say that COBRA takes precedence. What good does it do then to have this option? If the employee doesn't elect COBRA, can you still require them to be in the rest of the year? This has never really been made clear to me. I have some older plans in which we had made this election and I often wonder if they need to be amended. However, I can't imagine anyone as large as Corbel including this in a checklist if it wasn't a valid option. Any ideas as to why this is included in their checklists?

Has anyone seen a discussion on the PLR 200038051 issued earlier this year which discussed a 401(k) plan's violation of ERISA for failing to pay accrued interest to terminated participants for the period from the plan's most recent valuation date to the date of each participant's distribution? It has been my understanding that 401(k) plan distributions can be based on the last valuation date, as long as the length of time between the valuation date and the distribution isn't excessive. Our documents say that it is up to the plan administrator to determine if a new valuation is needed. Any idea if there is now a requirement to pay a certain interest rate?