New2EB

I am currently advising a client with respect to some potential prohibited transactions inside a self-funded group health plan. Part of that conversation has turned to a discussion about hiring an independent fiduciary. What are some names of companies that offer independent fiduciary services to self-funded health plans?

Thank you, everyone, for all of the wonderful feedback. I find jpod's point quite persuasive because the operative plan document came from a very intentional individually-designed plan and my goal is not to argue with the client's plan design wisdom. In fact, the TH vesting schedule is intentionally meant to address the client's separate concern related to a high turnover rate. This client wants to retain the 3-yr cliff TH vesting, if at all possible. The term "minimum" as it pertains to TH vesting is only defined as either the 3-yr cliff or 6-yr graded, so our concept of "minimum" under the Code and Regs is somewhat distorted given the current vesting environment. I also partially agree with ETA because I am still waiting to hear from the TPA about adminstrative feasability. Even though Reg. 1.416-1 Q&A V-3 appears to require that the participant's entire account must be subject to the TH vesting (3 yr cliff) schedule, the results are too unreasonable to justify....and it has me worried about 411(d)(6) implications. The Code, Regs, and Preamble for top heavy appear to be in desparate need of updating!

I did find some good language in the preamble to support the 100% vesting perspective, too - "In general, if a plan is top heavy, such plan must...provide faster vesting than that required by section 411..."

Thanks for the response, Bill. If I'm reading that correctly, you might suggest that all top heavy minimum contributions could be subject to the 100% vesting that applies to other types of contributions. I'll definitely propose that idea to my client, which would also mean a plan amendment to eliminate the Plan Document language for top heavy vesting. But, it begs a couple follow-up nuances, such as.... - I read IRC 416(b) to be the only allowable vesting options for TH, which doesn't include a 100% vesting option, but I haven't looked for IRS cases or rulings about100% vesting for TH yet either - Even though the Regs say "minimum" vesting, the IRC doesn't specifically indicate that 416(b) TH vesting is a minimally-required vesting schedule I also get a sense from my client that they like the 3-year cliff vesting option and may want to retain it, if possible

I'm having a tough time reconciling the top heavy vesting schedule requirements to a 401(k) profit sharing plan (contributions include elective deferral, Roth, safe harbor, and employer discretionary non-elective) in a situation where all plan contributions are 100% vested. The plan document calls for a 3-year cliff vesting if it becomes top heavy. Reg. 1.416-1 Q&A V-3 provides that "all accrued benefits within the meaning of section 411(a)(7) [the entire balance of an employee's account] must be subject to the minimum vesting schedule. In that scenario, it seems to indicate that my otherwise 100% vested plan account balances would become subject to the 3-year cliff vesting schedule after becoming top heavy (until the plan ceases to be top heavy). Clearly the top heavy vesting regulations from 1984 are far outdated, particularly now that vesting schedules have been basically aligned and many plans offer better vesting than the top heavy requirement (see language calling top heavy a "minimum" vesting). So, what is the best answer or what are others doing about this? Is there some other IRS guidance that helps clarify best practices? Any chance of the IRS issueing updated TH regs? My most reasonable solution is to make the 3-year cliff vesting only apply to the top heavy minimum contribution (not the entire participant's account)....but it appears that I risk violating an old Reg if I do that. Thanks in advance for any tips!!

Hi - this is my first posting. I am new to the benefits world and am trying to teach myself the nuances of an HRA, MERP, and Health FSA for comparison purposes. From what I've been reading, a MERP is a very generic term for any plan that provides medical reimbursements and the HRA is a specific type of MERP that was coined by IRS Notices 2002-41 and -45. I'm interested in learning about one particular (alleged??) distinguishing factor between a general MERP and an HRA: that a MERP can accept employee contributions but an HRA can only accept employer contributions. That's why this posting caught my attention. It looks like a MERP can accept employee contributions - see Reg. 1.105-11 (governing self-insured medical reimbursement plans) at subpart -11(i) where it says "a medical plan subject to this section may provide for employer and employee contributions." It goes on to tell us that the tax-favored treatment is governed by 104 and 105. It looks like an employee contribution into a MERP is a completely separate concept from the tax favored treatment in 125. It is equally clear that the HRA rules described in the IRS Notices do not allow employee contributions. Can anyone offer any more comments/insight about a MERP accepting employee contributions? ERISA trust requirement triggered?