TPS

Appreciate the responses. To clarify, this is a takeover client that has apparently used this arrangement for years. I had the same "this sounds like one big, impermissible CODA" reaction when the client was explaining the structure - but wanted to confirm with the experts on the board. Now just need to determine the fix... Thanks again.

New client is doctor group (professional corporation). Group consists of 17 shareholder-employees and 3 non-shareholder employees. All employees receive W-2 compensation. Group's 401(k) Plan provides for deferrals and two match sources. Each employee's annual compensation is "production-based" (i.e., collections - applicable overhead - direct expenses = employee's W-2 compensation). For this purpose, "overhead" includes all amounts the employee wants to contribute to the 401(k) Plan (deferrals and match), so if an employee wants to max out in 2016, $53,000 will be subtracted/withheld from what would otherwise constitute the employee's W-2 compensation - leaving the employee responsible for his or her "employer" matching contribution. As I've not encountered a production-based compensation model in which a W-2 "employee" is responsible for all "employer" contributions to a 401(k) Plan, my questions are this: 1. Inasmuch as the Plan's matching contributions are simply subtracted from what would otherwise be paid as W-2 compensation, shouldn't all of the contributions be characterized as "elective deferrals" and otherwise subject to 402(g) limits? 2. If no issue with #1 - any issue the P.C. taking the deduction attributable to all matching contributions despite the employees actually funding the contributions? 3. To the extent all of the employees are HCEs, should I care? Thanks in advance.

Target's 401(k) Plan (allows Roth) plan is terminated in connection with corporate merger. Successor plan rules mandate target plan's Roth deferrals must be transferred to the acquirer's 401(k) Plan (does not allow Roth). 402A regs define "designated Roth account" as a separate account... to which designated Roth contributions are permitted to be made in lieu of elective contributions, which obviously applies in the general direct rollover context. That said, if the acquirer does not want to permit Roth, would this prevent a direct plan-to-plan transfer of Roth deferrals otherwise required under the successor plan rules? Hope is to simply set up separately accounted Roth bucket which will be distributable from the acquirer's plan at the same time/manner as pre-tax deferrals. Thoughts? Any guidance I'm missing? Thanks in advance.

Securities laws and required disclosures aside - client is interested in offering election to transfer/invest participant 401(k) funds under the client's ESOP. Does anyone have any knowledge or experience whether the transfer of Roth funds is permitted? Thanks in advance...

Thanks in advance for any comments/guidance... I have a small non-profit employer (7 employees) that currently sponsors an unintegrated HRA which will be terminated prior to 12/31. Primarily because all 7 employees are covered under other primary health coverage (5 under spousal coverage, 1 under a union plan and 1 under a retiree plan), the employer has not previously provided and does not intend to provide primary health coverage going forward. The employer also does not desire to simply gross up wages (wants to ensure monies are used for benefits) but, rather, wants to continue providing a vehicle to reimburse mdecial expenses on a pre-tax basis. Based on my understanding, by not providing primary health coverage, the employer payment guidance (TR 2013-03) effectively precludes the employer from doing so inasmuch as a standalone health FSA, standalone HRA or any other standalone medical reimbursement arrangement will violate either the prohibition on annual limits or preventive services requirements... Am I missing anythin the employer could use on and after 1/1/2014 to reimburse 213(d) expenses on a pre-tax basis without providing primary health coverage? Again, grateful for any comments...

Appreciate the confirmation Marcus and GMK!

Wondering if anyone has encountered this... 100% ESOP-owned plan sponsor has foreign subsidiaries and, as a result, has an obligation under the FBAR regulations (Bank Secrecy Act - UBS scandal etc...) to disclose all financial interests in foreign financial accounts. Although the ESOP, in its capacity as an employee benefit trust, is not obligated to file since it's invested solely in domestic employer securities and maintains no interest in foreign accounts, based on the regulatory langauge the ESOP trustee appears to have a obligation to file in its capacity as the plan sponsor's sole shareholder. The filing instructions and FBAR reg. state - "A United States person (e.g., a trust - no exemption for qualified plans) has a financial interest in a foreign financial account for which...the owner of record (i.e. plan sponsor) is...a corporation in which the United States person owns directly or indirectly...more than 50 percent of the total value or total voting power of shares of stock." Penalties for the failure to file are punitve (50% of foreign accounts up to $100,000). Although such filing will be redundant, the intent of the regs is to be overly broad. That said, it otherwise seems apparent the ESOP trustee has an obligation to file, right? Am I missing anything?