jpod

Is someone asking this question because they are under examination by the IRS or someone else with the ability to cause pain? If so I would suggest that the food is fully taxable unless it is provided for legitimate business meetings or can be excluded as a de minimus fringe benefit under IRC Section 132. Is someone asking just because he/she is curious? If so, I would suggest that he/she not be so curious and worry about other matters instead.

Tax-exempt employer has a defined benefit-type SERP for an employee. Naturally, it is subject to Section 457(f). As of the date of termination of employment, the present value of all of the accruals under the SERP have been included in income under 457(f). What remains is a stream of payments for life which would be taxed in accordance with the Section 72 rules. If employer buys an annuity contract that will provide those payments and distributes the annuity contract to the employee, will that be an impermissible acceleration under Section 409A? Assume the cost of the annuity contract is greater than the amounts previously taxed. Alternatively, assume that the employee agrees to take an annuity contract that is purchased for the exact amount already taxed. To the extent that the period annuity payments under the contract are less than the amount earned under the SERP, the employer would pay the employee the difference each month out of its general assets.

Complexities of IRC Section 409(p).

RJohnson, I am currently looking at the same situation you had in March 2011. Have you learned/heard anything more on this? Like, for instance, the possibility that the IRS in the 457(f) regs may carve out a medical benefit-type reimbursement arrangement like you described,just because of the difficulty of assigning a "current value" to the future reimbursements? How the heck would you do that anyway? Wouldn't you have to factor in life expectancy plus some kind of estimate of the growth in health care/premiums costs?

Probably not. While there is an exemption from the GP rules for tax-exempt organizations, I believe the exemption applies only if the entity is a tax-exemption organization both before AND AFTER the CIC.

I am not saying it's a no brainer, just that it's a possibility.

I think if the trustees believe it is consistent with their fiduciary responsibility to the plan they can agree to waive the current w/l if the other parties agree to a structure identical to what 4204 would allow/require if 4204 had applied.

Maybe this is analogous. I had a situation where our client was being hired to run a City-owned facility, replacing the current contractor. Our client would hire the union employees and become a party to the CBA requiring multiemployer pension plan contributions. I felt that there was no authority for triggering 4204. That is not to say that the three parties in your situation (the current lessee, the new lessee and the Plan) couldn't agree to an arrangement that mimics 4204, but I doubt the statutory provision would apply.

Why t-h issues if nothing is going in for the keys (elective or non-elective)? That was my understanding of the facts. Still, I agree termination is best.

If they are willing to incur the expense and burden of maintaining a frozen plan (e.g., Form 5500 filings, amendments to reflect changes in law, etc.), I don't understand the reluctance to let the employees contribute. On the other hand, if I am to take it as a given that they don't want the employees to be able to contribute, then I don't understand the reluctance to terminate the plan and get rid of the expense and burden for the next five years or so.

Don't agree. The assets of the fund would be plan assets for purposes of the IRC, i.e., Section 4975, but not for purposes of ERISA Title I. Please show us something in the Reg., or the preamble to the Reg. or the proposed version of the Reg., that says otherwise.

David Rigby: I don't think you're such a skeptic; I think their motivation here is obvious. For some reason, which could be tax but it could be something else, they don't wish to have that money land in their business account.

please explain why they think this is a good idea; i'm dying to know

No. But, as soon as an ERISA Title I plan invests $1.00 in the Fund it will become subject to Title I.

I agree.

I think the vast majority of people who participate on these boards (maybe 99.999999999%), lawyers and non-lawyers, are directly or indirectly involved in advising plan sponsors on matters where 414 rules are quite relevant.

Relearn? If 414-related questions aren't already at or near the top of any practioner's list when he/she first talks to a new or prospective client, he/she shouldn't be in this line of work.

MoJo: In my opinion, the only way it could possibly not be a pt (and note I say "possibly"), is to eliminate all fees payable to the fiduciary making the decision to put the fund on the menu, or payable to an affiliate of that fiduciary, or payable to someone in which the fiduciary "has an interest" that may affect its judgment on the matter. Even then there still could be a pt lurking (e.g., seed money for the fund, or being able to tout the fact that "we make the fund available to our own employees through our DC Plan!).

QDRO: I may not be following your train of thought completely, but I don't think it's absurd at all. A 414(e) church plan would still have to comply with the other Code sections listed in 403(b)(12)(A)(i) (e.g., 401(m)), whereas a 3121(w) church need not comply with any of those Code sections.

ERISA or not wouldn't it violate ADEA?

QDRO: Here's what I meant. If the 403(b) plan is a non-electing church plan 410(b) doesn't apply. The authority is that Section 403(b)(12) says that 410(b) applies "in the same manner as if such plan were described in Section 401(a)," and 410(b) doesn't apply to a non-electing 401(a) church plan by virtue of the very last sentence of 401(a). J4FKBC is correct that pre-ERISA coverage rules would apply.

It absolutely would NOT be subject to 410(b).

I agree with everything you've said.

I think there is a distinction between "working copy" and a "proposed" restatement. A proposed restatement is what I think you are talking about, and you can still do that next year under the new Rev. Proc. A working copy is just a "fake" document that purports to include all amendments to date, but is not intended to be an actual legal document, either final or proposed. You can't submit a working document under the new Rev. Proc. At least this is how I understand the situation.

rcline46: I defer to people in the recordkeeping/TPA business, but is no ADP testing really that big a deal when you already must do ACP testing for the 401(a) match plan?