J2D2

I don't see Form 1024 on the "Forms and Publications" portion of the IRS website. The most recent version I've found through other sites is dates Sept. 1998. Does anyone know if the 1998 version is the most recent update? Thanks.

I am trying to determine whether a clause in a change in control severance agreement is a common one for publicly-traded companies. The agreement provides that an executive will be considered to have terminated employment and be eligible for the severance benefit if he/she is reassigned to substantial duties that are materially inconsistent with his/her duties, responsibilities and status prior to a change in control. OK so far. In the same paragraph, the agreement further provides that the "reassignment" provision will not apply if the company is no longer publicly-traded and the executive no longer has duties and responsibilities associated exclusively with a publicly-traded company, such as SEC reporting, stock exchange reporting, etc. I'm being asked whether this exception is a common provision. My sense is that such a provision is not unusual, but I don't have much hands-on experience with this type of agreement. What is your experience? Thanks!

Maybe you're way beyond this issue, but have you talked to the trust department of the bank? I can see where the platform folks at the branch might be confused about your request. Just a thought.

Have recently worked on a situation where the DOL discovered late contributions on audit. In response to the DOL letter, we have proposed restoring lost earnings using the VFCP calculator. I'll report back when we hear from DOL.

I don't see a HIPAA issue from the employer's perspective. If the employee is getting the note from the doctor and giving it to the employer, there is no HIPAA concern: the employee is providing his/her own PHI (possibly) to the employer. If the doctor is being asked to directly send the note to the employer, the doctor probably will want authorization from the employee, but, still, there is no HIPAA issue for the employer (assuming the employer is not a health care provider or health care clearinghouse).

Doesn't sound like a "group health plan" to me. I agree with you, Mal, that this is not covered by HIPAA.

Not sure what's more scary - the 170 pages of regs or the fact that so many of you have already gotten so far into them.

Employer currently provides retiree medical coverage, but would like to remove the liability from its financial statements. One option being considered is offering a lump-sum payment to retirees to "buy-out" their medical coverage. In other words, for $X retiree agrees to waive the right to continued employer-provided medical coverage. Has anyone seen such an arrangement? I can't think of any reason why the employer couldn't implement this proposal. I understand there are other options and that there are many nits that must be picked to proceed. At this point, I'm just trying to identify major roadblocks, not speed bumps. Thanks.

I think McKay Hochman may have something. Take a look at mhco.com

I think the answer to the "why" part is that Congress (or IRS, I don't remember which) decided it should be that way. Don't mean to be flip, but have also been in the business long enough that I don't try to divine the reasoning behind the actions of the Solons of the Potomac (even with actions more recent than '86).

Understood, GBurns. My question goes to how the changes will affect those aspects of employee benefits practice other than "rendering opinions on tax shelters."

Has anyone had occasion to consider the impact of the new Circular 230 provisions on their "regular" benefits practice? In other words, if you are not engaged in rendering opinions on tax shelters, how will the new rules affect you?

Please pardon a (possibly) stupid question - Why can't the participant sign the paperwork? If the participant is simply (easy for me to say) incarcerated, not incapacitated, shouldn't he/she still be requesting the distribution?

GBurns, I think it's a 2-pronged test. First, the individual must have a pre-existing condition. Second, the individual must have received treatment for that condition within 6 months prior to becoming covered. For example, I might have had cancer or some other condition for a year and not have known it. In that situation, the pre-ex exclusion would not apply if I didn't receive treatment during the 6 months preceding my entry into the plan. In the situation you posit, if the only treatment I received within the 6 month period was in Mexico, the reg seems to indicate that the pre-ex exclusion could not be applied.

Does anyone know if the IRS posts on its website the comments that it receives on proposed regs, notices, etc? BenefitsLink does a great job of posting comments from ASPPA and others, but I suspect that Dave isn't able to "capture" everything that's sent to the IRS. For the moment, I'm especially interested in seeing comments being submitted in response to Notice 2005-1. Thanks for any info or leads.

In a word - no. My recollection is that, in the case of annuity payments, federal income tax withholding is required, but that the recipient may waive withholding.

Thanks, Lee. Distinguishing exercise from distribution makes sense. Your response also addresses a second question I had - can distribution be made at the first to occur of one of the 6 specified events? Section 409A and the Notice weren't specific, but, again, it makes sense that the SAR could provide for distribution at the first to occur of one of the permitted events. Another question - Q&A 4(d)(i) of the Notice uses the term "fixed payment date." IRC 409A(a)(2)(A)(iv) refers to a "specified time (or pursuant to a fixed schedule)." Do you think this difference is intentional? In other words, could the Notice be intended to refer to any of the 6 events listed in 409A(a)(2) as "fixed payment dates?" I guess the alternative would be that the difference in terminology is not intentional and that "fixed payment date" should be read as referring to the specified date or fixed schedule of IRC 409A(a)(2)(A)(iv). Any other thoughts? Is everyone else having as much fun as I am with 409A?

Would this situation run afoul of 409A? SAR for non-publicly traded company is exercisable for cash. Notice 2005-1, Q&A 4(d)(i) states that SAR generally will be subject to 409A, but that they may be structured to comply, and notes that a SAR with a "fixed payment date" generally will comply. Could our plan provide that SAR becomes exercisable 3 years after grant and that the participant may exercise at any time up to 10 years from grant? Haven't been able to find anything that discusses exactly what "fixed payment date" means. Thanks for any insights or references.

I agree with DBTech. I've never seen any restrictions on the source of funds for the buy-back.

These arrangements used to be quite common, but I haven't seen one for a long time. If memory serves, the employee contributions were used either to provide increased benefits or simply to help pay the cost of the "basic" benefit. Such arrangement now are even more rare than basic DB plans, themselves. However, I'm not aware of any action taken by Congress or the regulators to ban them.

Service Corporation?

FWIW, I suggest that you go to Roy Ramthun to fully explore your "premise" and ask him to post it here. I, for one, don't have any idea what your "premise" might be because you refuse to define it. Last night, you said we were "discussing" the Travellers case, then a few hours later the "key item" became the Metropolitan case. Now, we're supposed to flip between 2 different boards to try to understand your "premise." In the meantime, you seemingly refuse to read the responses to your rambling posts, which, for my money appear to address the issues that you seem to be trying to raise. I don't often agree with the sentiments expressed by GBurns (as opposed to his substantive posts, which I find very helpful), but in this case he's on the money. Make your point or find a new topic.

My recollection is that federal income tax withholding is mandatory, but, for any distribution that is not an eligible rollover distribution (such as an MRD/RMD), the payee may waive withholding.

Don't know what position is being restated, all RR81-114 says is that its purpose is to restate 57-419 "in view of the enactment" of ERISA. For purposes of this discussion, does it matter? Since 57-419 was superseded by 81-114 over 2 decades ago, I don't believe it really matters if those 2 rulings are in conflict. 76-28 doesn't mention 57-419; if those rulings were in conflict I'd expect the IRS to note that fact and resolve (or at least discuss) the issue. As I tried to state (obviously unsuccessfully), I read 76-28 as requiring that the plan be in existence at plan year end and 81-114 as requiring that the trust be in existence at year end. Those are 2 related, but distinct, notions.

FWIW, I agree with Belgarath that Rev Rul 81-114 is clear. Rev Rul 81-114 supersedes RR 57-419, but does not "null" [sic] RR 76-28. In RR 81-114, "[t]he issue is whether deductions are allowable . . . for contributions made to an employees' trust that is valid in all respects under local law except for the existence of a corpus at the close of the taxpayer year." The conclusion in RR 81-114 is that "deductions are allowable [if made timely after the end of the year] even though the employees' trust did not have a corpus at the close of the preceding taxable year." RR 76-28 deals with the timeliness of contributions and the requirement that a valid plan exist at the end of the year. It does not address the valid trust under local law issue. Putting it all together: RR 76-28 says no deductible contributions unless you have a valid plan at year end. RR 81-114 says that you must also have a valid trust at year end and that you will have a valid trust, even though there is no corpus, if the trust is otherwise valid under local law.