Belgarath

Thanks. Cynical types report that there are some TPA's out there (none of them BL members, naturally!) that use every stratagem possible to keep participant and loan counts high so that they can collect more fees...

Just curious - how many of your plans permit loan repayments to continue following termination of employment? Almost none of ours do, on the theory that the employer doesn't want to mess with loan issues for ex-employees. However, I've seen some TPA's that have almost all of their plans allow repayments to continue after termination of employment. So, this is an unimportant question, just to satisfy my curiosity. I think our approach is more mainstream, but maybe not...

Only thing missing was the big, shaggy dog sitting in the corner of the owner's office. Great story, thanks for brightening my day!!

Perhaps you are thinking about the requirement for safe harbor matching plans? This requires that if the SH match is calculated on a payroll method, the matching contributions for a given quarter must be deposited by the end of the following quarter.

I claim no expertise in the area of Church Plans. However, I confess to being puzzled as to why they would even want to do this. Is it their intention that by doing this, they hope to make distributions from the 403(b) non-taxable? If so, then IMHO, it isn't valid. I won't go so far as to say you CAN'T have such a provision, but I doubt the IRS would approve it in a pre-approved document, and I'm dubious that it is permissible in an individually designed document. But even if you do put it in, and even if he IRS says it is ok, I still fail to see what it would accomplish? Maybe someone else can offer a more informed opinion.

I also have never seen a POA clause in the document. We've had a few POA situations, and it always goes to the Plan Administrator's attorney to make the determination as to whether it is a valid POA or not.

Sometimes people get this confused with crediting prior service for VESTING purposes. Perfectly ok to exclude service prior to establishment of the plan for VESTING. Not for eligibility, as WCC mentions. You might want to check your document 'cause I suspect that the exclusion for prior service may be for vesting.

Without doing any research, I'd vote for no BRF testing, unless perhaps there are special allocation conditions on the discretionary match.

Just guessing - it falls outside the pigeonholes, and it would require someone who actually knows something to do some extra work. I know in a prior life at a large corporation, reversing certain transactions could take two or three days, as each "step" had to go through overnight batch processing, then be checked the next day to make sure the system had properly updated, then do step two, wait overnight, etc... The service folks hated those.

So is there any reason, other than for withholding/pooled account issues, to need a TIN at this point? I've been trying to think of one, and I can't. My early training (one heckuva long time ago) was that you ALWAYS needed a TIN, but that was because 1099's and withholding were done in-house, and a lot of pooled account stuff. These days, it seems generally unnecessary. Especially now that to do it on-line, you have to have a "signature" and we wouldn't sign as the employer! (I haven't done this new on line form, but apparently you have to hold the mouse button down and actually "sign" the form.)

Depending upon the precise census/management/HC status and numbers, may also be possible to layer on a 457(b) for some or all of those folks who might otherwise blow the ADP test. I agree with the prior comments that in general terms, providers and investment options for 401(k) plans are far more diverse. Also, in general, financial advisors and CPA's tend to understand the 401(k) world better.

This is precisely the thought process I had when I opined that the FIS language seems to permit the change without an amendment. When I queried FIS, of course they opined differently. I suspect (and I can't blame them, really) that unless the IRS makes some additional public statements/guidance, FIS will pursue the extremely safe and conservative interpretation. You certainly can't get in trouble using that approach. They have a gazillion plans using their documents, so I can understand them wanting to cover their tails. And, one could also reasonably adopt their interpretation, even if it isn't a CYA situation. Funny - I can't remember another issue generating this much discussion in such a short time.

Just saw the attached, in an internet post by and Edward Morrow. Also saw a similar post by someone else. Not being au fait with community property IRA beneficiary rules, I found this rather surprising from a "common sense" point of view. Haven't seen an actual copy of the PLR. Fixing Plans with Community Property IRAs The IRS takes the position that a court order granting a surviving spouse 50% of an IRA that was her community property pursuant to state law is ineligible for a rollover! This is a wake up call to watch out for any cases where spouses are not named on the beneficiary designation form for community property IRAs. Community Property IRA Disaster In PLR 2016-23001, Decedent left 100% of his community property IRA to his son, not his wife. In settling estate, court ordered a portion (the ruling did not say, but probably 50%) of IRA to wife. She asked the IRS to rule that it was not a taxable event. DENIED. IRS held it would be taxable to son because Section 408(g) provides that § 408 “shall be applied without regard to any community property laws.” She could not be a payee and could not rollover the IRA. Three lessons: 1) Had son simply filed a qualified disclaimer, it would have likely passed to wife via intestacy (if not via contingent beneficiary designation) and spouse would have been entitled to rollover; 2) Check the beneficiary designation form and plan ahead for how spouse will receive community property - naming spouse as 50% beneficiary or more would have avoided the need for either a qualified disclaimer or an expensive private letter ruling; 3) Prevention is cheaper than PLRs!

Nope - filings (which were all approved) proposed leaving excess amounts in the plan, in the participants' accounts. Relatively small amounts, and mostly NHC employees. The IRS is pretty reasonable about this - but VCP fee is increased if excess amounts retained in plan. Employer generally prefers to do this, however, as opposed to trying to take away amounts and earnings going back several years! Plus, our fee to figure all that out would likely have been as much as the additional IRS fee... I wasn't sure if you meant "eligible" or "ineligible" on the severance? Either way, without doing any research, I'd say true severance pay was ineligible.

Doubtful. We've had some VCP filings to correct other issues where this was corrected simultaneously. I agree that SIMPLE's are not! So many ways for errors to occur, and they almost never have any professional oversight (of course, they aren't supposed to need it, but they do). How about Convoluted Operations Moronic Prototype Employer eXacerbation plans?

I'm very willing to admit that I'm missing something! And I'm hoping that if so, someone can point it out. Also, FWIW, Derrin discusses the "predecessor employer" concept, in this context, in more detail in questions 10:10 and 19:28 of his book. I'm going to let this percolate in my so-called mind this weekend, in hopes of some flash of wisdom, but that's probably an exercise in futility. Have a great weekend!

I'll defer on that question to my personal favorite guru in this arena, Derrin Watson. Infinite are the arguments of the mages, but Derrin is very clear that two corporations cannot be a controlled group if they do not exist at the same time. Question 8.18 in his book, Who's the Employer, if you have access to it. And coincidentally, he notes that this question most often arises in connection with 415 questions! (now, if the original business was a sole prop, then we'd have a different result, apparently) I'm sure that not every attorney would necessarily agree with Derrin on this, so there may well be opinions by other ERISA attorneys out there... Thanks again.

In my original example, 1.415(f)-1(b) would most certainly not apply. Neither an ASG, nor a break-up of an ASG, nor an affiliated employer, nor an affiliated plan. The "predecessor plan" rule in (c)(2) is the "facts and circumstances" portion that is a cause for concern that has been under discussion. And while in my unusual example I feel reasonably confident that there wouldn't be a "predecessor employer" absent new citations coming to light - in the real life situation at hand, I wouldn't dare venture an opinion. That will be left up to ERISA counsel, if the potential client even engages counsel. I most certainly would not go out on the limb on this one! Thanks, as always, for the input.

"When you apply IRC 415(b) limits, treat all DB plans (whether or not terminated) ever maintained by an employer (or a predecessor employer) as one DB plan (IRC 415(f) and Treas. Reg. 1.415(f)-1(a)(1))." Again, my example: For example, I form Corp A that manufactures Pixie Dust, and terminate that plan (and dissolve that corporation) in 1995. In 2015, I form a new corporation that sells pieces of the Golden Gate Bridge Andy - this is precisely my point in my example. Let me make it clear - I ABSOLUTELY agree, and understand, that plans, even if terminated, of the "employer or a predecessor employer" must be aggregated. In my example, it clearly isn't the same employer. (My example assumes corporate status, NOT self/employed.)The question then turns on whether this (the Golden Gate Bridge sales Corp) is a predecessor employer. If it is your position that any business ever owned by the same person, regardless of type, time gap, etc., is a predecessor employer, then that's fine. But nothing in the Manual sections you quoted above supports that. (Well, I suppose that if your interpretation of the controlled group rules is that you have a controlled group even if the corporations don't even come CLOSE to existing in the same time, then the manual sections quoted would support a finding of predecessor employer status due to CG status.) But, I don't see that as a valid interpretation. Derrin Watson's book doesn't, either. I'm getting a feeling that there isn't any guidance, other than what has already been discussed, on this issue that is at all definitive, so we are left with varying interpretations, and facts and circumstances. In the absence of additional guidance, I'm now comfortable with my general assumption that in the unusual example I posited, there probably is no predecessor employer status. I would, of course, leave this to the employer and ERISA counsel for a final determination. (FWIW - some additional information on the "real life" situation that prompted this discussion has just come to light, and I think it is far more likely that it would, in fact, be a predecessor employer situation!! Turns out it is the same type of business, with a time gap of only 3 years or so) Again, I sincerely thank you all for your input, and taking the time to discuss this - and I'd still love to see references to any other guidance that I've missed, or hasn't been mentioned yet, that might clarify all this!

My example from above - For example, I form Corp A that manufactures Pixie Dust, and terminate that plan(and dissolve that corporation) in 1995. In 2015, I form a new corporation that sells pieces of the Golden Gate Bridge. I agree that if it is the same business/trade, or "all or a portion" of the business/trade, whatever, then it must be looked at carefully under the predecessor plan rules of 1.415(f)-1(c)(2), which is "facts and circumstances." Now, my example is hypothetical. In real life, I expect it is much more likely to be the same general business, although that isn't a given. And we would, of course, recommend ERISA counsel to assist the client with making the ultimate determination. I don't know at what point the "facts and circumstances" might support a finding that no aggregation is required. 4 years? 10 years? never? As I said, I haven't found anything concrete, and there may well not be any such concrete guidance, but I'm hoping there is some (one way or the other) that I've missed. Thanks again for your response, and any future input - I do appreciate it!

Thanks MPHS. I'd ask, how WOULD it be a continuation of all or part of the trade or business of the former entity? Other than same owner, they are totally unrelated in every possible aspect, and many, many years between the liquidation/dissolution of one corporation and the establishment of another. And no, I don't agree that 1.415(f)-1(a)(1) requires consideration of the prior terminated plan in this situation. This regulation section refers to a terminated plan of the "employer." In this case, it is NOT the same employer - it is a separate corporation, hence a different "employer." So that's when I moved on to the possible "predecessor employer" issue, and I'm not reading that as applying in this situation either. Thanks again, and I look forward to any input you may have.

MoJo - my initial impression is the same as yours, but I got the same initial response from FIS that you did. Perhaps they are just being very cautious, at least for now - I don't know. But I'm sure they will be doing some sort of release explaining their position. We are using the VS document in AA format.

MPHS - thank you, but I still fail to see how, in my example, this would constitute a controlled group. The general rule is that the corporations must exist simultaneously for at least some period of time. Alternatively, the "predecessor employer" rule contemplates a couple of different situations - one where the new employer maintains a plan under which the participant had accrued a benefit, or there is a transfer of benefits from the former employers plan, or, if under the facts and circumstances, the new employer constitutes a continuation of "all or a portion of the trade or business of a former entity." In my example, I fail to see how either of these would apply. Now, it might be a different answer if the prior entity was a sole proprietorship. If you have some citation or authority for considering the situation in my example a controlled group, I'd greatly appreciate it if you could refer me to that citation/authority. Basically, I'm very concerned that there is something I might be missing, that would require aggregating the benefit under the very old, terminated DB plan, and any new plan that might be established. As I said, it doesn't "feel" right, yet I've been unable to find a solid reason that requires such aggregation for 415 purposes. And it may be that it is something simple that is right under my nose. Thanks. And Mike, enjoy the conference. Hopefully there will be a resolution of this question before you get back!

Thanks Mike. You wouldn't, by any chance, happen to have a citation? I can see where 415(b) limits the benefits for all plans of an "employer" - but what about when they are corporations? For example, I form Corp A that manufactures Pixie Dust, and terminate that plan(and dissolve that corporation) in 1995. In 2015, I form a new corporation that sells pieces of the Golden Gate Bridge. I'm just trying to determine the authority for "aggregating" these two plans for 415 purposes? It doesn't seem like 1.415(f)-1(c)(2) really "fits" this situation, so I'm trying to confirm the correct interpretation here.

Thanks - is this changed by the QSEHRA for small (under 50) employers? Seems like the new QSEHRA provides for reimbursement for medical expenses under IRC 213(d), (which includes the Medicare premiums, at least for Part B? what about part D?) You can't have the QSEHRA if the employer offers group health coverage anyway. If you are over 50 employees, then you have to follow the restrictions in IRS Notice 2015-17? I look at this stuff only on a very sporadic basis, and I'm now officially a bit confused.