Belgarath

Thanks!

Austin - I'm far from a 125 expert myself, as many of my previous posts would confirm! However, although it may be a matter of semantics, most people would consider a Section 125 "arrangement" as a "plan." It may be instructive to note that the IRS proposed Section 125 regulations themselves clearly label it all as cafeteria PLANS. (My emphasis.) I agree that it isn't a typical "plan" in what we would consider the normal sense in the qualified plan world as it does not, in and of itself, provide any benefits - but there must be a written "plan" document to allow the employees to choose between taxable and allowable non-taxable benefits. I agree that you have the same health plan either way - just that if employee is paying a share of the premiums, then those employee premiums are not pre-tax unless you have a cafeteria "plan" in place. So I think we are agreeing, other than a minor disagreement on terminology.

Yes, Tom, you will be missed. Best of luck with your Mom. I hope you may find some time to post some of your humorous anecdotes at times.

I'm nominating you for sainthood.

No, and it is a constant annoyance to me! I second this question - if available somewhere, it would be wonderful!!!

Scrap this question. Just found it! https://www.govinfo.gov/content/pkg/CFR-2003-title45-vol1/xml/CFR-2003-title45-vol1-sec164-520.xml Welllll...I got all excited, but this mostly deals with the specifics of the Privacy Notice itself. In the absence of any additional guidance re the "notice of the Privacy Notice - anyone know of any?) it seems reasonable to apply this same standard. Should at least be safe. If you are interested, here's the specific information re the electronic delivery of the Privacy Notice itself: (3) Specific requirements for electronic notice. (i) A covered entity that maintains a web site that provides information about the covered entity's customer services or benefits must prominently post its notice on the web site and make the notice available electronically through the web site.(ii) A covered entity may provide the notice required by this section to an individual by e-mail, if the individual agrees to electronic notice and such agreement has not been withdrawn. If the covered entity knows that the e-mail transmission has failed, a paper copy of the notice must be provided to the individual. Provision of electronic notice by the covered entity will satisfy the provision requirements of paragraph (c) of this section when timely made in accordance with paragraph (c)(1) or (2) of this section.(iii) For purposes of paragraph (c)(2)(i) of this section, if the first service delivery to an individual is delivered electronically, the covered health care provider must provide electronic notice automatically and contemporaneously in response to the individual's first request for service. The requirements in paragraph (c)(2)(ii) of this section apply to electronic notice.(iv) The individual who is the recipient of electronic notice retains the right to obtain a paper copy of the notice from a covered entity upon request.

Plans must provide a notice of the availability of the Privacy Notice at least once every 3 years. Can this "notice of the Privacy Notice" be merely posted on the company's intranet/website? Does it follow the same electronic disclosure requirements applicable to qualified plans?

While I'll leave this to the fiduciary experts, I've always assumed it was to limit the liability (and authority) of one or more trustees. I've seen situations where a bank is a directed trustee - in order to act as trustee, they require that the document name them as a "directed trustee."

Generally, yes. But if the children were required to remain the named beneficiaries under the terms of a QDRO or court order then the children may still be the beneficiaries of at least part of the benefit. Since you say H was married to W2 for 3 years, then the "one year marriage rule" wouldn't apply, if the plan even uses it.

You may be right, and I may be dead wrong, but something seems bizarre if one follows what appears to be your interpretation. So IF you "follow the rules" there is a taxable distribution almost immediately. (End of cure period, deemed distribution.) On the other hand, if you fail to follow the rules, either intentionally (but of course it would never be officially intentional) or through error, you can correct under SCP, in theory depending upon time of default, up to 4+ years later, with NO DEEMED DISTRIBUTION AT ALL. I find it hard to believe that this is what the IRS intended, even granting that they say they reserve the right to limit the use of this correction to "appropriate" situations. Whatcha think? Am I off my rocker on this?

Is the insurance policy part of the retirement plan, or is it a policy outside of the plan, such as group term life insurance? Certainly if it is part of the retirement plan, there's no problem. The typical form designates a beneficiary or beneficiaries for the plan benefit, and the life insurance is part of that benefit. If the life insurance is outside the plan, such as group term, I don't know. While I expect a form could be designed and worded properly to provide for the same beneficiary(ies) for both the plan benefit and the group term benefit, I haven't personally dealt with it, so I will leave that to the folks here who have. Might be more work to design such a form, and easier just to have them sign both - I don't know...

Just wondering how some of the practical aspects will play out with recordkeeping platforms, reporting, etc. For example, the SCP loan default correction. This is great, but suppose a loan defaults in year one. Deemed distribution is reported. 2 years later, as allowed under the Rev. Proc., you "correct" this so that there is no taxation. Are you allowed to amend your previously filed income tax returns? How far back can you go to amend a personal return? What documentation is required to do so, etc...?

Any family members that can be put on the payroll, but excluded for contribution purposes, to help testing? Hard to even guess on these situations without detailed census information. Sometimes they just have to bite the bullet and give their employees a decent contribution!

When was this originally sent out? Haven't seen it that I recall.

Deleted original question. Trying to condense something into a question that perhaps makes more sense. Suppose I own Company A and Company B. Controlled group. Company A is the sponsoring employer, and Company B is signed on as a participating employer. Effective December 15th, 2018, I sell Company A - a stock sale. The new owner of Company A wants nothing to do with the plan, so does a resolution and amendment to terminate the plan effective 1/1/2019. Does not establish a new plan, nor are there plans to do so. I still own company B. And, I've just purchased two more businesses. If I attempt to establish a plan, other than a SEP or a SIMPLE-IRA, it would be considered a successor plan, right? Now, the other question is whether, IF I establish a successor plan, if this "taints" distributions already made, or pending, to employees of Company A? It does not seem reasonable that it would. Appreciate any thoughts. (And by the way, I have no idea WHY any of this took place - only know what DID take place, for whatever reasons.)

I've understood that the IRS, when it comes to coverage testing interprets 1.410(b)-4(b) such that a plan that has everyone in their own group/classification will be considered to have "substantially the same effect as an enumeration by name" and as such, it is not a "reasonable" classification and the plan must pass the ratio percentage test instead. That's fine - but is there any written guidance stating this? For some reason I'm unable to locate it if there is. Any unofficial IRS pronouncements to this effect at recent ASPPA conferences, etc? I've seen reference to an indirect interpretation of the issue from back in 2001, but I'd sure like to find something more direct and more recent. Thanks. P.S. I know they withdrew the portion of the proposed regulations that would have applied this same interpretation to NONDISCRIMINATION testing, But I'm still trying to track down some documentation/confirmation that this is how the operate n the coverage issue.

First, I'm not an actuary or DB plan expert. So I defer to those experts, but here are my thoughts, having done no additional research. Going from memory, I recall that for a plan subject to Title IV if ERISA, Section ?4041(e)? clearly prohibits it. For a 1-person or non-PBGC plan, although I definitely lean toward the "no can do" answer, I do recall reading somewhere (could have been the EOB) that it might be possible, if the defined benefit nature of the benefit was preserved by purchasing a paid-up annuity for the DB piece of the benefit. Not sure if this is "acceptable" or if most pre-approved DC plan documents would handle it. And frankly, terminated a non-PBGC plan doesn't seem like a big deal anyway - why take any chances? Just terminate and establish a new plan. FWIW...

Just curious to explore this a bit further. So what is the opinion as to whether an 11(g) amendment is permissible in a safe harbor plan if 414(s) testing fails - that is, does it retain safe harbor status if the 11(g) amendment is used? It doesn't really make any sense (to me) that safe harbor status should be lost since merely reverting to ADP testing isn't an option, but I'm not aware of this being specifically addressed.

Say a client has had 3 welfare plans under their cafeteria plan, filing separate forms. Then for 2018 changes to a "wrap" document, so only one 5500 will be required. Do you go back and amend the previously filed 2017 forms for the welfare plans to show them as "final" forms? Seems like if you just file the one new wrap plan, you'll get DOL inquiry on why you didn't file forms for the plans that get wrapped...

Yup, but in my case I'm already crazy, so it doesn't matter. It just doesn't matter! It just doesn't matter! It just doesn't matter! (Bill Murray in "Meatballs" - one of the better teen Summer Camp style movies ever made.) Anyway, the index accurately captures most of the stuff that you would typically look at. But of course it doesn't show you what other options may be available, and no explanatory notes,, etc., etc. - however, if a client calls and wants to know what the allocation requirement are for a PS plan or something like that, very handy to have.

Austin - the FIS document does something like this, albeit in a different format. For the 401(k) plan their system will produce an "index" which lists the employer choices made in the AA, and gives references to the appropriate pages. VERY handy for clients, and a quick reference for the TPA as well - a total of 2 pages. Unfortunately, they don't do this on the 403(b) adoption agreement. Obviously, no substitute for the full AA, but you can very quickly see most of what you need.

I think you are stuck. See 1.414(q)-1, Q/A-9(b)(2)(iii) - I note that it says for "all" employee benefit plans. Q-9: How is the top-paid group determined? A-9: (a) [Reserved]. See § 1.414(q)-1T, Q&A-9(a) for further guidance. (b)Number of employees in the top-paid group - (1)Exclusions. The number of employees who are in the top-paid group for a year is equal to 20 percent of the total number of active employees of the employer for such year. However, solely for purposes of determining the total number of active employees in the top-paid group for a year, the employees described in § 1.414(q)-1T, A-9(b)(1) (i), (ii) and (iii)(B) are disregarded. Paragraph (g) of this A-9 provides rules for determining those employees who are excluded for purposes of applying section 414(r)(2)(A), relating to the 50-employee requirement applicable to a qualified separate line of business. (i)-(iii) [Reserved]. See § 1.414(q)-1T, Q&A-9(b)(1) (i) through (iii) for further guidance. (2)Alternative exclusion provisions - (i)-(ii) [Reserved]. See § 1.414(q)-1T, Q&A-9(b)(2) (i) and (ii) for further guidance. (iii)Method of election. The elections in this paragraph (b)(2) must be provided for in all plans of the employer and must be uniform and consistent with respect to all situations in which the section 414(q) definition is applicable to the employer. Thus, with respect to all plan years beginning in the same calendar year, the employer must apply the test uniformly for purposes of determining its top-paid group with respect to all its qualified plans and employee benefit plans. If either election is changed during the determination year, no recalculation of the look-back year based on the new election is required, provided the change in election does not result in discrimination in operation. Edited for a typo...

Thanks for the response. Yeah, it is one of those situations where the failure(s) were relatively few, and the excise tax on the 5330 was a couple of dollars - some number (I don't even know the number, at this point) of deposits were a day or two late. Something in me rebels at the idea of a VFCP filing (albeit not that difficult) and charging a client for something that was already "corrected" and excise tax paid, and is so piddly to start with. Maybe I'm just in my "tax filing season grumpy" mode... Anyone have any experience with the DOL actually pursuing this on a 2 dollar excise tax case?

When one of these letter is received (basically a form letter) in a situation where the late deposits were tiny, and the excise tax was less than 10 dollars and was paid timely on a 5330, are you still filing a VFCP? Or are you responding to the letter, explaining that the late deferral was corrected, and excise tax paid via a 5330 submission?

Personally, I think the IRS auditor's assertion is ridiculous. Revenue Ruling 66-144 clearly states otherwise for a corporation, and ERISA amended 404(a)(6) to make that provision applicable to cash basis taxpayers. In my humble opinion...