Belgarath

Kevin, good point. I forgot about that.

Under 6.06(4), unlikely, generally, that the participant would be willing to return the "overpayment" - so then the employer or "another person" would need to contribute a "make whole" contribution. I doubt the employer would be too thrilled with this solution unless it was a VERY small distribution. Otherwise, it requires a corrective amendment under 4.04(5) such as discussed above. So while it is a viable solution, I'm dubious that it will generally be the solution of choice.

I agree. You might be able to get away with a "one time irrevocable election" where an employee initially elects NEVER to contribute to the HSA and to always have the full amount contributed to the 403(b) (subject to applicable limitation) but that's the only way I can see to get around it.

Another question on this. The corrective amendments to conform plan language to actual operation - I'm guessing that this will not override the normal timing requirements for advance notice in a safe harbor plan? Or, is it meant to allow self-correction n such a situation?

No takers? How about if I change the question a bit - given that the IRS specifically added (and then subsequently removed) in the proposed regs that this requirement would apply to nondiscrimination testing, might you reasonably infer that it does apply to coverage testing? Since no apparent guidance, just looking for opinions now. Thanks!

If you consider it an "erroneous failure to allocate" in a prior limitation year, then yes, I think it applies. If you consider it something else, then maybe not. Personally, for a situation like this with only one small NHC participant contribution, I'd take the chance.

"Q2: Also, wouldn't depositing it now for 2018 PY count towards the 2019 Annual Additions LY for each participant who shares in the allocation of it because outside the 30 day window? If so, one participant terminated in 2018 therefore 2019 Annual Addition limit is zero for him - is there any correction available for this? The other staff member terminated at end Q1 2019... may be okay with 2019 Annual Addition limit. Will this ultimately make it impossible for the employer to contribute any PS for 2018 because of this Annual Addition issue, limiting the employer to only the SH for 2018?" The "30 day" rule doesn't always apply. For the terminated participant, see 1.415(c)(1)(b)(6)(ii)(A) - I think this will cover you on that piece.

Interesting. Auditor may have a point, depending upon the specific plan language and interpretation of that language. If I were doing a document in this situation, I'd do a specific exclusion for compensation paid for hours/work performed for division C, or whatever works to appropriately specify the excluded comp.

P.S. I just found this very helpful resource on the internet re 5500 filings: https://www.ebcflex.com/portals/8/PDF/webinars/ERISA-Compliance-Wrap-and-5500-QA.pdf

Well, yes and no. If the 125 plan is done as a "wrap" document, then there is only one 5500 form filed, which encompasses all of the underlying "plans."

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.)