Belgarath

Thank you both. I don't have the hard numbers at my fingertips, but let's assume the plan would pass both the "3 years of service" test and the "entry date" requirement test. (Entry and eligibility are immediate if you are hired to work 30 hours per week.) However, if you have 40 NHC's, and only 4 of them are 30+ hours per week, and all 4 Highly Compensated Individuals participate, then there is no way you will pass even the unsafe harbor percentage of the facts and circumstances test, correct? As I said, there has been NO prior testing on eligibility. Now, since the plan doesn't have 3-year eligibility, it appears that the plan could be tested on a disaggregated basis - one plan benefiting employees with less than 3 years of service, and one plan benefiting employees with 3 or more years of service, correct? And therefore, if NO HC in the "less than 3 year" category then the disaggregated plan for the "less than 3 years" would automatically pass, and you'd then just have to pass for the "more than 3 year" plan? Similar to the "Otherwise Excludable Employee" rule in 401(k) plans... Also, am I correct that "years of service" has no minimum numbers of hours - just elapsed time? I'm not even yet getting to the C&B test - just trying to wrap my head around this first part, and what I think is a potential problem, although actual testing, if performed, may be fine. Thanks so much for your assistance!

I apologize if this seems like a basic question, but since I'm far from expert in these cafeteria plans, I frequently question myself. I've run across a block of plans, where eligibility for the cafeteria plan is identical to the eligibility for the health plans. There has been no eligibility testing on the cafeteria plans, because the TPA says that since eligibility is the same for all participants, they automatically pass. I would not have said this was true, depending upon the eligibility requirements for the health insurance. For example, first plan I looked at (which raised this question) provides that anyone working less than 30 hours per week is not eligible for the health insurance. Consequently, they are not eligible for the cafeteria plan. Well, all 4 HCE/Keys are naturally eligible for the health insurance, but many employees are <30 hours per week and therefore ineligible. Isn't this a potential problem? Or am I missing something obvious? Now, I understand that they might very possibly pass if testing is done, but it doesn't seem like it is automatic. Thanks!

Thanks Kevin.

Yes, thanks. I had considered that, but it doesn't apply in this plan. I appreciate your taking this extra step.

Thanks. Shot - I'm not entirely sure what I meant, as the question posed to me wasn't all that specific. So if we term it a "deposit" which is then used to all or a portion of the exempt loan payment that is due in 2019, this is then NOT a "contribution" for 415 or 404 purposes, and therefore a "normal" contribution/deduction could still be made? Maybe I'm completely mixing things up, for which a apologize in advance!

S-corp is paying a dividend payment to the ESOP. As I understand it, this can be used towards the repayment of the exempt loan. According to IRC 4975(f)(7), this isn't a prohibited transaction. Agree? If so, another question - for tax purposes, they S-corp is apparently considering this dividend as 2018. But, it is being contributed to the ESOP within a few days. Is this considered an ESOP contribution for 2018, or 2019, or can they choose either? Thanks!

Thanks Kevin - that's the same answer I had come up with. Ran across a plan that has this, so wondered if I was missing something... Pam, it is a 501(c)(3).

Thanks. What's the goal? No idea whatsoever at this point - it was just an inquiry if it was possible.

Maybe I'm missing something - can a 403(b) plan allow a certain class of employees to defer, but exclude them from the safe harbor match? I didn't think so...

Thanks.

If you follow the guidelines, you clearly can have any two out of the three at the same time. If your FSA is limited purpose, and your HRA is set up to only pay after reaching the deductible of $1350/$2700, is there any reason you can't have all three? IRS publication 969 seems to indicate that you can - says you can have one or more of the following. Mind you, I have no idea how this would work in practical terms, or whether there is any advantage to it. Perhaps there is - if you meet the $1350/$2700 deductible, and then your other plan(s) kick in, you could theoretically contribute the maximum to the HSA? Other employee health plans. (p4) An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally can’t make contributions to an HSA. Health FSAs and HRAs are discussed later. However, an employee can make contributions to an HSA while covered under an HDHP and one or more of the following arrangements. Limited-purpose health FSA or HRA. These arrangements can pay or reimburse the items listed earlier under Other health coverage except long-term care. Also, these arrangements can pay or reimburse preventive care expenses because they can be paid without having to satisfy the deductible. Suspended HRA. Before the beginning of an HRA coverage period, you can elect to suspend the HRA. The HRA doesn’t pay or reimburse, at any time, the medical expenses incurred during the suspension period except preventive care and items listed under Other health coverage. When the suspension period ends, you are no longer eligible to make contributions to an HSA. Post-deductible health FSA or HRA. These arrangements don’t pay or reimburse any medical expenses incurred before the minimum annual deductible amount is met. The deductible for these arrangements doesn’t have to be the same as the deductible for the HDHP, but benefits may not be provided before the minimum annual deductible amount is met. Retirement HRA. This arrangement pays or reimburses only those medical expenses incurred after retirement. After retirement you are no longer eligible to make contributions to an HSA.

Just curious about something. Situation is this: A non-profit has an ERISA 403(b) plan. They came to us a couple of years ago - plan was a mess. Document out of compliance, no 5500 forms EVER filed, ACP testing was never done, etc., etc. - huge clean-up VCP project, and 5500 forms (audited) filed under DFVCP, etc., etc. They just got notified that they are going to have the plan audited by the DOL. I'm curious as to whether this is purely random, or if the DFVCP filing triggered this audit - not that it matters. Any thoughts on this?

I don't equate the ability to amend eligibility in general to the ability to amend eligibility on the last day of the year that would allow a previously eligible employee to be excluded for THAT YEAR. SEP's are supposed to be SIMPLIFIED plans, and as such, don't always have the voluminous guidance that is available for plans under 401(a). I'm using, as I said, a conservative approach, that can't get a sponsor in trouble. Your way, the IRS might disagree - I don't know. I reject the argument that just because the IRS didn't post this specific question on their FAQ list that it means that they approve of an amendment such as you propose. I might ask if you think an auditor who disagrees with your interpretation would accept your argument that, "Well, since you didn't post it on your FAQ's, it must be ok." Anyway, I'm not saying you are wrong, just saying that I wouldn't do it myself, and would never advise a client to do it. Again, just an "agree to disagree."

I'm very conservative on this issue. Bird, since there is no "last day" requirement for a SEP contribution if one is made, I'd still argue that a contribution is due and you can't amend that person or persons out of getting it. Just your basic agree to disagree issue here. By the way, being back at work sucks...

FWIW - I would never counsel amending now for 2018. IF a contribution is made, the eligibility requirements to receive that contribution have already been satisfied. Amend it today for 2019, yes. Amend today for 2018, NO! Just my humble opinion.

For you and your family and friends. Drive safely!!!

Can you provide a specific example of the situation, the error, and a Relius response?

Tom - was this maybe the old 401(k) regs that were modified by TAMRA (1988) which provided such a de minimis rule for excess contributions and excess aggregate contributions that were distributed within the first 2-1/2 months? I think it was 1.401(k)-1(f)(4)(v)(B) way back when...?

No. See below for a definition of a designated Roth account. Can't have a designated Roth account if you don't meet the definition. § 1.402A-1 Designated Roth Accounts. Q-1. What is a designated Roth account? A-1. A designated Roth account is a separate account under a qualified cash or deferred arrangement under a section 401(a) plan, or under a section 403(b) plan, to which designated Roth contributions are permitted to be made in lieu of elective contributions and that satisfies the requirements of § 1.401(k)-1(f) (in the case of a section 401(a) plan) or § 1.403(b)-3(c) (in the case of a section 403(b) plan).

A very difficult question to answer. A lot might depend upon the structure/options/restrictions in the State plan. In addition, many private employers have an innate distrust when it comes to having a State-run plan. Ultimately, it would likely come down to a "what's in it for me" decision - if the State plan proves to be "better" - whatever that may mean to the person making the decision - then they might opt for the State plan. I'm with RBG - I think that very few of our clients would opt for it even if available.

Not enough information. How many participants? Is this 1 out of 100? Or 50 out of 75? Dollar amount involved? Etc., etc.? Likely to be insignificant, but really no way to tell without full data. Take a look at the Revenue Procedure (2016-51 is the number I remember, off the top of my head don't remember the number of the updated Rev. Proc. - maybe 2018-52?) Section 8, which will give you some parameters. But it will often come down to a judgment call anyway.

Usually, (but not always) where I've seen this situation in the past is where there is an asset that the Hog expects to appreciate greatly in the future, so they want to take it at current value and make a killing when it is liquidated later. A piece of land, for example, where if the new interstate exit gets approved, it'll be worth a gazillion dollars. Thankfully, in my present life, we have no such plans!

"A person cannot become a trustee unless he/she/it accepts that appointment, usually as evidenced by a writing." And just fyi - the document I mentioned above DID require signatures of Employer and the Successor Trustee. (Dated as well, of course.)

The lawyers may disagree with this approach, but we had a similar request a while back. I didn't amend the document, but just did a resolution and appointment of Successor Trustee, pursuant to Article (whatever) of the plan, with such appointment to become effective only upon the death, resignation, removal, or incapacity of the Trustee, and an acceptance of appointment as Successor Trustee by the Successor Trustee, only in the event of the death, resignation, removal, or incapacity of the Trustee. Don't frankly know if this is legal, or if it is only "good" for a certain amount of time, etc., etc. - told them to check with their attorney, and never heard back.

Thanks.