KJohnson

The final regs did speak to this. Here is the langauge from the preamble which probably gives you as detailed guidance as you are going to get.. Commentators requested guidance on payment schedules contingent on the receipt of certain payments by the service recipient. For example, commentators requested clarification whether a plan requiring an annual payment equal to a percentage of certain accounts receivable collected during the prior 12-month period would qualify as a fixed time and form of payment. The ability to schedule payments based upon the time the service recipient receives a customer’s payment raises issues regarding the ability to, in effect, create an impermissible event-based payment through characterizing the payment as a schedule (for example, a payment “schedule” that pays an amount every year if a specified transaction occurs in that year actually pays based on whether and when the transaction occurs, which is not a permissible payment event under section 409A). In addition, these arrangements raise issues regarding the ability of the service recipient (or service provider) to control the timing of the payment of deferred compensation through an ability to influence the timing of the payment by the customer. Accordingly, the final regulations generally provide that a schedule based upon the timing of payments to the service recipient is not a fixed schedule of payments. However, the final regulations also provide certain parameters under which such a plan may qualify 105 as having a fixed time and form of payment. First, if the service recipient is comprised of more than one entity, the payments must be due from a person that is not one of such entities (for example, not a payment due from a subsidiary corporation to a parent corporation). Second, the payments must stem from bona fide and routine transactions in the ordinary course of business of the service recipient, and the service provider must not at the time such payments are due retain effective control over the service recipient, the person from whom the payments to the service recipient are due, or the collection of the payments. Third, the payment schedule must provide for a nondiscretionary, objective method of identifying the customer payments to the service recipient from which the amount of the payment is determined, and a nondiscretionary, objective schedule under which payments of the nonqualified deferred compensation will be made (for example, a payment every March 1 of 10 percent of the accounts receivable collected during the previous calendar year). Finally, the sales to which the payment relates must be of a type that the service recipient is in the trade or business of making and makes frequently, and either all such sales must be taken into account or there must be a legitimate, nontax business purpose for limiting the sales taken into account.[/color]

Here is one person's list. Don't know if it is current or how the list was created: http://www.erisalitigation.net/AttorneyList.pdf

I would check out 302©(5) of the LMRDA. In order for the payment of the contributions not to be a criminal violation the: "detailed basis on which such payments are to be made is specified in a written agreement with the employer"

Two employers in a controlled group each adopt a non-standardized prototype excluding the employees of the other. Two HCE's work for both companies and participate in both plans. Safe harbor 414(s) definition of compensation for allocation of the profit sharing contribution is used which includes comp from all related employers. No allocation conditions for contributions. For the year, one provides a 5% of comp discretionary profit sharing and the other provides a 8% of comp profit sharing for the year. Two questions: 1) If the plans pass 410(b) separately then would each HCE get 13% of total comp in the controlled group and you still would have a 401(a)(4) safe harbor? This doesn't seem right to me but I am not sure where the flaw is. 2) If you need to permissively aggregate the plans to pass coverage, even though each has a 401(a)(4) safe harbor allocation formula, the fact that you are permissively aggregating means you can no longer rely on the safe harbor since you wouldn't have the same percentage of plan year compensation for all participants?

ak2ary--Went back and looked and Tripodi takes the same position as jpod.

Jpod, I see your point. I had it in my head that if you aggregate for 410(b) you aggregate for top heavy, but that might not be the case.

I think if you have to aggregate to pass 410(b) that kicks in the TH contribution for the associates assuming (as is highly likekly) that the plan is top heavy on an aggregated basis.

jpod, How are you going to pass coverage in the Associate plan if all the Associates are HCEs? I assume that they are not HCEs' even if they are over the comp limit because of a top 20% election.

The associates becoming partners is an issue. I think some plan designs mandate a plan to plan transfer of account balances once an associate becomes a partner. Not sure if this completely solves the top heavy problem but at least you will never have the same individual with an account balance in both plans.

If it is discrminatory under 105(h) and lasts longer than the COBRA period then it is not exempt from 409A but the final regulations contain methods on how you could make such coverage compliant.

Do you allow someone who is still working to receive a distribution from the money purchase source after they reach NRA? If so, I think the answer is that if you have an NRA of 62 or above you are o.k. If it is between 55-62 you have a facts and circumstances test and may want to amend, earlier than 55 you definitely need to amend to to amend. Where I am not clear is that if you have a mp plan (or mp portion of a ps plan) that for some reason has an NRA lower than 62 but does not allow in-service distributions (or technically post-NRA distribuitons while still working) whether you have anything to worry about.

Agree with EGB: 1) A split-dollar life insurance program is usually an ERISA welfare plan. Williams v. Healthalliance Hospitals, Inc., 135 F. Supp. 2d 106 (D. Mass. 2001); First Capital Life Ins. Co. v. AAA Communications, 906 F. Supp. 1546 (N.D. Ga. 1995) (widow of former employee had no right to proceeds of policy owned by employer, even though change-of beneficiary designation form had not been properly transmitted to carrier). Quote taken from this paper... http://d2d.ali-aba.org/_files/thumbs/rtf/1...CH011_thumb.pdf 2) There are tophat welfare plans but they are exempt from almost all reporting and disclosure requirments: 29 CFR 2520.104-24 Therefore I think that if it qualifies as a tophat you only have to have an SPD if DOL wants one as RY Benefits noted. On the other hand, I think that the small welfare plan exception only gets you out of the 5500 it does not get you out of the SPD.

A number of multiemployer defined contribuiton plans (they used to be called annuity plans) have been turned into 401(k) plans. Or, some have started from scratch. In fact, I think that 401(k)'s are rapidly becoming the rule for multiemployer DC plans rather than the exception. The elevator constructors have one referenced in my post above. So do the Teamsters http://www.teamster.org/benefits/401k/401k.htm So does the IUE/CWA http://www.iuepension.org/IUECWA401kPlan/4...ngEmployers.htm OPEIU http://www.westernstates.aibpa.com/401k/index.htm MEBA http://www.mebaplans.org/PDFFiles/401(k)%20Regs.pdf IATSE http://www.iatsenbf.org/employer/files/Con...0Handbook_1.pdf USW http://www.uswbenefitfunds.com/401kplan.htm UMWA http://www.umwafunds.org/cdsp/index.htm Many locals have them as well: http://www.plumberslu130ua.org/site/section/2/61 http://www.local82benefits.org/401k/401k.pdf I am willing to bet you could find hundreds. For example I searched on freeerisa for 401(k) plans with over 5,000 participants with the word "trustees" in the name of the plan sponsor and came up with 49. All of these are 401(k)s, some might not be multis but I bet most are (as usual there are some repeats as well based on keying differences in the name on the 5500 form). If you drop the participant count down to 2,500 there are more than 100 (freeerisa will only display the first 100). BD OF TRUSTEES NORTHWEST SHEET METAL WORKERS SUPP PENSION PLAN BD OF TRUSTEES OF THE ELEV CONST ANNUITY AND 401K RET PLAN BOARD OF TRUSTEES - UMWA CASH DEFERRED SAVINGS PLAN OF 1988 BOARD OF TRUSTEES AMERICAN MARITIME OFFICERS 401K PLAN BOARD OF TRUSTEES ENTERTAINMENT INDUSTRY 401K PLAN BOARD OF TRUSTEES I A T S E ANNUITY FUND BOARD OF TRUSTEES IATSE ANNUITY FUND BOARD OF TRUSTEES INTERNATIONAL UNION OF OPERATING ENGINEERS Company Name BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR IND 401K PLAN BOARD OF TRUSTEES OF THE NATIONAL ELEVATOR IND 401K RET PLAN BOARD OF TRUSTEES OF THE TEAMSTERS BOARD OF TRUSTEES OF THE TEAMSTERS - NATIONAL 401K SAVINGS PLAN BOARD OF TRUSTEES OF THE TEAMSTERS- NATIONAL 401K SAVINGS PLAN BOARD OF TRUSTEES OF THE TEAMSTERS-NATIONAL 401K SAVINGS PLAN BOARD OF TRUSTEES OF THE TEAMSTERS-NATIONAL 401K SAVINGS PLAN TRUST BOARD OF TRUSTEES OF UA UNION LOCAL NO 290 PLUMBER STEAMFITTER & SHI BOARD OF TRUSTEES UFCW LOCAL 5 SAVINGS PLAN BOARD OF TRUSTEES UFCW LOCAL 56 SAVINGS PLAN BOARD OF TRUSTEES-OREGON LABORERS- EMPLOYERS PENSION TRUST FUND CENTENNIAL STATE CARPENTERS PENSION TRUST FUND BOARD OF TRUSTEES SEE FOOTNOTE 1 SHELL PAY DEFERRAL INVESTMENT FUND TRUSTEES THE BOARD OF TRUSTEES OF THE COMMUNICATIONS WORKERS OF AMERICA THE BOARD OF TRUSTEES OF THE COMMUNICATIONS WORKERS OF AMERICA -SAVING THE BOARD OF TRUSTEES OF THECOMMUNICATIONS WORKERS OF AMERICA - SAVING THE BOARD OF TRUSTEES THE PACE INDUSTRY THE BOARD OF TRUSTEES THE PACE INDUSTRY 401K PLAN THE BOARD OF TRUSTEES USW INDUSTRY 401K PLAN TRUSTEES OF ELECTRICAL WORKERS LOCAL NO 292 401K PLAN Company Name TRUSTEES OF ELECTRICAL WORKERS LOCAL NO 292 DEF CONT & 401K PLAN TRUSTEES OF IBEW LOCAL UNION NO 520 ANNUITY TRUST FUND TRUSTEES OF LOCAL 1776 & PART EMP TRUSTEES OF TEXAS IRON WORKERS DEFINED CONTRIBUTION RETIREMENT PLA TRUSTEES OF TEXAS IRONWORKERS DEFINED CONTRIBUTION RETIREMENT PLN TRUSTEES OF THE CULINARY AND BARTENDERS 401K TRUST TRUSTEES OF THE IUE-CWA 401 K RETIREMENT SVGS AND SECURITY PLAN TRUSTEES OF THE IUE-CWA 401K RETIREMENT SVGS AND SECURITY PLAN TRUSTEES OF UFCW LOCAL 1776 & PART EMP RETIREMENT & SAVINGS PLAN BOARD OF TRUSTEES INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 4 A BOARD OF TRUSTEES IUOE LOCAL 4 ANNUITY FUND BOARD OF TRUSTEES OF SUPPLEMENTAL INCOME TRUST FUND BOARD OF TRUSTEES OF THE AMALGAMATED TRANSIT UNION BOARD OF TRUSTEES OF THE BUILDING SERVICE 32B-J SUPPLEMENTAL RETIREMEN BOARD OF TRUSTEES OF THE BUILDING SERVICE 32BJ SUPPLEMENTAL BOARD OF TRUSTEES OF THE BUILDING SERVICE 32BJ SUPPLEMENTAL RETIREMENT BOARD OF TRUSTEES OF THE DEFERRED SALARY PLAN OF THE ELECTRICAL BOARD OF TRUSTEES OF THE DEFERRED SALARY PLAN OF THE ELECTRICAL INDUST BOARD OF TRUSTEES OF THE ELEVATOR CONSTRUCTORS ANNUITY AND 401K BOARD OF TRUSTEES OF THE IBEW LOCAL NO 58 ANNUITY FUND BOARD OF TRUSTEES OF THE IBEW LOCAL NO 716 RETIREMENT TRUST FUND

Grumpy, I think your analysis of the need to do the ADP test is correct. There are clearly mutiemloyer plans that require reporting and testing see this link: https://www.neibenefits.org/faqdocs/401kFaq...20recordkeeping What information gets reported to the NEI Benefits Office? On a monthly basis, each employer must report the deferral amounts (employee contribution) to the Benefits Office on the Deferral Report Form provided by the Benefits Office. An electronic format approved by the Benefits Office on tape or diskette may also be used. Reports must be filed every month. The Deferral Report Form must be filed even in months when no deferral contributions are due. The earnings/W2 wages are reported on the Hours Report Form in order to track wage information for non-discrimination testing. At the very least the trustees should be informed of this. I think multis are probably more likely to be audited. BTW do you have a match? I believe that you do get a pass on the ACP so I have always wondered whether you could just pull any match over to the ADP test as a qmac and since you get a pass on ACP-- problem solved. Or, would the IRS say that using a qmac means you now have to pass ACP when you wouldn't have to perform the test otherwise?

The real problem with this is that what the Doc gets for his stock is dependent upon the accounts receivable attributable to his production. If you had it equal to all accounts receivable for the Corp. as a whole, I think you might have a much better argument. Under Sutarrt's scenario one Doc gets $550,000 for his 50% interest while another Doc would get $800,000 for the exact same 50% interest because his receivables were greater. I guess if you look at it logically you would think that the value of the stock would be worth less rather than more upon the departure of the greater producer. If the IRS looked at this I think that they would conclude that something is going on here other than the sale of stock.

You can't "gussy up" deferred comp to look like a stock sale. I guess if the stock is really worth $300,000 plus the AR then you might be o.k.. (BTW, I don't see this as a sale of AR by the Doc, the corp. not the Doc owns the AR.) In my view, the payment of trailing AR in many professional practices would typically be treated as deferred comp. Indeed the final regs specifically speak to this point. Here is the portion from the preamble: Commentators requested guidance on payment schedules contingent on the receipt of certain payments by the service recipient. For example, commentators requested clarification whether a plan requiring an annual payment equal to a percentage of certain accounts receivable collected during the prior 12-month period would qualify as a fixed time and form of payment. The ability to schedule payments based upon the time the service recipient receives a customer’s payment raises issues regarding the ability to, in effect, create an impermissible event-based payment through characterizing the payment as a schedule (for example, a payment “schedule” that pays an amount every year if a specified transaction occurs in that year actually pays based on whether and when the transaction occurs, which is not a permissible payment event under section 409A). In addition, these arrangements raise issues regarding the ability of the service recipient (or service provider) to control the timing of the payment of deferred compensation through an ability to influence the timing of the payment by the customer. Accordingly, the final regulations generally provide that a schedule based upon the timing of payments to the service recipient is not a fixed schedule of payments. However, the final regulations also provide certain parameters under which such a plan may qualify 105 as having a fixed time and form of payment. First, if the service recipient is comprised of more than one entity, the payments must be due from a person that is not one of such entities (for example, not a payment due from a subsidiary corporation to a parent corporation). Second, the payments must stem from bona fide and routine transactions in the ordinary course of business of the service recipient, and the service provider must not at the time such payments are due retain effective control over the service recipient, the person from whom the payments to the service recipient are due, or the collection of the payments. Third, the payment schedule must provide for a nondiscretionary, objective method of identifying the customer payments to the service recipient from which the amount of the payment is determined, and a nondiscretionary, objective schedule under which payments of the nonqualified deferred compensation will be made (for example, a payment every March 1 of 10 percent of the accounts receivable collected during the previous calendar year). Finally, the sales to which the payment relates must be of a type that the service recipient is in the trade or business of making and makes frequently, and either all such sales must be taken into account or there must be a legitimate, nontax business purpose for limiting the sales taken into account.

At the Mid-Atlantic benefits conference in late April, the IRS made a comment that ERSOP arrangements were definitely something they were going to be looking at closely.

Bill as to reimbursing the plan for a fee that the plan paid I believe PLR 9124037 revoked part of 8940014. That partial revocation of 8940014 is what people cite for the propostion mentioned by Santo Gold that reimbursing a plan for a fee will always be treated as a contribtion even if the fee is something that the employer could pay and deduct outside of the plan without it being treated as a contribution. Also you might want to look at PLR 200507021 where the IRS stated that paying the "wrap" outside of an IRA was not treated as a contribtion to the IRA even though a portion of the wrap was for brokerage. Doesn't seem consistent with 86-142 but maybe they figured it was too hard to determine what portion of the wrap reprsented brokerage.

Bill, I don't see that language in 97-15A http://www.dol.gov/ebsa/programs/ori/advisory97/97-15a.htm Santo Gold I would go back and read 86-142. I think that if it is an "intrinsic part" of the investment it might be treated as a contributio.

With regard to 5-percent owners 401(a)(9) has gone through some gyrations. Prior to TRA 86 only 5% owners were required to take distributions from qualified plans at 70 ½. TRA 86 changed this to everyone. SBJPA changed it back to only 5% owners. However, the pre- TRA ’86 rules and the proposed regs had specific rules with regard to what happens if you first became a 5% owner in a year after you reach age 70 ½. (You have to begin taking distributions). SBJPA and the Final 401(a)(9) regs are silent on this and actually appear to say that the determination date for 5% owners is the plan year ending in the calendar year in which someone turns age 70 ½. It would appear from the language of the Code and the regs that if you become a 5% or more owner after this year you would not be a 5% owner and would not have to begin taking distributions. The Section of the Code that provides the exception to the rule allowing distributions to be deffered to actual retirement applies only to “an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701/2,” The regs provide: (c) For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 70\1/2\. Therefore it appears that if someone becomes a 5% owner after age the plan year ending in the calendar year in which they are 70 ½ they would not be a 5% owner under the current Code language. I wouldn't have thought that this was the rule, but looking back at the pre-TRA '86 Code provision and proposed regs--where this was specifically addressed--and looking at the current Code language and regs the conclusion appears to be that 5% owners is a one time determination and what happens after that date with regard to corporate ownership is irrelevant. Has anyone looked at this?

1) Particpant dies in 2005 2) Plan provides for life expectancy rule. 3) Non-spouse beneficary takes distribuiton purusant to life expectancy rule in 2006. Do you agree that the non-spouse beneficiary can rollover the remaining amounts in 2007 (after taking the 2007 life expectancy distribution)? It seems to me that there is no need for any "transition relief" in this case (which based on an article today in BenefitsLink it doesn't appear the IRS is going to provide): 3/14/2007: No Transitional Relief for Rollover to Nonspouse, IRS Official Says (The Bureau of National Affairs, Inc.) Excerpt: "The Internal Revenue Service made the decision not to provide transitional relief under Section 829 of the Pension Protection Act for years prior to 2006 regarding nonspouse beneficiary rollovers, an Internal Revenue Service official said March 9." I know the plan will need to be amended to provide for non-spouse rollovers, but what is the amendment deadline. Is it 2009 with other PPA amendments with just operational compliance until then?

Do a google search on the term "ersop" this is a marketing term used by some to describe this arrangement. Here are a couple of links. http://www.businessweek.com/smallbiz/conte..._0799_sb006.htm http://www.irstaxtrouble.com/2005/11/entre...k-purchase.html Also this is from the 2003 ABA Q&A's with the IRS 9. §401(a)(4) – Nondiscrimination Does the use of rollover proceeds to indirectly acquire a business violate nondiscrimination or other Code requirements? The situation involves an individual (Executive) who establishes a new company (Newco), which adopts a §401(k) plan. Executive is the sole director and officer of Newco. Executive rolls over to the Newco §401(k) plan funds from an eligible rollover plan. Executive then elects to invest the rollover proceeds in 100% of the stock of Newco. Newco uses the proceeds from the sale of stock directly or indirectly to acquire a target company. Once target or target's assets are acquired, new employeesa associated with target's business begin making §401(k) deferrals to the Newco plan, but will not have the option to direct investment in Newco stock because the offering will have closed. Proposed response: No, the situation described does not violate any nondiscrimination or other Code requirement. The right to make particular investment choices is a benefit, right or feature. However, at the time Newco stock is available for purchase, Executive, who is Newco's sole employee and the sole participant in the plan, is not an HCE. In future years if Executive becomes an HCE, the right of Executive to continue the self-directed investment in Newco stock is not subject to the BRF requirements. IRS response: The IRS disagrees with the proposed answer. The proposed answer discusses current availability testing with regard to the benefit, right or feature, but it doesn’t resolve the effective availability requirement, which has a timing element. The timing of the transaction appears to structure the transaction in a year where the individual is not an HCE and there may not be any other employees, but after the transaction the individual becomes an HCE. The IRS noted the fact situation may also violate the requirement that the timing of a plan amendment not discriminate in favor of HCEs. The IRS also noted its concern about investment options with inherent restrictions, such as a $100,000 minimum investment requirement. While the IRS is aware some commenters believe such inherent restrictions do not violate the nondiscrimination standards, because the investment restriction is not part of the terms of the plan, the IRS does not agree. (Interesting the IRS did not raise any PT issues but not sure if I would take their silence on this point as saying that having qualifiying employer securities is enough to get you off the PT hook).

If this is viewed by the IRS as an option between taxable cash and a non-taxable benefit (coverage under the employer's own plan) and the arrangement is not run through a cafeteria plan then you run the risk of those who take take the non-taxable benefit being in "constructive receipt" of the cash. Thus those who stay in the employer plan could conceivably be taxed. I would tread carefully here. I think there are a number of threads that discuss the various issues that might arise.

Sole proprietor had a SEP from the early 1990's on a 5305. In the mid to late 1990's set up a DB Plan and ceased contributions to the SEP. The DB Plan is terminated in 2005. He now wants to start contributing to the "old" SEP again. 1) Since he made no contributions to the SEP in the years when the DB was running, is there an issue that the SEP was set up with a 5305 which prohibits its use with a qualified plan? 2) Since he made no contribuitons to the SEP in years when the DB was running, is there an issue on the pre-2000 rule that a combination DB/SEP had to seek a determination letter with regard to 415? 3) Should the SEP have been restated on the 5305 revised for EGTRRA, or is this only applicable if you wanted to take advantage of the EGTRRA rules? (In other words does the fact that there were no contributions mean that a restatement was not required). 4) I assume that if he wants to make contributions again, he would need to update the SEP (not only for EGTRRA but because I believe "old" 5305s state that they cannot be used by an employer who has a terminated DB.) 5) How do you update the model SEP on a 5305? IRS says to adopt a "revised model plan" But the 5305 doesn't have any box to check for "revised" or "restatement." If you fill out the form again, it might appear that you now have 2 SEPs. I suppose if you don't fund the first one this really isn't going to be an issue. Or, maybe it is actually the solution. No update was required of the "old SEP" because there were no contributoins and now you are starting a new one that is fully compliant? Any comments would be appreciated.

I have not doubt EBIA is a conservative source. I was just questioning a prior post which cited EBIA in support of the practice where they clearly advise against it espeically for major medical benefits. Also, I think that making arguments that individual policies are not goverend by ERISA (as well as HIPAA and COBRA for medical-type policies) because they are not "employer plans" may come back to shoot you in the foot for purposes of Code Section 106. I have yet to see any authority thay says such an individual policy is not an ERISA plan but is still "employer-provided coverage under an accident or health plan" for puposes of the pre-tax advantages of Code Section 106. FYI Here is DOL's take (or rather non-take) at a 2005 ABA JCEB meeting where they refused to accept a "proposed answer" proffered. Question 27: An employer adopts a cafeteria plan under I.R.C. §125 offering both group benefits and individual voluntary policies. One of the individual voluntary policies is a cancer benefit policy. The employer does not contribute to the insurance premiums associated with this policy and the cafeteria plan document clearly indicates that it is exclusively the employee’s decision whether to elect the cancer benefit policy. The employer does not comment on or tout the merits of the policy. In fact, the employer’s sole involvement in the program is to (1) choose to include it among the cafeteria plan benefit options, (2) process and pay over to the insurer the employees’ pretax salary dollars that the employee elects to use to pay the premiums. (The employer does not make any contributions to the cafeteria plan.) The policies themselves are mailed directly by the insurance company to the employees who enroll in the cancer insurance policy. 23 Does the fact that the employer (1) has selected this cancer insurance policy to be a cafeteria plan benefit option and (2) obtains the benefit of not having to pay its share of FICA payments in connection with the pretax dollars an electing employee spends to pay the cancer policy premium, necessarily cause the employer to be deemed as “endorsing” the program for purposes of 29 CFR §2510.3-1(j), thus causing the policy to be an ERISA-regulated plan? Proposed Answer 27: No. The determination whether an employer has endorsed a particular benefit arrangement in a cafeteria plan is an inherently factual question, that will vary based on the cafeteria plan and the level of employer involvement. The mere decision by an employer to include an individual voluntary policy in an I.R.C. §125 will not, without more, cause the plan to be endorsed by the employer and, thereby, subject to ERISA. Moreover, the economic benefit to the employer stemming from its savings on FICA payments is an incidental benefit caused by the employee’s decision to participate, and does not by itself cause the employer to be endorsing the arrangement. To hold otherwise would necessarily cause all benefit options in a cafeteria plan to be ERISA plans (assuming the benefit is of the type that is a welfare benefit set forth in § 3(1) of ERISA). Such a rule would sweep too broadly and would dissuade employers from using cafeteria plans as vehicles for employees to obtain welfare benefits that the employees, in the absence of the Code § 125 tax advantages, would not be able to afford. DoL Answer 27: DoL staff noted that the broad question of the circumstances in which offering a product under a cafeteria plan will automatically result in the product falling outside the group and group type insurance safe harbor in 29 CFR 2520.3-1(j) might currently be anan issue before the U.S. Court of Appeals for the Fourth Circuit in the case of Cassleman v. AFLAC. DoL staff thus declined to address the question because of concerns regarding JCEB publishing informal staff views on an issue when DoL staff was aware that the issue could be pending before a U.S. Circuit Court of Appeals. Note: Subsequent to the meeting, the court issued its decision at Casselman v. Am. Family Life Assurance Co. of Columbus, No. 04-2370, 04-2378, slip op., 2005 WL 1492208 (4th Cir. June 24, 2005). Here is the opinion in Cassleman (which can be used to support arguments on either side). http://pacer.ca4.uscourts.gov/opinion.pdf/042370.U.pdf