Kirk Maldonado

You must have very different clients than I have if they would chose anything but a bottoms-up QNEC. They must have money to burn. Those are the type of companies that I'd like to have as clients. Do any of them need ERISA counsel? To demonstrate how much you can save by using a bottom's up QNEC, for one of my clients a $50,000 contribution allocated as the same percentage of compensation of all non-highly compensated employees was not enough to bring the plan into compliance with the ADP test, but we brought it into compliance for a measly $1,800 by allocating those funds on the bottom's up basis. Admittedly, that was pretty cheap because the client had a lot of turnover in its workforce; actual savings may vary.

KJohnson: Every plan that I've reviewed that contained language authorizing QNECs made them optional, not mandatory.

Don't you also have to worry about violating the limitation on the maximum number of shareholders in an S Corporation if shares are distributed to participants? Also, isn't there a concern if the stock is rolled over into an IRA and not immediately redeemed?

I think that purchases of stock under a nonqualified employee stock purchase plan would be taxed under Section 83. Unfortunately, as Katherine pointed out, that doesn't mean that they can't also be subject to tax under Section 409A; they can be taxed under both regimes.

If you do a Google search of at least some of the people on the Message Boards, at least some of their postings on BenefitsLink will show up. Try doing a Google search on your own name to see what comes up.

erisafried: Let me make your life a little bit more complicated than it already is. I think that it is a safe assumption that the employer has purchased a stop loss policy to protect it against large losses. Do the California rules require that the health plan to which the stop loss insurance policy relates must comply with AB 2208 before a stop loss insurance policy can be issued with respect to the plan? My recollection is that California took that approach regarding the regulation of insurance plans for small employers (AB 1672?) many years ago. It is nothing more than an artifice designed to skirt ERISA premption rules by indirectly regulating the content of health plans. I also seem to recall that some state on the East Coast (Maryland?) did the same thing too. That statute was challenged in court on the grounds that it was preempted by ERISA, and I'm almost positive that the court said the statute was prempted.

Isn't there also an issue about the plan not be operated in accordance with its terms if the QDRO is given retroactive treatment for more than 18 months, and the plan limits the retroactivity to 18 months?

I don't think that you can do that for purposes of determining the amount of the COBRA premium.

WDIK: Point well taken. What I was focusing upon, but didn't mention in my post, are where service providers get each one of their clients to send the identical letter to the IRS. Gettting hundreds or even thousands of identical letters has extremely little impact. On the other hand, as you implicitly suggest, people preparing original and thoughtful analyses of the same issue will help to demonstrate that the problem affects a lot of employers.

JAY21: I seem to recall that there was some language in the preamble to the section 415 regulations issued in the early 1980s that said that setting up a 414(k) arrangement without a formal termination of the defined benefit plan doesn't work. Is that the answer that you were looking for? If not, please clarify.

I don't think that they are posted on the IRS website. Some of them get published in the BNA Daily Tax Reporter. I think that you can get all of those comments from BNA, but it might require an annual subscription. You should make the suggestion to the IRS that the comments on section 409A be posted on their website as they come in. That will help the IRS because it may eliminate the amount of duplicative submissions that they get.

I think that the notice indicating the portion of the payment that is not eligible for rollover treatment needs to go to the distributee as well, because it will affect the amount of his or her taxable income. Also, I think you want to build a "paper trail."

You need to read ERISA section 4069.

That's more than a lot of people know.

mbozek: I had always assumed that the plan documents were protected from disclosure under the FOIA. My recollection, albeit pretty hazy at this point in time, is that there was a court decision holding that the favorable determination letters were not disclosable under the FOIA. Accordingly, I would assume that the plan documents are disclosable either.

Forms R Us: I think you are off-base. I didn't go back and read all 413 of the postings by Vebaguru, but I did read the 10 or 20 that showed up on a search and none of them evidenced the malice that you attributed to him.

RLL: On the opposite end of the spectrum, I think that you are being overly modest if you include yourself within the group of "normal folks." I've found your postings to be among the best I've seen on the Message Boards; they are invariably both concise and precise.

"VEBA maven" is definitely better than "VEBA Geek."

Please no more information about what Blinky has. I've not eaten yet!

Mary Kay Foss: Are you aware of the fact that there are (at least) three different definitions of disability contained in the Social Security Act?

Does your plan document address this issue?

I think you should bring this matter to the attention of the IRS.

I think that scheduling and conducting meetings with clients is premature. I think that it would be more productive to wait until the guidance is out. Most of my clients don't want to have meetings if the answer to most of their questions will be "We won't know the answer to that until the guidance comes out." This isn't to say that you shouldn't notify them of the developments and that you will need to meet with them after the guidance is out, I just think that having meetings now won't be the best use of the client's time.

I think that scheduling and conducting meetings with clients is premature. I think that it would be more productive to wait until the guidance is out. Most of my clients don't want to have meetings if the answer to most of their questions will be "We won't know the answer to that until the guidance comes out." This isn't to say that you shouldn't notify them of the developments and that you will need to meet with them after the guidance is out, I just think that having meetings now won't be the best use of the client's time.

Demosthenes: You said: For those of us who are significantly less sophisticated on investment matters than you are (which probably includes the huge majority of the people on BenefitsLink as well as the general public), could you please provide the names of some of those "good, free tools" and how or where we could get them? That will be a big help to a lot of us.