Kirk Maldonado

I agree with MBozek.

MRoberts: What contract? This is a self-funded plan. It might be a small arrangement that just covers the portion of the costs that aren't covered by insurance, so there might not be any contract.

My recollection is that the protection given to IRA owners and self-employed individuals under California law is limited, not absolute.

I've seen some check the box SPDs that were definitely in final form. I think that is very unprofessional. It does save the client some money but it looks very cheap.

Don't forget about the Section 410(a) rules regarding when participation must commence following satisfying the eligibility conditiions.

MBozek: Thanks for the clarification.

Pardon my ignorance, but how do you have a nonresident alien who is living and working here? Doesn't that make him or her a "resident" alien?

BTH: That is a perfect example of the maxim that "no good deed goes unpunished."

I've never heard of the IRS challenging any reason for terminating a plan. I've always been tempted to try "the plan fiduciary was abducted by alien creatures."

What would the employer do if an individual's employment is terminated during the year?

Did you hear about the organizations ADD? It stands for "Dislexics Against Drugs?" Their motto is "Just say ON!"

b2kates: Could you contact Dave Baker to see about posting it here on BenefitsLink? I think that it would be of value to a lot of our readers.

Harry O: Thanks for the clarification.

Here's a pragmatic solution. Hire an ERISA attorney to give you an opinion as to what to do with the residual funds, and pay his or her fees out of the plan. The legal fees should use up all of those funds, thereby solving the problem.

mbozek: How would a SERP swap (by itself) involve a loan from the employer to the executive?

I think that going to the local office of the U.S. Department of Labor would be more productive. They seem to be aggressively pursuing these types of cases. P.S. I'm assuming that the employer did not pay the premium for anybody's health coverage.

mroberts: Being a Californian, I had assume that California would be the worst offender. Is that an incorrect assumption?

PAX: You might want to read IRC Section 401(a)(13)©.

My recollection is that, if the documents are silent, you are not required to take into account service with predecessor employers. Thus, service with Company B need not be taken into account under Company A's plan.

Jose: Why don't you rely on the provisions in EGTRRA permitting the elimination of different forms of benefits rather than the regulations? The EGTRRA provisions are much simpler.

GBurns: That assumes that those state laws are not preempted. I believe that they are, although I will readily concede that not everybody shares my opinion.

KIP KRAUS: I've heard some people say that only one year's experience is sufficient for self-funding, if there are at least 500 lives. Is that a reasonable rule of thumb in your estimation?

They were approved in Rev. Rul. 2002-27.

Although I'm an attorney, and not an actuary or insurance agent, I've worked with a number of self-funded plans. The people that I've worked with have always discouraged small plans from being self-funded. The standard that I've heard is you need 500 life-years of credible experience. Based on what I've heard from those people, my recommendation would be for you to find a benefits expert who is knowledgeable regarding self-funding. (That person would not be an attorney.) My prediction is that person will tell you that you are too small. I think that you will find that the people that work with fully insured plans will typically refer out cases involving self-funded plans, because of the need for specialized expertise.

I disagree with Lisa Hand's position. I seem to recall that her position is the same as that espoused in EBIA. If my memory is correct, I disagree with EBIA's position as well. I have disagreed with a number of positions taken in that publication, as have a number of my other colleagues. I was also involved with an ABA project in which we attempted to get the IRS to reverse the position that kindergarten expenses are not reimbursable. While the IRS would not accede to their prior position, they did remove the language from their Publication that stated that those expenses were not reimbursable. I take that as a sign that we prevailed.