Kirk Maldonado

BFree: Because virtually nobody else knows about that obscure IRS document, it is very hard to locate, and it is not often cited in secondary source materials.

Full vesting is not required upon the merger of two defined contribution plans, provided the requirements of Section 414(l) are satisfied. Q&A-16 & 18, TIR 1408, October 30, 1975.

Jbentz: The abuse you mentioned has been eliminated in the latest set of COBRA regulations.

You might also want to check out BNA Tax Management Portfolio #395, VEBAs and Other Self-Insured Arrangements. It has an extensive discussion of the VEBA rules.

Based on my withdrawal liability experiences with them a number of years ago, I'll be that they will be underfunded for many years.

I concur with Steve72. RIA Checkpoint has a lot of material that is hard to locate otherwise. I also have no relationship with RIA, other than the fact that my firm subscribes to its services.

As somewhat of an aside, if the employee contributions are run through a cafeteria plan, then the cafeteria plan ends up discriminating against highly compensated employees! That occurs because the contributions by the non-highly compensated employees (to the cafeteria plan) are a greater percentage of compensation than the contributions by the other employees.

suziecpa: Just because the shares were not registered on a Form S-8 does not mean that they shouldn't have been. If employee contributions can be used to buy employer stock, then those shares must be registered on a Form S-8 (and a Form 11-K must be filed). Failure to register those shares gives participants a rescission right, which they will exercise if the stock price goes down. In other words, if the shares weren't registered (even though they should have been), the company should consider itself the guarantor that the stock price won't go down. In today's market place, that is not an enviable place to be in.

suziecpa: If the shares are registered on a Form S-8, the plan must file a Form 11-K, regardless of the size of the plan. By the way, the vast majority of ERISA attorneys are not terribly proficient on the nuances of securities laws; the number of attorneys who are knowledgeable on both ERISA and securities laws is a pretty select group.

MBozek: Obviously, you didn't realize that my prior reply was an attempt at humor.

Why not use the forfeitures to pay plan administrative expenses? If that wouldn't use up all of the forfeitures, then you could hire an attorney to advise you as to whether you could use the forfeitures in that manner. That should be able to enable you to expend whatever amount of forfeitures you have.

If you want more detail on these matters, you might want to look at BNA Tax Management Portfolio #362, Securities Laws Aspects of Employee Benefit Plans. In the interests of full disclosure, I wrote it.

I wasn't aware of any authority that says that if the IRS makes an error in issuing a determination letter, that automatically revokes any relevant Revenue Rulings. Now the issuance of the determination letter might preclude the IRS from revoking the qualified status on a retroactive basis, but it does not change applicable law.

Neither. The test is whether employee contributions are used to purchase employer stock, and, as a result, the shares are required to be registered on a Form S-8.

No.

I agree that Revenue Ruling 80-155 does not specifically mention forfeiture accounts. But it does state that suspense accounts are not permitted (except, for example, as authorized by the Section 415 regulations). I think that a forfeiture account should be treated the same as a suspense account for purposes of that ruling.

You should look at Rev. Rul. 80-155, 1980-1 C.B. 84.

I'm not sure that this is right, but check out Treasury Regulation Section 54.4975-11(e)(1).

I disagree with the assertion that the ability to self-direct investments causes constructive receipt. That issue generated a lot of interest after the advent of Rabbi Trusts, and the IRS has agreed that there is no constructive receipt issue. See PLR 8804023.

In addition to QDROphile's concerns, you might want to consider whether advising people on their rights constitutes the unauthorized practice of law.

It seems that if the release fraction changes were manipulated so as to maximize the allocations to the highly compensated employees, you could have a problem.

I seem to recall that there was a prior discussion about what to do when you can't find the plan document. You might want to search the prior threads to see if there was anything useful in them.

GBurns: From your response, you seem to indicate that your documentation has separate claim procedure rules for the health FSA. My documentation, on the other hand, has one claim procedure for all of the claims arising under the plan (whether arising under the health FSA or otherwise). Thus, my comment was that there must be a claims procedure for resolving any disputed rights to reimbursement under the health FSA. (I wasn't addressing the issue of whether the rules need be stated in the cafeteria plan document or the separate documentation evidencing the health FSA.) I assume that we are all in concurrence on this point?

Why do you think that the company should buy it first?

Why isn't a claim for reimbursement of medical expenses (out of the participant's flexible spending account) subject to the claims procedure rules?