Sarah R

Hello, we have a non-profit establishing a safe harbor 401(k) plan. The main director of the non-profit also owns 100% of two other for profit corporations with employees.The rules states: (b) General rule. For this purpose, common control exists between an exempt organization and another organization if at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization. A trustee or director is treated as a representative of another exempt organization if he or she also is a trustee, director, agent, or employee of the other exempt organization. A trustee or director is controlled by another organization if the other organization has the general power to remove such trustee or director and designate a new trustee or director. Whether a person has the power to remove or designate a trustee or director is based on facts and circumstances. To illustrate the rules of this paragraph (b), if exempt organization A has the power to appoint at least 80 percent of the trustees of exempt organization B (which is the owner of the outstanding shares of corporation C, which is not an exempt organization) and to control at least80 percent of the directors of exempt organization D, then, under this paragraph (b) and §1.414(b)-1, entities A, B, C, and D are treated as the same employer with respect to any plan maintained by A, B, C, or D for purposes of the sections referenced in section 414(b), (c), (m), (o), and (t).Since the director of the non-profit is also a representative of the other organizations by virtue of owning them / being President, etc., I interpret this to be a control group situation between the three organizations. The for profit companies do not have any direct control over or involvement with the non-profit so the client disagrees with my interpretation. Thoughts?Thank you!

An employer sponsors a stand alone HRA and one participant is enrolled in an HSA through her spouse's employer. The participant had previously only used the HRA to pay the health insurance premiums on the HDHP. Now, the spouse's employer will be paying these premiums and she wants to start using her HRA for other expenses such as prescriptions and non-preventative medical care. If she stops her contributions to the HSA, would she be able to begin using the HRA for any purpose immediately (it is a General Purpose HRA) or would she have to wait until the calendar year in which she had no contributions to the HSA? Also, if she still has balance in the HSA at the time she ceases her HSA contributions, does that have any impact on her availability to use the HRA for any purpose? Note that the HRA plan is run on an off calendar plan year. Thank you!