SRNPEBT

A back to basics question: Does the 401(a)(17) compensation limit apply to elective deferrals under a 403(b) plan? For example, if an employee's compensation is $350k and he has elected to defer 5% of compensation, can he defer 5% of $350k up to the 402(g) limit ($18k), or can he only defer 5% of $265k ($13,250) because of 401(a)(17)? I assumed 401(a)(17) did apply to 403(b) plan deferrals, but I've been pointed to some regulations under 1.403(b)-5 that suggest universal availability trumps such that 401(a)(17) does not apply. Thanks in advance for any thoughts.

Thanks for the feedback. I'm not in the TPA business so the granularity of coverage testing isn't something I need to dig into often - happy when I can punt to someone more in the know. In this case, it's a small plan that hasn't historically required any testing and as such is administered by the client's accountant. I wanted to confirm my suspicion that this type of design tinkering would require testing that is far beyond what their accountant can handle, and now I can make the argument that they will need to move to a more sophisticated TPA if they want to achieve their new design objectives.

Yes - the allocation condition would be added effective 1/1/16, so we are kicking around options now. Historically the profit sharing contribution has been pretty generous, so I'll have to look into whether they are willing to cut it down. Otherwise, my choices are to make sure all NHCEs are getting at least 5%, or make sure the profit shariing contribution is no more than 3x whatever the NHCEs are getting, right?

Client offers a safe harbor 401(k) plan (3% nonelective) which has a discretionary profit sharing contribution with no allocation conditions. Client wants to add a 1,000 hour allocation condition to the profit sharing contribution. If done, it is expected that only 2 HCEs will receive the profit sharing contribution (client is a physician's office which employs 13 HCEs and 8 NHCEs, most of whom work only a few days a month due to hospital commitments). Since all employees receive the 3% SH nonelective contribution, I believe we pass coverage testing (even if none of the HCEs receive the discretionary profit sharing contribution, because they are at least getting some nonelective contribution). But, do I need to test the discretionary profit sharing contribution for discrimination under 401(a)(4) as well? If so, do I have any chance of passing if 2 HCEs will benefit and no NHCEs will?

Thanks everyone for the thoughtful responses. This arrangement is definitely papered as if it is fully insured (e.g., contract filed with the insurance department, etc.). The insurer at issue pays the PCORI as well (as an insurer would do for a fully-insured arrangement). Feedback from the insurer indicates that they treat this arrangement as insured for "regulatory purposes" but as self-funded for "statutory and accounting purposes" which is why they believe they aren't on the hook for reporting. I think the client has a good argument that it has no obligation to report the coverage (other than as required because it's an ALE subject to the ACA) but if the IRS doesn't agree, they could be on the hook for failure to report penalties (which I realize won't be enforced for the first year of reporting, so maybe we hold off on reporting this year and see what happens?)...

We have clients who participate in minimum premium arrangements with insurers (which, in a nutshell, offer insured coverage but with cash-flow advantages of self-funding). At least one of the insurers has taken the position that a minimum premium arrangement is self-funded, rather than fully-insured, and as such, the insurer will not be reporting on Form 1095-B. Instead, the employer, as self-funded sponsor, should report on Part III of Form 1095-C. This was a surprise to clients and to me. I checked the final instructions and they don't appear to call out filing obligations for minimum premium arrangements or any "partial self-funding" situations. I would like to push back on the insurers so they do the reporting, but I'm not finding any clear authority. Thanks in advance if you have anything to share.

I have a situation where an employer failed ADP and ACP testing for 2012 and 2013. In both cases they refunded/forfeited in the 2/1-2 correction period. It turns out that the data relied on for those tests was incomplete. After retesting was performed, it was determined that certain HCEs are (i) due additional refunds for 2012, and (ii) were refunded too much for 2013. I'm clear on my options for correcting where additional refunds are due, but I'm not as clear on correction where too much was refunded. I found a few threads here that suggest I need to treat the excess refund as an overpayment (under EPCRS), try to collect it back from the HCE for deposit into the HCE's account, and if the HCE doesn't agree, so be it (ordinarily, the sponsor has to make the plan whole for any unreturned overpayments, but since the overpayment would have been returned to the HCE's account, that would be a true windfall). Another poster mentioned that the IRS indicated at an ASPPA conference that the HCE should have to pay the 10% early withdrawal penalty if the excess refund isn't returned (assuming the excess refund was already reported on the HCE's W-2, I guess that means amending the W-2 and reporting the excess refund on 1099-R?). Does anyone have any other thoughts for correcting the excess refunds? For example, can the employer offset the 2012 refunds by the amount of any 2013 excess refunds due to the HCE? I am inclined to self-correct, but the employer may ultimately go the VCP route to ask for an excise tax waiver. Thanks in advance for any input.

Employer is a general partnership. There are four unrelated general partners, each holding 25% interest in the employer, so none of the general partners are members of the same controlled group as the employer. If employer withdraws from a multiemployer pension plan, I understand that each general partner can be held jointly/severally liable for the entire withdrawal liability (as applied under state law). But, is the controlled group of a general partner also on the hook if the general partner can't pay? For example, assume general partner is corporation x, which is wholly owned by corporation y. Can the plan or the PBGC go after corporation y? My gut sense is no, since neither corporation y nor the general partner are in the same controlled group as the employer. But, I haven't found any cases on point. I would appreciate any thoughts. Thanks!

I have encountered a multiemployer welfare plan which only offers a one-size-fits-all coverage option; in other words, there is no "self-only" coverage option. I assume this means I must consider the employee contributions toward the cost of the one-size-fits-all coverage option when determining ACA affordability (if so, the plan is VERY unaffordable - employees pay around 30% of wages for coverage)? Certainly, employers/plans can't circumvent the ACA affordability standard by eliminating the self-only coverage option, right? I checked regulations, etc. and didn't find anything that addressed this situation. Would appreciate any thoughts, etc. Thanks!