EBspecialist

If an employer wants to establish a new program to make lifetime payments to some former employees who retired long ago, would the program be considered an ERISA pension plan? 29 CFR §2510.3-3(b) says that the term "employee benefit plan" does not include a plan under which no employees are participants covered under the plan. The definition of "employee" is "an individual employed by an employer". At least one court has interpreted that language to mean that ERISA covers a plan only when the employer established it to provide benefits to at least some of its then-employees. A few other courts have said former-employee-only plans are not ERISA plans based on the policy argument that the objective of ERISA is to ensure that workers get promised benefits upon retirement, especially since some of the promised benefits were in lieu of other compensation that workers may have received, and those objectives do not apply to such plans. Is anyone aware of more definitive authority that could support (or contradict) the position that ERISA does not cover plans that are established to provide benefits to former employees only?

The question is how does the 5-year delay rule for subsequent deferral elections (under Reg. Section 1.409A-2(b)(ii)) apply to a form of payment change where the plan pays on the earlier of a fixed date designated by the employee and separation from service. Fact pattern: Plan pays upon the earlier of a specified distribution date designated by Employee and Employee's separation from service and offers payment in either a lump sum or fixed installments. Employee timely makes an initial election to be paid in a lump sum and designates January 1, 2020 as his specified distribution date. Employee files a subsequent deferral election by December 31, 2018 changing his elected form of payment from a lump sum to fixed installments and moves his designated distribution date to January 1, 2025. If Employee incurs a separation from service in, for example, 2023, must his benefit be paid in a lump sum pursuant to his initial election or installments pursuant to his subsequent deferral election? Example 15 makes clear that with respect to a payment deferral he still gets paid on separation from service. Any citations, guidance or authority on point would be helpful.

Questions regarding a proposed S-ESOP structure. Individual X owns 100% of Corporation Y and 5% of Corporation Z, each an S corporation. ESOP, which forms a portion of Corporation Y's 401(k) plan (the KSOP), owns the other 95% of Corporation Z. Corporation Z will have two officers but no other employees, although some of the services provided by Corporation Y employees benefit Corporation Z. Plan participants will receive a non-discriminatory discretionary employer contribution and will be given a one-time election to invest the contribution in Corporation Z stock. Afterward, participants may not enter or exit the stock fund except upon a distribution event or to satisfy ESOP diversification requirements. No participant will own 5% or more of Corporation Z through the KSOP. 1. Does the KSOP meet the requirements of an exempt employees' trust under section 1.1563-2(b)(4) and section 1.414©-3©(2), which would mean that the ESOP stock in Corporation Z is excluded and would make Corporations Y and Z members of a controlled group? Might Corporations Y and Z be treated as a single employer for this purpose? 2. If future contributions are not made to the ESOP portion of the plan for several years after the initial contribution, but substantial and recurring contributions continue to the 401(k) portion of the plan, has the permanence requirement of 401(a) been satisfied?