Ebplans

Are there any land mines on the discrimination or other 125 plan road for an employer that maintains two IRC Section 125 plans for the benefit of its workforce? Must the two plans be aggregated for discrimination testing?

This is going back a long way but I believe the 1986 Tax Reform Act first precluded elective defferrals in money purchase plans. I vaguely recall it was possible and sometimes done before the '86 Act.

I often tell clients and others there are two rules to observe when working with an insurance company... Rule 1: Insurance commpany always wins. Rule 2: Refer to Rule 1. Insurance companies are not in the business of letting go of assets. My exprience is that the people working at most such companies don't care about ERISA fiduciary duties, although they should. I suggest your attorney draft a complaint alleging fiduciary breach by VOYA and your employer. Then send it to your employer and VOYA's manager with the message they need to fix this or you will file. Of course, that will cost you money which is not fair. It may cause your employer some heartburn, as well, but retaliatoiin is also a vciolation of ERISA. Sometrimes a written complaint is the only way to get the attention of plan fiduciaries and insurance companies. The QDRO procedures requiremenet has been on the books since the mmid-1980s. This is really fundaamental plan work.

I recall an IRS audit from years ago in which the aditor made my client's plan vest participants who had balaces in the plan including those who died as well as all others when the plan terminated. The auditor's position was that if the money hadn't been distributed, all the vesting rules applied. I get that there is no plan terminatin here, but that auditor from days of yore would say if you diddn't distribute, you must vest. I would be interested in CuseFan, ESOPGuy, or anyone else's take on this. The plan may need to VCP/SCP itss failure to distribute.

PA's are usually professional associations, and are creatures of state law. Some states have Professional Corporations in lieu of PAs. Some have Professional Sewrvice Corporations in lieu of PAs. State law determines who can organize as a PA/PC/PSC and who owners can be. In geberal, they are similar to corporations, single director/owner corporations in your case. My experience is that PA/PC/PSC employees are W2 emloyees. This is just the tip of the iceberg. Your other questions don't have enough facts to answer.

I have had many clients over the past 25+ years that were governmental hospitals. Most were county hospitals. They overwhelmingly received 501(c)(3) status so they could maintain 403(b) plans. In addition, many maintained 457(b) plans. As governmental entities, they were not subject to ERISA and the pre-ERISA IRC governs with a few exceptions. Not your facts, but they are governmental with 501(c(3) status. This sounds like your client is a FQHC, a Federally Qualified Health Center. FQHC employees are Federal employees and they get FTCA 'protection.' They get funded through the PSA and get their authority from Medicare rules, I think. See DOL Opinion 2005-07A. Again, not your situation exactly, but the DOL ruled on a statewide group of FQHCs. Reading between the lines, did the DOL consider FQHC to be non-governmental? There are also FQHC look-a-likes out there but I don't know much about them. I suggest you run it by the DOL if someone will talk to you. I bet they have thought about this. There are thousands of FQHCs operating.

Termination has different meaning to different players in the retirement plan termination game. For example, the IRS says a plan is terminated when the last penny of assets is distributed. The final 5500's due date is related to that date. There is not enough information to judge or opine here but there is a good argument that the plan was terminated for IRS purposes the day that stock, if it was the sole remaining asset, 'left' the plan. When it 'came back,' there was no plan to return to. it could come back to a brokerage account, but not to the plan. If the facts bear this out, there was no plan to return to. I am not sure from the question when that moment/day occurred when all assets were paid out. That is the year of distribution with all its reporting requirements.

It has been a while since I thought about this. My recollection from the early days of ERISA and how one should report income centered on avoiding confusion at tax time. I counseled clients starting new plans to get a separate trust identification number for new trusts. I have always told the new plan sponsor that this approach will ensure the trust's income does not get reported as income to the plan sponsor which could happen if the plan sponsor's EIN is used. I cannot think of a plan sponsor client that has experienced this kind of confusion, but that was the reason. Perhaps my clients didn't have this problem because they used a separate TIN. The exception to the separate TIN rule applied in cases where the trustee was a corporate trustee that used its trust identification number to hold and report earnings. More modernly, this issue hasn't come up for me. I have no single employee 401(k) plans The Employer Identification Number of the plan sponsor plus the three digit plan number were used for reporting in other than the investment matters.

Board resolution is enough for all the interested government agencies. You can amend later if needed as long as there are still assets in the plan's trust. Good luck!

I agree that he does not have to wait until after the close of the plan year to fund.

Agree with ESOP Guy and EBECathy. Must vest.

I am not sure how the facts play out here. If the contribution being made to the 403(b) is a non-elective/profit sharing contribution or match, it can be made to a 401(a) plan that exists to receive it for 2020. How about this sceario... Amend the employer contirbutin out of the terminating 403(b) for 2020. Set up a 401(a) plan in 2020 to accept the Employer contribution for 2020. Merge the 401(a) plan into the new plan or make the new 401(a) plan effective 1/1/2020 as to employer contributions. I admit to being somehat confused about these facts. Perhaps I am missing something. I don't thnk you can merge a 403(b) plan into a 401(a) plan. It would still considered distribution from the 403(b) plan. Hope tihs is helpful and doesn't stir the muddy water.

You don't want the DOL to get the perception that the client cannot be bothered with the final 5500 filing or even worse, the DOL perceives the clinet is disregarding the DOL. They will not go away until they have what they want. The folks in TEGE are a bunch of swethearts by comparison to the DOL.

Ray, I am a horrible typist too. I feel your pain.

I agree 100% with Luke Bailey. This individual is not a Qualified Individual. Spouse makes him or her a QI only if the spouse has tested positive for COVID-19 by a CDCP approved test.

The government agencies have never provided much helpful guidance. The IRS has said in a number of forums over the years that prime plus is not commercially reasonable but many, many loan programs use it. A commercially reasonable rate is required. One comparable type of loan is the compensating balance loan which often is discounted. I have heard IRS presenters say the rates from these loans were too low.

If the employer stonewalls your wife, call your Regional Office of the Department of Labor's Employee Benefits Security Administration They will get the employer's attention. They handle these issues frequently.

At the FIS seminar in Orlando last week, there was a little discussion of this 'technique.' In summary, the discussion was that 1. Testing, etc. work for a single life 401(k) plan; 2. Testing, etc. work in the context austin3515 describes above; 3. However, the Mega Back Door Roth may run afoul of the IRS's long standing enforcement position that you cannot do in two steps what you cannot do in one step. No one commented on the results of IRS audits of these plans. For some practitioners, it doesn't pass the smell test.

The Eglehoff case says the plan document controls. I also suspect that the plan says that the person to whom the participant was married at the time of his death is his beneficiary. I have not reviewed or thought about a QDRO as suggested above, but if it isn't your facts, you don't have to worry about it.

I couldn't agree more with what has been said above. He might be able to get away with it since it is a small plan (audit roulette), but if he is caught, the consequences would be catastrophic in terms of the tax, penalties, etc. Plus he will have to pay another lawyer to see the plan through the grinder. Lawyers hate to pay other lawyers.

457(b) plans are designed to provide governmental employers the opportunity to sponsor salary deferral plans for their workers since governmental employers are mostly precluded from offering 401(k) plans. Are sure you mean 457(b)?

My view is that it is unreasonable. What is the link between the fee and work performed by the TPA? Much greater than anything I see. Perhaps it is a fiduciary breach for the Plan administrator or other responsible fiduciary to allow it.

The three different arrangements may be not subject to ERISA because the arrangement(s) took advantage of the conduit exception to ERISA. They may not be three different arrangements either. I am not sure there is anything to terminate. If the employer intended to take advantage of the conduit exception, taking action to terminate the arrangement(s) may blow up the conduit exception. I haven't looked at that issue in some time. The conduit exception says ERISA doesn't apply to an 403(b) arrangement if the only role the employer has is to send $ to the investment provider and information from the fund to the employee-participant. The employer may only limit the investment providers to a reasonable number. That is about all the employer can do if it wants to avoid ERISA. For arrangements that meet the exception, they are really just employee-investment provider deals not unlike an IRA. This approach was common and there were no documents often before the 2007 final regs.

Mr. Star, I respectfully disagree with your analysis and position. An unfair labor practice is an unfair labor practice. Today it may not be an issue but tomorrow the union may make it one. I also don't know about appropriateness. I don't get paid to give appropriate advice.

The answer is YOU ABSOLUTELY MAY NOT allow this one union member in the plan UNLESS the bargaining unit has provided for such a benefit in the bargaining agreement that covers these folks. If you let him in and the bargaining agreement does not permit it, you have engaged in an unfair labor practice. Letting the one employee in without negotiating the benefit is a forbidden union "busting" technique. This is also the reason why every non-collectively bargained plan of any sort should exclude collectively bargained employees. My limited experience is that the bargaining unit will not likely permit one member in and not the others. Bill William D. Roberts Attorney ebplans@hallrender.com | vCard | @hallrender on Twitter Hall, Render, Killian, Heath & Lyman, P.C. 603 Munger Avenue, Suite 350 | Dallas, TX 75202 D: (502) 568-9364 | C: (502) 314-6667 | F: (214) 615-2001