QSLOB "testing" frequency?

[Guest beppie_stark]

I recently became responsible for a DC plan for a QSLOB. I am wondering if the QSLOB demonstration needs to be repeated after the first filing? Looking at the regs. I see that notification is only necessary once but must the QSLOB continue to meet the requirements on an ongoing basis? If so is the requirement daily, annual or what.

I hope this is just a coverage question -- not a plan defect -- but I couldn't find a better board and you all are the greatest!

[Sandra Pearce]

I did the QSLOB analysis and IRS forms for our Pension Plans several years ago. The plans have now merged into one. Annually I reviewed information to see if we still qualified. After the first filing I only completed a new filing when we added or dropped a pension plan on one side of the SLOB (acquisitions and sales).

[Kirk Maldonado]

Sandra Pearce:

Would you please clarify whether your annual test was (1) whether the arrangement still met the QSLOB tests or (2) whether the nondiscrimination tests were met for that year (after taking into account the QSLOB rules).

[Guest beppie_stark]

Does the lack of responses and Kirk's question mean that there is a lack of clarity on this issue or is it just an obscure issue few others are familiar with?

[E as in ERISA]

I have seen situations where the QSLOB status had to be re-evaluated almost every year (various family members involved changing percentages of ownership and/or acquiring or disposing of companies). When the facts are fairly stay fairly constant, it is probably not important to repeat the QSLOB analysis each year. But there are definitely some situations when they have to be updated frequently.

[Sandra Pearce]

I reviewed the two sides of our QSLOB each year and if the information provided previously had changed (companies added or deleted, plans added or deleted) then I filed a new form.

[Guest beppie_stark]

E -

Sounds like you are talking about controlled group membership, which to my mind is a larger issue than QSLOB status. There have not been ownership changes that would affect this company. There have been some changes in relative employee concentrations, management and staff responsibilites. Am I required to reconsider QSLOB status due to those changes? I'm not sure that the changes are significant; we have not gathered the information necessary to make that evaluation.

[JDuns]

Each plan must at all times be provided to a non-discriminatory group of employees. The QSLOB rules are one way to break your employees into different groups for testing purposes.

If at some point the facts have changed and you no longer meet the QSLOB rules, you can no longer continue to ignore the employees in the other line of business when testing your benefits. In my opinion, verifying the QSLOB status should be part of your regular discrimination testing. If you discover that the QSLOB may no longer be qualified, you can then take steps to remedy the problem. I think this is much better than finding out that you weren't eligible when you are under audit and can't self-correct.

As to your timing question, technically a plan must meet the non-discrimination tests each day but are permitted to test on a representative day under the substantiation guidelines.

[E as in ERISA]

I have never seen it re-evaluated in that circumstance. But that doesn't mean it's not necessary. Without checking through the rules, I thought that you have to qualify for QSLOB as often as you test. But I don't find QSLOB analysis to be high on anyone's list of things to do.

[JanetM]

We use QSLOBS. The non discrimination & coverage testing done each year must be done on QSLOB basis and passed on QSLOB basis if you wish to keep SLOBs. You must ensure you meed three criteria (50 ee's working +17.5 hrs?6months/year, notify IRS it considers itself to have SLOBs, satisfy adminstrative scrutiny.

This also affect you in your counting for the schedule Ts.

You file the original 5310-A when you want to be QSLOB and then, unless you hear from IRS or new guidance is issued, you only file again if you modify or revoke QSLOB.

Hope that helped.

[Guest beppie_stark]

Janet and Sandra -

Did you also review the separate management and separate workforce requirements annually?

- Beth

[JanetM]

Beth,

We do consider any changes annually. Normally the organizational chart stays fairly static that high up the food chain. If nothing has materially changed then we stop looking. Occasionally they do a major shuffle with the group of 20 (or is it 22 now) companies and then we take a good long look.

[Guest beppie_stark]

I believe I found my answer at 1.414®-1(d)(6). Annually, calendar year is testing year (1.414®-11(b)(5)).