Foreign Company 401(k)

[Guest Green92]

We have a client (a Canadian general contractor) that is winding down operations in the US. They soon will have no office here and only 1 active employee in the 401(k) plan. They want to leave the plan open to contribute to his account, but I don't think they can if they pay him through their foreign payroll (they used to pay employees through a US office and US payroll). Is there another type of plan that I should suggest?

To make matters worse, the client will not commit to never bidding US jobs again (and therefore adding US employees and a payroll). They might, they might not.

[Guest mjb]

I dont understand the Q. If the employee is working in the US how can he be paid in anthing other than US $ under applicable state labor laws. In otherwords they cant pay him for working in the US in Canadian $ which is only worth 90% of US$. There may also be currency violations under Canadian law to pay a worker in the US in Canadian $.

[Guest Green92]

I dont understand the Q. If the employee is working in the US how can he be paid in anthing other than US $ under applicable state labor laws. In otherwords they cant pay him for working in the US in Canadian $ which is only worth 90% of US$. There may also be currency violations under Canadian law to pay a worker in the US in Canadian $.

Currently he commutes to Canada every day to work. I left that out, my mistake.

[Guest mjb]

Forgetting the other issues how can canadian funds be remitted to a US custodian for 401k plans who accepts only US $ not to mention compliance with applicable US laws, eg. ERISA. Legally a foreign employer can maintain a qualified plan for a US employee if the plan complies with US law, trust is sited in US, but I dont know if a foreign employer can maintain a US plan for a US citizen who works for a Canadian co in Canada, eg. how do the 415 limits apply.

[Guest Green92]

Forgetting the other issues how can canadian funds be remitted to a US custodian for 401k plans who accepts only US $ not to mention compliance with applicable US laws, eg. ERISA. Legally a foreign employer can maintain a qualified plan for a US employee if the plan complies with US law, trust is sited in US, but I dont know if a foreign employer can maintain a US plan for a US citizen who works for a Canadian co in Canada, eg. how do the 415 limits apply.

Thanks for pointing out some deeper issues here. I was just scratching the surface. The good news is that they now say they will continue to have a US address and payroll and tax ID number.

[401k IA]

On 5/31/2006 at 9:24 AM, Guest mjb said:

Forgetting the other issues how can canadian funds be remitted to a US custodian for 401k plans who accepts only US $ not to mention compliance with applicable US laws, eg. ERISA. Legally a foreign employer can maintain a qualified plan for a US employee if the plan complies with US law, trust is sited in US, but I dont know if a foreign employer can maintain a US plan for a US citizen who works for a Canadian co in Canada, eg. how do the 415 limits apply.

Could a Canadian custodian hold the assets of an American 401(k) plan? If not, would it be possible if the money flowed through an American Entity of the Canadian custodian or if the money flowed through a Canadian entity of the American business wanting to sponsor a 401(k)?

It's a complex question, so my apologies if it doesn't make sense to you. I have a unique situation that would benefit from a Canadian custodian holding the assets of the 401(k) plan, but I'm not sure that's even a possibility.