International Employee 401k

[Guest padmin]

is anyone aware of a good resource to determine the issues associated with the establishment of a 401k plan for ex-pats. A client would like to provide a retirement arrangement for us citizens working abroad?

Thanks

[ERISAnut]

Not much to be offered.

It should be business as usual since these employees are not (Non-resident Aliens with no U.S. income). Hence, if the employer already has plans, these could count against coverage.

In reality, these would likely be your highest paid employees; so a plan covering only them would likely fail 410(b) as a standalone.

May be some issues with certain investments (such as employer securities).

My exposure is very limited in this area. What are your major concerns?

[Guest Kabert]

Are the participants-to-be US citizens living abroad or are they non-US citizens? Your question refers to US citizens as well as ex-pats -- I thought ex-pats were people who have renounced their US citizenship. Have you looked at BNA's Tax Mgmt Portfolio for International Pension Planning (or similar name)?

By the way, if they are non-resident aliens, you might consider whether to set up a separate ERISA section 4(b)(4) plan for them.

[Guest Sieve]

Kabert -- Even if they were all non-resident aliens living abroad, wouldn't a plan established by a US company with a US trust location still be subject to ERISA (despite Section 4(b)(4)) because it would not be considered "maintained outside of the U.S."?

Assuming that this is a US company and the employees are US citizens working abroad, why couldn't they be particiapnts in the US company's plan regardless of their location? I see nothing to prevent that (although I've never dealt with it). In that case, of course, the normal coverage rules would apply, so that establishing a plan only for these employees would have to pass IRC Section 410(b).