IRS memorandum on Otherwise excludable employees

[Tom Poje]

hurray, they have concluded you can use the 'greatest' of exclusions

e.g. a full time employee hired 4/3/2015 is an otherwise excludable employee until 10/3/2016

(1st day of plan year or 6 months after completion of 1 year)

thus if he quit 8/4/2016 he is still otherwise excludable.

OE memorandum.pdf

[Belgarath]

Thanks Tom - this is how we have interpreted it anyway, but nice to see the IRS agrees!!

[david rigby]

Regulation by memo. Shameful.

[Kevin C]

Regulation by memo. Shameful.

In this case, I'd call it helpful. This officially resolves the controversy caused by an IRS speaker's comments at the 2006 ASPPA annual conference DC Q&A session.

[Beltane]

Any document language restrictions which may govern its applicability? Depends on the provider I suppose - or is this another option to use in testing?

[Kevin C]

Current plan document language will probably address whether you use the plan's entry date or the statutory semi-annual entry dates. Our PPA VS document says you use semi-annual entry dates.

If you look at an older document, it likely won't address it. The IRS speaker's 2006 comment was basically that you had to use the plan's entry date, unless the plan language said you use something else. The ASPPA panelist's reply was that if we had known we needed to put that in our documents, it would be in there.