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Foundation with employees in U.S. and Canada

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I don't have much information, but extrapolating/guessing from what I do know, the following situation may be the actual situation, or close to it.

Suppose you have a non-profit foundation, that does whatever - provides canoe trips for blind dogs and cats so that they are less stressed.

They have a U.S. operation, and a Canadian operation. Let's ASSUME that the same board controls both organizations, so they are a related group.

The U.S. organization has a non-ERISA, deferral only 403(b). They have NOT been allowing the Canadian employees to participate, and there is no separate plan.

Now, I can't find where the Canadian employees (I THINK they are all Canadian citizens, not U.S. citizens) can be "excluded" under the Universal availability regulations. But, perhaps the plan could simply exclude all non U.S. source income COMPENSATION, which would accomplish the same thing, as they are paid purely for work in Canada? Or actually, as I think about it, they should be able to exclude Nonresident aliens, I think, which depending upon the circumstances should take care of that "problem."

Never seen a situation even approaching this, and curious if anyone else has? By the way, no highly-compensated employees, apparently.

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If the Canadiens (hockey fan spelling) are living and working in Canada then yes, your non-resident alien exclusion should work. They could have a separate Canadian plan, if desired, the rules up there are different. Things get extremely complicated for Canadian citizens if they earn benefits in a US-based plan, so would highly recommend against that and continue to exclude as they do now - but make sure the plan document has that exclusion.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services


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