Benefits practitioners take warning: contributions of unused vacation pay to employee benefit plans raise complex issues

Article Abstract:

IRS Technical Advice Memorandum 9635002 appears to support the use of vacation plans that contribute unused vacation pay into 401(k) plans, but plan administrators should be aware that such arrangements are still subject to nondiscrimination testing under IRC section 401(a)(4). In the ruling, which focused on FICA issues, the IRS characterized the contributed vacation pay as an employer nonelective contribution but did not address whether these contributions were subject to the $9,500 annual contribution limit. If the vacation pay contributions favor highly compensated employees, they are likely to violate nondiscrimination standards.

Employee Benefits & Services, Taxation, Human resource management, Employee benefits, Salary reduction savings plans, 401K plans, Defined contribution plans, Employee vacations

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Plan administrators be advised: treatment of severance pay as plan "compensation" raises complex issues

Article Abstract:

Administrators of qualified employee benefit plans need to know the relevant IRS rules and plan provisions when faced with decisions regarding the allocation of employment severance payments. Issues such as whether severance payments are compensation usable for plan contributions and service period crediting are complicated and have important tax consequences. Nondiscrimination rules in cases of highly compensated employees must also be considered.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Pension & Welfare Benefit Prgrm, Usage, Laws, regulations and rules, Compensation management, Qualified benefit plans, Severance pay

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Pension funds and investment partnerships - caveat emptor or a match made in heaven?

Article Abstract:

Fiduciaries investing in venture capital partnerships must be aware of relevant ERISA and Department of Labor regulations and protect themselves from possible personal liability. Usually a general partner will offer a 'side letter' with the needed protections for the investing pension trust and its fiduciaries. The regulations also provide plan asset exemptions when the entity's securities are not publicly offered.

Management, Economic aspects, Venture capital companies, Pension funds

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