SIMPLE Cafeteria Plans

Minimum Eligibility Requirement
An eligible small employer under the provision is, with respect to any year, an employer who employed an average of 100 or fewer employees on business days during either of the two preceding years. For purposes of the provision, a year may only be taken into account if the employer was in existence throughout the year. If an employer was not in existence throughout the preceding year, the determination is based on the average number of employees that it is reasonably expected such employer will employ on business days in the current year. If an employer was an eligible small employer for any year and maintained a SIMPLE cafeteria plan for its employees for such year, then, for each subsequent year during which the employer continues, without interruption, to maintain the cafeteria plan, the employer is deemed to be an eligible small employer until the employer employs an average of 200 or more employees on business days during any year preceding any such subsequent year.  The determination of whether an employer is an eligible small employer is determined by applying the controlled group rules of IRC §§52(a) and (b) under which all members of the controlled group are treated as a single employer.  In addition, the definition of employee includes leased employees within the meaning of IRC §§414(n) and (o). 

Minimum Eligibility Requirement
The eligibility requirement is met only if all employees (other than excludable employees) are eligible to participate, and each employee eligible to participate is able to elect any benefit available under the plan (subject to the terms and conditions applicable to all participants). However, a cafeteria plan will not fail to satisfy this eligibility requirement merely because the plan excludes employees who (1) have not attained the age of 21 (or a younger age provided in the plan) before the close of a plan year, (2) have fewer than 1,000 hours of service for the preceding plan year, (3) have not completed one year of service with the employer as of any day during the plan year, (4) are covered under an agreement that the Secretary of Labor finds to be a collective bargaining agreement if there is evidence that the benefits covered under the cafeteria plan were the subject of good faith bargaining between employee representatives and the employer, or (5) are described in section 410(b)(3)(C) (relating to nonresident aliens working outside the United States). An employer may have a shorter age and service requirement but only if such shorter service or younger age applies to all employees.

 

Minimum Contribution Requirement
The minimum contribution requirement is met if the employer provides a minimum contribution for each employee who is not a highly compensated employee or a key employee (within the meaning of IRC §416(i)) in addition to any salary reduction contributions made by the employee.  The minimum must be available for application toward the cost of any qualified benefit (other than a taxable benefit) offered under the plan. The minimum contribution is permitted to be calculated under either the nonelective contribution method or the matching contribution method, but the same method must be used for calculating the minimum contribution for all nonhighly compensated employees. The minimum contribution under the nonelective contribution method is an amount equal to a uniform percentage (not less than two percent) of each eligible employee's compensation for the plan year, determined without regard to whether the employee makes any salary reduction contribution under the cafeteria plan. The minimum matching contribution is the lesser of 100 percent of the amount of the salary reduction contribution elected to be made by the employee for the plan year or (2) six percent of the employee's compensation for the plan year. Compensation for purposes of this minimum contribution requirement is compensation with the meaning of IRC §414(s).

  
Just Out from the IRS

401(k) Questionnaire Coming to 1,200 Employers

During the week of May 17th, IRS Employee Plans Compliance Unit (EPCU) began sending a letter and instructions to 1,200 employers sponsoring 401(k) plans asking them to complete the 401(k) Compliance Check Questionnaire.  Since this is being sent to such a small group of 401(k) plan sponsors, it is not likely that you will receive one.  The information gathered from the questionnaire will provide a comprehensive view of 401(k) plans and will help EP maximize its resources for education, outreach, guidance and enforcement efforts while minimizing the burden to compliant plan sponsors.

The Questionnaire was developed because of the critical role 401(k) plans play in our private retirement system. There are nearly half a million 401(k) plans in America covering over 50 million participants. EPCU will use a secure website to collect responses on the following topics:

· Demographics

· Participation

· Employer and employee contributions

· Top-heavy and nondiscrimination testing

· Distributions and plan loans

· Other plan operations

· Automatic contribution arrangements

· Designated Roth features

· IRS voluntary compliance and correction programs

· Plan administration

All plan sponsors who receive the letter will complete the same Questionnaire; however, some questions may only apply to plans with particular features.   Please note that, if you receive the letter, completion of the questionnaire is mandatory.  The questionnaire must be completed online and you will have 90 days from receipt of the letter to complete the questionnaire. 

CAUTION: we have reviewed the questionnaire and we strongly recommend that you do not attempt to complete this questionnaire on your own!  If you receive an IRS questionnaire letter, please contact us, or your current service provider for assistance as soon as possible!

See the EPCU Web page for more information on the Questionnaire, which is the featured project on the page.  (http://www.irs.gov/retirement/article/0,,id=223440,00.html)

Click here to access the instructions for completing the questionnaire http://www.irs.gov/pub/irs-tege/epcu_401k_questionnaire.pdf   

 

We as parents along with our children can learn about street safety and be aware of the many dangers we can encounter.

Here are some rules that you can teach your kids when they are going places like school or a friends house or anywhere that involves them using the streets. 

• If at all possible try and walk with a group of friends.
• Know exactly where you are going and do not wander or stroll.
• Give the impression that you have to be somewhere right that minute and running late.
• Stay on the busier areas. Walk in the middle of the sidewalk. Avoid abandoned or empty buildings. Never take short cuts.
• If you see someone doing something wrong.....go the other direction.
• If you feel threatend or feel something is going to happen to you...run to a populated area or store and ask for help. You can also try and yell out "Dad!" and run that direction.
• As mentioned before...never take short cuts. Use the same route everyday going to and from school. If your kids run errands...sit down with them and plan a route you both know to and from stores or friends houses.
• Never talk to strangers!
• When walking the streets...kids need to avoid every possible distraction to keep them focused on where they are going. This may include...not wearing head- phones or playing hand held games.
• This next rule is a must for me as a parent. There are other alternatives. Have your child carry a cell phone for emergency calls only. Not all parents can do this (very understandable) ...so maybe have them carry loose change for a phone call.

You can print these rules and practice them with your children. Add to the list with your own ideas and share them with others, compliments of Michael F. Yates & Company Inc.