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The ERISA Outline Book

Errata Page

In this section we update you on errors we have found in the 2010 Edition of The ERISA Outline Book. Each entry includes the date it was added to this page. The entries are listed in chapter order.

Chapter 1A, filing dates definition (added March 16, 2010). In Part C.1.a.1), the last sentence (which contains a cross reference) should be deleted. In Part C.1.b., the cross-reference to "2.c. below" should be a reference to "2. below."

Chapter 1A, Part A.7. of the IRA definition (added March 30, 2010). In the second sentence of this paragraph, the words "the employer might adjust" shoould read "the employee might adjust."

Chapter 1B, Part A.2.a.1)a) of the nonqualified deferred compensation plan definition (added May 17, 2010). It has come to our attention that the Pennsylvania Legislature overtuned the court decision discussed in this paragraph. Accordingly, substitute the following paragraph for the one in the text, replacing 2.a.1)a) in its entirety.

State law should be checked. The reader should check State law to determine whether the tax treatment of nonqualified deferred compensation is different from Federal tax treatment. For example, prior to 2005, Pennsylvania law treated an elective deferral under a nonqualified deferred compensation plan (even if the election is irrevocable) as subject to current taxation for Pennsylvania personal income tax purposes for the year in which the amount was contributed to the plan. See Ignatz v. Commonwealth of Pennsylvania, No. 136 F.R. 2003 (Commonwealth Ct. Pa. May 12, 2004). This ruling was based on the court's interpretation of State law at the time. In 2005, the Pennsylvania legislature enacted House Bill No. 176 ("HB176"), which overturned the Ignatz decision with respect to tax years beginning after December 31, 2002. HB 176 states that nonqualified deferred compensation is considered received for State tax purposes if it is "actually or constructively received for Federal income tax purposes," and, with respect to determining when amounts deferred are to be included in income and subject to withholding, it specifies that IRC §§83, 451 and 409A apply. Thus, Pennsylvania's income exemption for "old age or retirement benefits" does not apply when the nonqualified deferred compensation that is attributable to an employee's elective deferrals is distributed. HB 176 is effective January 1, 2003, with respect to the adoption of Federal constructive receipt rules, and effective January 1, 2005, with respect to the adoption of IRC §409A with respect to State income taxation. Residents of Pennsylvania need to check with local tax advisers regarding the scope of this law change, and whether any exceptions might apply at the local level (e.g., city tax purposes). Note that HB 176 did not change Pennsylvania's approach with respect to elective deferrals under qualified plans, where the elective deferral is subject to current state income taxation, but is not taxed again at the time of distribution. See the discussion in Section II, Part A.1.c., of Chapter 7.

Chapter 4, Section II, Part F.2.k. (added March 16, 2010) The cross-reference to 2.k.2) should read 3.d.

Chapter 5, Section VI, Part C. The first sentence should read as follows: "The annual additions limit under a defined contribution plan cannot be made up in later years where the full limit was not used in earlier years." In the sentence in the book, there is a cross-reference to a section that no longer exists.

Chapter 6, Section IV, Part D (added May 21, 2010). All references in Part D to "Notice 2000-36" should read "Rev. Rul. 2000-36."

Chapter 6, Section VII, Part D.9.c. This example makes the statement that the daughter, being a nonspouse beneficiary, would not have a rollover option. The example,which had been written prior to 2007, will be revised in the 2011 Edition to reflect that, pursuant to IRC §402(c)(11), the daughter could rollover to an inherited IRA that could continue the required minimum distributions in lieu of the plan doing so.

Chapter 7, Section V, Part C.1.a. (added March 29, 2010). In the third note following the paragraph, with the heading "12-month periods to calculate annual payments," the reference to Rev. Proc. 2002-62 should read Rev. Rul. 2002-62.

Chapter 11, Section VI, Part C.2.e. (added June 17, 2010). The citation to "§1.401(k)-3(b)(6)(iv)" should read "§1.401(k)-3(c)(6)(iv)."

Chapter 11, Section XII, Part E.2.a.2) (added March 16, 2010). The reference to 1.401(k)-3(b)(6)(iv), should read 1.401(k)-3(c)(6)(iv).

Chapter 11, Section XII, Part E.3.b.3)b) (added March 16, 2010). Replace "nonexcludable HCEs" with "nonexcludable employees"

Chapter 13A, Section III, Part A.2.c.1) (added May 27, 2010). Starting with the 2009 Form 5500 series, the "one-participant" plan definition has changed. For those years, the following text for 2.c.1) and 2.c.1)a) should be substituted for the text in the book, eliminating 2.c.1)b) through 2.c.1)d).

2.c.1) Eligibility requirements for using Form 5500-EZ. To be eligible for the EZ filing status, the plan must satisfy the definition of a "one-participant plan" as prescribed by the instructions to the Form 5500-EZ. For this purpose, a plan is a one-participant plan if on the first day of the plan year, the plan covers only: (1) one individual (or the individual and such individual's spouse) provided that the individual (or the individual and such individual's spouse) own 100% of the plan sponsor (whether or not incorporated), or (2) one or more partners (or partners and their spouses) in the plan sponsor (treating 2% shareholder of an S corporation, as defined in IRC §1372(b), as a partner). The plan may not provide benefits to anyone other than such individual (and the individual's spouse) or such partners (and their spouses). In essence then, the only participant or participants in the plan must be individuals who are not employees for Title I purposes (see DOL Reg. §2510.3-3, and Section II, Part B). For pre-2009 plan years, additional conditions described in 2.c.1)a) below had to be satisfied.

2.c.1)a) Additional conditions in pre-2009 plan years. For plan years beginning in 2007 and 2008, the definition of a one-participant plan had additional conditions for use of the definition of a one-participant plan provided in section 1103(a)(2) of the PPA 2006. For earlier years, the Form 5500-EZ instruction prescribed a virtually identical definition. In addition to meeting the requirements described in 2.c.1) above, a one-participant plan: (1) could not be aggregated with another plan in order to satisfy the coverage requirements of IRC §410(b), (2) the employer that maintained the plan could not be a member of a controlled group of businesses or an affiliated service group, as defined in IRC §414(b), (c), (m) or (o), and (3) the employer that maintains the plan cannot receive the services of leased employees, as defined in IRC §414(n). Because of the elimination of these additional conditions, a plan that covers only an individual who is the 100% shareholder of a corporation is eligible to use Form 5500-EZ, even if the company has employees who all participate in a separate plan (which, of course, files Form 5500 or Form 5500-SF) and the plan covering the sole shareholder is relying on that other plan to satisfy the coverage requirements under IRC §410(b). Similarly, if an affiliated service consists of 4 separately incorporated professional corporations, and a partnership of those professional corporations, and each professional corporation maintains a separate defined contribution plan covering only that corporation's sole shareholder, and the partnership covers all of the other employees of the affiliated service group, the separate plans covering each of the sole shareholders of the professional corporations could file Form 5500-EZ, even though those plans rely on the plan covering the partnership employees to pass coverage. The plan covering the partnership employees would have to file Form 5500 or Form 5500-SF.

Chapter 13B, Section II, Part B.2.f. (added March 16, 2010) Ihe cross-reference to "Part A.3.a.3) of this Section III" should a refernce to "Part A.3.c.2) of this Section III."

Chapter 14, Section II, Part C.1.a.1)b) (added March 16, 2010) Ihe cross-reference tip at the end, the reference to Chapter 14 should be a reference to Chapter 13A.

Chapter 14, Section II, Part E.1.g.2) (added March 16, 2010) The text "described in 1.g.2) above" should read "described in 1.g.1) above."

Chapter 15, Section VI, Part C.¶9 (added May 21, 2010). In the second sentence, the reference to "a. above" should be a reference to "a. below."

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Opdateret d. 17/6/10