Section 414(q)(11) specifically excludes such nonresident aliens from QSLOB testing.
Even assuming, arguendo, the IRS's statutory authority to include nonresident aliens within the scope of the QSLOB rules, there are practical reasons for not doing so.
In summary, TEI questions why another "top-paid" employee group must be tested under the QSLOB rules, especially since the test can result in the combination of union and non-union employees.
The separate-tangible-asset test may be one of the most onerous burdens placed on the taxpayer by the QSLOB regulations, and may well be the decisive factor in an employer's electing not to use section 414(r).
12) Since neither of the forms is normally filed annually, however, TEI recommends that Form 550 (Annual Return/Report of Employee Benefits Plan) be the vehicle to notify the Secretary of a QSLOB election.
TEI recommends that the regulations accord employers an opportunity to change its election upon audit or its first return in which the QSLOB rules have significance.
Mandating a timely filed Form 10-K without extensions satisfies no reasonable tax purpose, especially since that Form 10-K deadline is March 30 -- before the filing of the Form 5500 and before most data is collected to make QSLOB determinations.
Nothing in the legislative history of the QSLOB rules suggests that Congress intended ot discourage the use of profit-sharing plans in order to use section 414(r).
In summary, TEI believes that flexibility and proportionality are the keys to successful implementation of the QSLOB regulations.