MoJo

Let me give you an example that proves you wrong (and it's because money is "fungible.") Day 1, you borrow $10,000, and you spend it. You pay no tax on this money - because it is a loan. Day 2, you repay the loan with $10,000 you had in a savings account, plus $0.01 interest. Your "tax situation" is EXACTLY the same if you take the loan and spend it, repaying with other money you had, or if you DON'T TAKE THE LOAN, and use the $10,000 in savings for your purchase. Your "tax consequences" do NOT CHANGE because you take the loan, and the TOTAL TAX you pay is exactly the same either way.

To qualify for Medicaid - it is first an asset test, but the benefits received by Medicaid are *reduced* by income. For example, in Ohio, you are allowed to keep *only* $50 per month out of any income stream you may have (after you've reduced assets below the threshold). Any income *over* $50 per month is first used to pay your expenses, and then Medicaid pays the balance (if any). The philosophy is that taxpayers are only secondary payors to the recipient - who must first use available assets and income, before receiving benefits.

It wouldn't matter if he can or can't. To the extent he has a "right" to receive the pension payments, they will count against him for Medicaid purposes (sorry, I can't give you a cite, but Mrs. MoJo works for a county government managing a team of people who qualify people for Medicaid benefits).

One of our clients just got that same letter.... Unfortunately, "some" in this industry think this is a legitimate tactic - as filing under DFVC has a price tag associated with it - and "apparently" the 45 letter lets you off "scot-free" if you meet the deadline. I think it is a very, very dangerous practice....

Charge them a $25 distribution fee and send them a bill for $20! ?

And I would agree with Bird. State law has something to say about wage assignments - and being revocable is usually one of the conditions....

Again, not "authority" but... https://www.mckinleyirvin.com/family-law-blog/2013/september/5-misconceptions-about-common-law-marriage/ p.s. - what does it mean one of their families is prohibiting it? Not that I'm advising anyone, but they can get married without anyone else's permission - or even knowledge. The alternative is to simply name the other as the beneficiary....

You posit some very good questions. First, from my very basic research, it appears as though California has never recognized a common law marriage (as having been created in CA). If the common law marriage was created outside of CA, in a state that allows them (or did allow them at the time) then if MUST be recognized in CA under the federal Constitution privileges and immunities clause (and others). I haven't researched that though to see to what extent the courts have ruled on this issue. Filing tax returns as "single" (not married filing separately") is evidence of them not having a present intention (at some point in time) to being married. But it doesn't mean that they didn't have a present intention at some time, and then it becomes evidence of committing tax fraud. ? IF these people are residents of CA, have always been residents of CA, then I think it would be safe to say they are not in a common law marriage. Beyond that, it becomes a more difficult situation. FYI, I found this - not "authoritative", but provides some answers: https://www.cadivorce.com/news/common-law-marriage-myths/

Legally, there is no difference between a "common law" marriage and a "regular" one. If one is "married" the rules apply. The problem is that it may be difficult to ascertain whether or not a "common law" marriage exists. The rules varied state by state, but usually included a "present intention" to be married, cohabitation as spouses, and holding oneself out to the community as married (and in many places, the "time" was not a factor - registering in a hotel as "Mr. & Mrs." may qualify, as long as the other attributes also existed). In many places, "common law" marriages are no longer possible (Ohio did away with them a number of years ago, as have many other states) - BUT any common law marriage that existed (or is created, depending on the jurisdiction) is STILL valid. Like I said, the problem is in determining if one exists, and that usually becomes an issue when one dies, and the other "claims" that status.

I actually split my time between OH and IN (I'm in Indy right now), but this discussion has me hankerin for a Mr. Hero....

No no no! A Hero sammich isn't a grinder nor a sub (and definitely not a gyro)! A hero is a hot meat sammich on a sub bun, usually with lots of toppings of the kind one might find on a philly cheese steak sammich - but the meat is more likely a hamburger patty (or three) or meat balls, etc. If you are ever in NE Ohio, look up a Mr. Hero restaurant. Definitely not a Subway....

Would not the "one bad apple" problem still exist in Austin's scenario (unless and until appropriate legislation is passed)?

I vote for MESS. *IF* this is a controlled group and hasn't been dealt with as such, it's a MESS. If the goal is to reduce "costs" then what Larry suggests (splitting the one plan into two) *MAY* eliminate the need (and cost) of the annual audit, but it *WILL* increase the costs of maintaining a third plan (going the opposite direction from that posited by the OP). If they are *NOT* a controlled group, then a closed MEP is a possibility - which if done correctly results in ONE Form 5500, but has other additional costs. If the primary driver is to save a few pennies on recordkeeping and administration costs, then I'd seriously think long and hard about whether this is a long term client you want....

In the words of my generation, "Right on!"

"Stable Value Option"?

Well, there really is nothing magical about the term "fund" - as it could imply more than one owner, or even more than one investment. The '40 act doesn't call the entities created by is "mutual funds" but rather Regulated Investment Companies. In common parlance, it's still a "fund" (general account, separate account, many owners or just one).

A separate account is still a "fund" and unless the plan is huge, separate "separate accounts" are not created for each plan. Multiple investors will still invest in a single separate account "product." The only significant difference between a general account and separate account product is that 1) a "general account" is an insured product where the entire assets of the insurance company back the obligation to pay, while a separate account is not part of the balance sheet of the insurance company and is merely a segregated pool not "insured" nor subject to the claims of the insurance company's creditors; and 2) the insurance company is the "investment manager of the general account product and hence a "fiduciary" with respect to plans that invest in it, where a separate account product is treated more like a mutual fund with respect to the investment manager not being a fiduciary.

FGC and JPOD: By the "definition" you posit of a "fund" having multiple investors or owners, I would suggest to you that it *is* a multi-owner offering by the insurance company. As a "general" account product, it *must* be offered to qualified investors (plans, etc.) just as a collective (bank) trust is. For an insurance company to offer it, it must have state level regulatory approval in each state in which the offering is made, and the "template" contract used for the offering must be filed with the regulator, to ensure each investor has basically the same rights and features (there is some "variable" language allowed in the contract, but that is "limited") Each investor has enters into a "contract" which is substantially identical to that filed with the regulators and merely is the governing instrument that spells out the terms and conditions of the investor being able to "invest" in the "fund" much as an account application functions with respect to a mutual fund. Each "contract" does NOT imply a separate vehicle into which that investors money will be invested. It is a "collective" managed pooled investment vehicle.

It is a "fund" even though it may not be named a "Fund." The term "fund" simply means a commingled investment pool - and can be a "Registered Investment Company" (the '40 act term for a "fund" - which doesn't use the terminology of "fund" as part of the "official" legislation (although the word may be in there somewhere)), a common or collective "trust" fund, or a separate or general account "fund" offered by an insurance company. I can't tell you the "documented" name of our general account product that provides a "stable value" for plan participants, but we call it the "Stable Value Fund" - or SVF for short.

We've thought about that - but that raises other issues that might bring the wrath of the DOL. In our case, the SPD was "on-line" - but it required "employees" to actually sign up and the system "requires" an affirmative election (zero is permissible) to get through to where everything else is). Since our issue involved an auto-enroll error, we ""danced" around the issue indicating that the plan administrator distributed the SPD to "store managers" who "probably" put them in a break room and we had evidence anyone clicked through to the on-line version. "Delivered" under applicable rules, uh, we plead the fifth. Effective as part of an argument for IRS purpose, yes (but as indicated above, we had lots of other materials "consistent" with plan operation).

We just successfully concluded one - but it was not easy. The IRS "standard" is that you must show by "clear and convincing" evidence that the participant knew what the plan provided (in operation). We had the same issue with system generated documents (SPD, various notices and the like) perpetuating the error - but we had all of the educational materials consistent with practice (and not the document). The initial response was NOT favorable, so we went back and gathered more materials that were distributed to participants. We put together a chart - showing what said what, when everything was delivered (including printing receipts and delivery tickets, and other ways of distribution for the various documents), and made the argument that the materials most likely to have been read, and most voluminous during the period were consistent with plan operation (and not the document error). We had the advantage as well that the bulk of the affected population was Hispanic, and the ONLY documents translated into Spanish were the educational materials (not the system generated docs). The end result was a demonstration that 3 times as much "stuff" was consistent with plan operations (and more likely to have been read) than consistent with the plan document (although all of the regulatory notices were "in error"). They bought it. I would suggest being prepared for that level of detail, if it exists, to be successful.

Thanks Tom. I agree with Belgarath - this is way more exciting than, well almost anything in the benefit world. I have to say though, that I'm not going to trace my family heritage back to the old countries - I may find they were the one's involved in stealing such art...

If it was "merged" into another plan - it's not orphaned, and typically, the buyer would be responsible for the "final" 5500 of the non-surviving plan (after all, it's due AFTER the acquisition/merger). The answer is in the facts, however. Was the plan part of the deal? Did the plan actually merger into the acquirer's plan (or were there just rollovers into it)?

The DOL has been issuing almost identical letters for late deferrals (we've seen those in the past, and our clients in the "Chicago" district area have gotten some. ARA/ASPPA has challenged the DOl on the "harshness" of the letter and apparently has gotten the DOL to reconsider the "threat" - although I haven't seen any more recent ones (the ones I've seen were from April).

Was the QDRO signed by the Judge? Nothing in the rules say a DRO has to be signed by the parties (but it is easier to get a judge to sign it if the parties agree). If you have a "court order QDRO (signed by the judge and filed) nothing further needs to have been done for the plan administer to process the split. Whether or not you could get an immediate distribution is subject to the terms of the plan and the terms of the QDRO.... We need more facts, please.