QDROphile

First, I am not aware of anything that says moving into a rental home is acquiring a principal residence. Second, the funds for the purpose were obtained without hardship withdrawal. It is at best very agressive to use a hardship withdrawal to cover a separate debt, even if the debt orginated from an elgible situation. So much the worse if the loan is from the employer.

$4000 from the plan. Maybe more from someone else, a more interesting question.

Don't forget the objective criteria, and when you figure out what that is, please let the rest of us know.

At some point the expenses would not be eligible, or would be an indication that they were not eligible, such as the medications are not being used by the participant and eligible family members. What triggers duty to inquire further is not an easy call.

In that case, the threat, and going through with the threat, of appeal to the Department of Labor is a legitimate tool. But don't use the toool too soon. The participant should get started immediately with a formal claim under the plan's claims procedure. That formality should get some attention from the fiduciary, who may be just hoping the issue will go away. I take you at your word that informal inquiry and protestation have not received reasonable response. The situation also sounds like it involved a failure to follow plan terms, which would disqualify the plan, so the threat of going to the IRS to report potential plan disqualification is a possibility. That option is a bit more self destructive, but it will touch a nerve with the plan sponsor and management as well as the plan administrator.

What is your role with respect to the plan or the participant? Are you a fiduciary?

Who are you to involve the DOL and why?

Those words are typically understood to refer to the taxes on the income that results from the hardship distribution based on the hardship standards of the document, such as medical expenses, etc. For example, if a participant qualified for a hardship distribution for $10,000 of medical expenses and was in a 20% tax bracket, the plan could distribute $10,000 (medical expenses) plus $2000 (20% for taxes) plus $1000 (10% penalty tax). My numbers are not fine-tuned for iterative computations. The language does not mean the plan will allow a hardship distribution for a stand alone income tax obligation. A hardship distribution for a stand alone income tax obligation would have to be justified by some other plan terms.

Does EPCRS still require the notice to the former participant that the excess amount is not rollable and that penalties attach if the excess is not withdrawn from the IRA?

If the plan is a 401(k) plan and the plan is not registered, no employer securities.

Assuming no state law problems, nothing requires the numbers to be translated from the original award. The original award cannot be implemented as originally provided. The checks to the participant could be split on some basis, possibly taking into account the lack of diligence by the former spouse. One consequence of the delay is the election of a J&S annuity with a new spouse, which makes the current checks smaller than life annuity checks. So one would not expect the former spouse to be getting numbers resembling those that would have attained to a timely QDRO.

Not having seen an answer, I renew the question.

Assuming no issue with state law, what prevents the former spouse from getting a share of payments to the participant during the participant's life?

So what is the compliance issue?

If it is a fixed formula, the contribution is not in accordance with plan terms, plus you are up against a very strong principle that contributions for a year have to be allocated for the year.

Maybe disqualification.

No option on year-to-year basis for nonelective contribution. Where the line is drawn on what constitutes a cash or deferred election is uncertain, but year-to-year is on the wrong side of it. Partner C can be excluded from nonelective contributions, subject to discrimination limits if Partner C is not an HCE.

Are you treating the plans as multiple employer plans?

Are you bound (and protected) by professional standards that prevent you from sacrificing the client by reporting them to an appropriate regulatory agency and then using the victim as an example for others? It would be more satisfying to get the real culprits, but the IRS probably won't go after the broker just for giving the bad infomation. After all, the plan is not required to break the law. Or just get used to it. In the area of nonqualified deferred compensation, the consultants routinely gave abusive advice and then castigated the lawyers for being too conservative. Result (with som help from Enron): 409A.

It was an advisory opinion. No cite off the top of my head, but it should be easy enough to find on the EBSA website collection, if not in one of your services.

That is because timing of distributions cannot be at the discretion of the plan adminstrator -- a basic principle of qualified retirement plans. The provisions about "may distribute" are poorly worded and must be interpreted in a compliant way.

Yes, there is an acceleration. The money that the employee elected to have paid some later year comes into the employee's hands in the year of the freeze. The particpant's opportunity to defer income ended December 31 of the year before the freeze. "Participant's control" is a concept that 409A expressly trumps.

Why should the plan limit everyone to prevent someone from exceeding the limit becuase of particpation in another plan? The responsibility for observing the limit should be left to the individual. The others should not have to leave money on the table just to prevent the possibility that a limited number of people might be asleep.

Would this be an example of internet Cerfing?

What about 401(a) (17) limit proration of compensation for calculation of the match? Section 1.401-k(3)(g)(1) says that the ADP test must be satisfied for the entire plan year, and section 1.401-m(3)(h) says that the ACP test must be satisfied for the entire year, but neither says the plan may use compensation for the entire plan year for calculation of the match. And what about compensation for testing of the match, which is in effect for less than 12 months? This is not a typical entry date issue that is expressly covered by the regulations.