QDROphile

Check the instructions to the forms. Hint: Start with W-2

On this point, the IRS requires the plan to state on what basis the plan operates, and is very clear that a plan amendment is required to change, and has rules about the changes.

If the infrastructure is in place for rolling out and rolling in, a loan is the same as any other asset and can be rolled.

Since government plans can meet the non-assignment requirements with a domestic relations order that does not cover all the requirements of section 414(p), see section 414(p)(11), I suspect it is a term used to avoid the word "qualified" in the context of a government plan, lest someone get the idea that the govenment is requiring something under section 414(p) not compelled by section 414(p) for government plans. Of course, the government plan could have some requirement for an"eligible" domestic relations order that section 414(p) does not have.

Find an acceptable definition of compensation and see if the nonqualified salary reduction is in it. For example. a lot of plans use a definition that resembles taxable W-2 pay with certain reductions added back (e.g. 401(k) and 125). Nonqualifed reductions would not be in that definition. Section 414(s) would be a good place to start. Happy hunting.

It is a common misconception that welfare benefit plan assets are not required to be held in trust. The DOL has a "look the other way" policy based on certain standards but those standards are violated all the time, especially in health FSA arrangements. I venture that far more than half of the arrangements violate the trust rule, even with the DOL concession to practicality. Evidently it is not practical enough, and the DOL must know it because the DOL is not enforcing its own policy.

You don't have a direct rollover if the formalities do not involve a first step of transfer of ownership of the distributed asset from the trust to the IRA or other eligible retirement plan. Skimp in the formalities at your peril.

Since the plan has recently been amended to comply with the section 415 reguations, great attention was given to such details and the plan will have provisions that describe what compensation is included relative to termination of employment. The trick may be to detetmine emploment status.

You could ask if the IRS would approve the correction under VCP.

If you have a competent promissory note, the creditor does not have to exercise rights strictly and a can allow payments to bring the note current. If you don't have a competent promissory note, get soem competent help and modify the note terms. Or are you arguing that the desired policy is a strict policy and someone wants to get around the description of a less strict policy and use the note as the lever? What is the line you want to line up?

I was not contradicting anything, I was clarifying. Your response was overflowing with information relevant to the ultimate outcome between the two individuals, but not all of that information was relevant to the plan. In fact, the plan could go astray if it considered and tried to apply all of the information and conclusions you offered; the plan can't resolve all the issues for everyone. Nothing wrong with the response, but each player needs a different filter.

State law statutes of limitation are none of the plan's buisness in the first instance. If the plan got the order before distribution of assets, then it should process it one way or another, with a bias toward qualification. If it got the order after distribution, then the order is ineffective as far as the plan is concerned. If the participant does not like the plan's determination, the participant can step in and raise various objections during the time after notice and before the determination is given effect, includig an objection that the order is no longer effective under state law.

I second Bird.

Possible penalty under state payroll law.

The plan cannot refuse to qualify an order that is properly submitted and has appropriate terms. If you want an ANSWER, I don't think you are going to get it. Charging fees under a DB plan presents some problems and we have no reliable guidance. My experience is that plans do not charge. At least one state has a law that seems to require that certain government plans charge an administrative fee and does not distinguish between DB and DC. The law is fairly stupid because it does not answer the questions it poses.

If the loan is not already distributed, why can't the individual write the check to the plan in the amount of the loan balance? Then there would be no loan in default and the distribution would be conventional. When you are not dealing with cash, I recall something like a rollover has to be the asset distributed or the proceeds of that asset. If that is the rule, I wonder if the independent check in the amount of the distributed loan would be "proceeds" delivered to the IRA.

What do the plan terms and the election forms say? This is more a communication issue than a legal issue. The plan can define compensation to include salary reduction amounts for medical benefit. The plan can also define what sources will be charged for a deferral.

The IRA can't hold the loan. It would be a prohibited transaction that would kill the IRA. The loan could be rolled over to a qualified plan, but only as a direct rollover (and not really even then, but the IRS says it can be done, so who cares what the right answer is?).

You might find that 409(i) does not apply to ESOPS. Only certain provisions under 409 apply to ESOPs. Section 409 applied generally to tax credit ESOPs and certain subsections are obsolete.

What if the pope is a lawyer or a lawyer is the pope?

You might get your answer when you think about how eligiblity will change.

The individual partner cannot function alone. The others must be taken into acocount when considering if the SEP ocverage rules are satisfied. The partner has employees. I have run across erroneous "professional" advice of this sort before.

Does the the partnership have employees other than owner employees?

The employer has choices. The section 409A regulations have some material of interest about how to charge the benefit for the FICA withhollding and ther rleated pyramiding of taxable income. Before anyone barks, I am not saying that 409A applies to 457(b) arrangements.

Check out what EPCRS has to say about rolloing over amounts that one thought, mistakenly, at the time of distribution were eligible for rollover. That may provide food for thought about how to approach the issues.