QDROphile

I gainsay, except to the extent one is trapped by a plan document, and except for related migrations to the new firm. If the hires are unrelated, but proximate, it would be a good idea to grant service credit.

Can you tell me briefly about having an annuity as investment in the PSP? Don't.

You could describe the proposed transaction in some detail but it will almost certainly come out to be a prohibited transaction.

$245,000 puts you into the middle class (if you are a Republican). The middle class can't get a match (thanks to the Democrats), so the plan pretends you are not in the middle class so you can get a match. Consider yourself lucky you get a match because the plan looks the other way at compensation above $245,000.

Department of Labor position is informal. I can't remember if it comes out in the QDRO book, available at the EBSA web site.

Schoonmaker (7th Cir. 1993)

There are almost no dumb questions under 409A except the ones that relate to how 409A does not affect 457(f).

Plan is required to hold if it has received a domestic relations order. Department of Labor says the plan has to hold if it has a whiff of a potential QDRO. The statute and the only federal decsion on point disagree with the Department of Labor.

Not much time left in December to defer much of anything. Does that, in an of itself, bother you?

Foreitures are are restored. Typically restoration is from other forfeitures or the employer has to contribute.

rcline: You are assuming the employees are excludable?

The participant is not out of luck. The participant is entitled to restoration. The restoration can be conditioned on buy back. If the plan insists on buy back, it cannot refuse to take after tax money.

I agree that your accountant should be able to do better, but you may still be stuck if you have not adopted a 401(k) plan already and you have employees. Your employees won't have much of an opportunity for elective deferrals for what is left of 2008 so you will have discrimination problems. If your your tax avoidance motivation is matched by generosity, you could adopt a plan and contribute amounts for all partners and employees within the tolerances of the discriminatin rules, which can work out quite well for the partners and have a reasonable cost for the employee benefits.

I am sorry you got stuck with an assigment that was not reasonable to give to you.

Why not ask the person who is reviewing the plan for section 409A compliance?

I think you can design a plan that allows front loading up to the limit. That does not change the coverage period. It is simpler to have everything falling to uniform lock step with the normal way that cafeteria plans work with other benefits. While that may be enough justification to do it the simpler way, that is no reason to think that it is legally required to be done that way.

Maybe the IRS thinks that giving ground again in a culture that has a tradition and mentality of noncompliance would be a never ending process. Only the discipline of the deadline got us this far. An extension will have us in the same place next year. A lot of plans will be noncompliant at the deadline no matter what the deadline is. Being in violation is a motivation.

Plan provider's rule.

Use of employer securities is not a good idea under pure retirement plan theory unless the alternative is a contribution that is nothing or substantially less. Use of employer securities will complicate plan administration, fiduciary responsibility and expose you to more scrutiny by the Department of Labor.

Not an unusual design.

If the borrower is the owner, you have great sensitivity because loans that are not paid are essentially in-service distributions. Who is making the decision to make the loan? Is there an intent and capability to pay? If there is, why has not the first loan been paid? I think the situation is terribly sticky and just the sort of thing the IRS would jump on if it ever enforced anything.

2. "Substantial risk of forfeiture" is not a necessry element of a 457(b) plan, and in fact can seriously compromise the plan because of when amounts are counted against the annual limit.

Something for nothing is always a great idea, but it is never the reality. The cafetria plan itself is not an ERISA plan, but watch out for prohibited transactions around the ERISA edges.

I don't think the IRS thinks the statute has the same scope as a lot of ESOP professionals think, but it is unlikely that the circumstances in this post would be a test case. At lease one court case went with the statute over more narrow IRS regulations that had been recently issued, without discussion of the issue of scope and conflict with regulations.

An amazing number of FSAs do not comply with the exemption from the trust requirement even though the benefits are paid from general assets and "employee money" has nothing to do with it. I venture that most FSAs that have third party administrators who handle disbursements are noncompliant.