QDROphile

A plan can't have that provision, at least as applied to parties in interest who are not employees.

Here is a hint for your futher inquiry. No matter how you come out on the issue, if you have not at least discussed HIPAA in connection with the arrangement, you have not adequately considered the consequences.

What does the plan say if a beneficiary dies? Alternate payees are more like beneficiaries than participants in many respects, including ERISA provisions that treat APs as beneficiaries. What do the written QDRO procedures say about the interest of the alternate payee and beneficiaries of alternate payees? What does the order say? Assuming that this is a defined contribution plan that allows alternate payees to designate beneficiaries, and assuming no answer from the other sources, the money would probably go to the estate of the alternate payee. You really should have a clear answer from the other sources. If not, you need to work on the documents.

I am curious about the wife.

Sorry if I missed something because I did not parse your question properly. No 403(b) arrangement should deliberately fail to comply with the 403(b) regulations, incluing the requirement for a plan document. ERISA has nothing to do with whether or not to comply with the tax regulations. The ERISA question is whether or not to try to find that line and walk it. My advice is not to bother.

See Treas. Reg. section 1.409A-1(a) (2)(viii). But some people should be rethinking what was permissible under pre-409A law in light of 409A even though 409A does not apply.

Prepare to spend too much time and too much money to achieve an uncertain result. I think you can buy into the DOL delusion without great fear of the DOL; it is just a lot of trouble to understand and comply with the so-called guidance. Sloppy compliance is probably even OK if the DOL has any sense of shame. The important question relates to trouble and liability when a participant finds some way to improve his or her lot under ERISA and the judge does not buy into the DOL delusion. One point of my previous answer is that ERISA status can be attained by formal actions as well as funding.

Compliance with the 403(b) plan document requirements will make the plan an ERISA plan in most cases, despite the DOL attempt at rationalizations to the contrary.

Silly rabbi, tricks are for kids.

Typically the loan is an offset distribution. While other options may be theoretically possible, they are usually not possible in practice. The account balance will be reduced by the distribution to $96,000, assuming you are counting the loan in the balance that you reported.

mjb is correct. A qualified plan cannot divide the retirement plan benefits and pay to a same sex former spouse (or other relationship, whatever you call it) unless the person is a dependant under federal law. Federal law does not recoginze same sex spouses, and plan qualfication is are governed by federal law. The plan would be disqualified if divided and distributed any benefit.

Some people can't take a joke and others can't recognize a joke. Two cars meet on a one lane bridge. One driver shouts, "I never back up for idiots!" The other, shifing into reverse, replies, "I always do!" Some people keep repeating very old and corny jokes, thinking that the context justifies it.

The answer is in the crazy history of the statute, but the explanation that involving the benefit in the cafeteria plan regime could run afoul of the cafeteria plan restrictions is valid. Transportation fringe is a more free wheeling benefit.

I see. You did not mean "gratuitous?", you meant "with gratitude."

If you have not already done so, you might check the thread on the securites law board that started on April 28, 2005. It provides a roadmap, some key citations, and a bit of amusement if you are interested in personalities. If it makes you feel any better, I do not have a post on that thread. Please explain your one word question in parentheses. The post is asking about pitfalls. I pointed out a pitfall that would not commonly be anticipated in the retirement plans community.

You cannot have a 401(k) plan that is a multiple employer without violating secuities law.

I don't know how far you can push section 414(p)(2)(B). I think 'apply gains or losses' might be good enough, but the plan can use a reasonable method.

You summarized very nicely, so it is with some reluctance that I embellish on a technical point. I think there are two safe harbors, one for the reason and one for the financial need. The list is the safe harbor for the reason, and the 6 month suspension is the safe harbor for the financial need Based on an old statement in the IRS manual (which I have not checked since the new 401(k) regulations) to the effect that subjective criteria for the reason are not acceptable, I find it daunting to operate under F&C for the reason unless the plan has its own list of reasons. If you have a custom list, where does it end? I find it easier just to say that we use the IRS list, end of discussion about whether or not the list should be expanded today for some new good reason. I am not so concerned about using F&C for the financial need because the IRS gives us a crutch -- the statement by the participant. Yes, it requires use of a brain for administration, and that is not what makes the administration world go around right now.

The fiduciary would have to determine that the distribution was necessary to satisfy the financial need under Tres. Reg. section 1.401(k)-1(d)(iv), but can rely on a statement of the participant described in subparagraph © with respect to the unavailability of other resources (as required under subparagraph (B)). The participant can furnish the information required by subparagraph (A), which goes with showing a need under the safe harbor list of needs. For example, to show a need to pay burial expenses, the participant would show a bill from a mortuary. The amount of the bill would demonstrate the financial need under (A). The participant would provide a statement under © with respect to the requirements of (B).

I get all my information from Emily Latella.

The six month suspension is not related to the list of reasons. A good design for F&C will keep the list because individual determinations of adequate reason are problematic for compliance and morale. Determination of financial need can be covered by an appropriate statement of the participant. The six month suspension is the safe harbor related to finacial need. The stupidity of the six month suspension is the most compelling reason to not to adopt the financial need safe harbor and the alternative for compliance is not awful, as it is for determination of reasons.

Back up a bit to ask the right questions. Q: Why do you want a rabbit trust? A: Because you are afraid that you are, or will be, dealing with an employer that will not keep its promises about the benefits. Now ask the question, "Who do you want to be the trustee?" After you answer that question, and if the answer is not a financial institution that is permitted to conduct trust business under state law, you may still want to ask the question you posted.

And if the particpant does not pay the loan in full after default, what actions must the fiduciary take to collect?

The loan terms should cover prepayment. If they do not, the provider of loan documents is incompetent. It is common to allow prepayment, but only if the entire balance is prepaid. I think there is some limitation on absolute prevention of prepayment, but I am not sure it applies in plan loan context.

You could, and I would, argue that any reasonable method of calculation is permitted. I don't think it overstretches the proscription on asking the plan do what it is not designed to do to defend against the "perfect" approach unless the plan uses the perfect approach for some other functions of plan administration. If you add some sort of weighting adjustment, I think an earnings rate approach is OK. Maybe even if you don't add weighting. I would also defend a plan that would not retroactively try to adjust for earnings, as long as the plan would make all of the investment data available to someone who would provide a figure for earnings adjustment for the time prior to the implemenation of the division, so you may question my judgment.