QDROphile

I think the doctrine of latches is alive under ERISA, so it could have effect. Do you think a plan administrator would be in a position to make the call?

We disagree about whether or not AT&T v. Hopkins in correct.

I think it is a breach of fiduciary duty to let a participant default when the fiduciary can reasonably prevent the default, such allowing the participant to cancel payroll deduction when the participant does not have an overriding right to do so. Then the fiduciary has to decide if the fiduciary must try to collect on the debt by other means even if the participant managed to arrange a default.

The investment company only has to comply with the terms of its agreements. It can agree to extraordinary matters on any terms that it likes.

I think the new regulations allow an order issued before death to be modified to correct qualification defects. I would not accept an order that originated after the death of the participant. A plan could be designed to accommodate such an order, but I would not design a DB plan to do so.

The payment of the property taxes would probably be treated as a contribution to the plan. That might cause problems. If the company had no income, the owner probably had no compensation. If you want to treat anything as a loan, you probably have a prohibited transaction. I don't know where you get the idea of tax basis out of a loan.

Participant direction of investment of accounts is the not a good idea; the asset should be managed by a fiduciary. The prevailing practice of participant direction is misguided.

Don't forget the securities law violations that occur in a mulitple employer 401(k) plan that is not registered.

I second Bird.

The 409A regulations define "employer" and generally use a controlled group approach. Check the regulations. A separate question is what happens if one or another controlled group members becomes insolvent. Can one protect the employee by putting the deferred compensation obligation with the stronger sister? What is the protection against creditors, considering that the benefit must be unfunded?

The account is the participant's account. What the record keeper calls it does not matter as long as it is administered correctly as the participant's account. Have some fun. Instead of naming accounts by participant name, give each account a nom d'account. Everyone will enjoy having dual idientity.

We don't have any facts about any retirement plans for any employees of any employer, prospective or otherwise.

That would be a different discussion. What to do to avoid issues and what to do after certain facts have set in are two different matters. I have no quarrel with your argument based on a literal reading of the statute and I think no second filing is required. But I advise a second filing, one of the few times I advise to run with the herd.

To be really sure you can eliminate employer securities, the plan needs to say that the right to distribution of employer securities is the right to distribution of employer securities in the account at the time of distribution. Then you can eliminate the employer securities as an investment option in the first step. Once the employer securities have been eliminated, the distribution option can be eliminated. I am uncertain about a plan that provides a blanket right to distribution in employer securities (i.e. the plan has to obtain employer securities for distribution no matter how the account is invested up to the time of distribution).

You have just spent more time in inquiry than it would have taken for a filing. If you had spent the time filing, you would have nothing to worry about except the loss of postage, whether or the DOL can read a statute (which it cannot sometimes).

No.

Section 409A is a concern if someone who has a right to payment in a year receives payment in a subsequent year. That is not to say that the situation you describe violates 409A.

A second filing is common because it is not that much trouble and removes any doubt about interpretation or policy.

What about the requirement that salary reduction can be effected only prospectively, never mind when the qualifying event occurs?

Is the son compensated?

In comments at the ABA at annual section meetings, the IRS said it was OK. Those materials are published, but I cannot remember the year. The IRS comments are not official guidance.

Without further thought about the conflict between the plan terms and the annuities and the adverse implications, you should consider a disclaimer by the son. It would be nice if the son were not a minor at the time of the disclaimer.

Can an individual be an accrual basis taxpayer?

Sorry for the distraction. I have no idea why I read so much into the original post. Maybe I was wishing to see a completely novel question.

I thought the question was whether or not the employees of the government unit could participate in the 403(b), even though the government unit is not eligible to sponsor a 403(b) plan. Are you saying that if the 501©(3) entity is an instrumentality, then that opens the door for the parent's employees?