QDROphile

We forgot to say to be careful to comply with what the plan and the written QDRO procedures say about the relevant subjects, or amend if desired.

The authorities have been very forgiving about imperfect plan identification, so if the fiduciary is convinced there is no ambiguity, the order can qualify. If the fiduciary reasonably believes that the order is what it purports to be, then it can be accepted. All the certification and other stuff simply provides indication that the order is really an order of the court and not a false document. If the fiduciary is concerned that the paper is a false document, then the fiduciary can ask for reasonable assurance of authenticity. The fiduciary would also get some comfort by waiting an appropriate period after notice about qualification before distributing benefits to an alternate payee. If one party submits a false document, the other party ought to be asking some questions about the unexpected notice, or a notice with unexpected terms.

Sounds like the employer has simply chosen to pay different incentive compensation amounts to different persons, all recognized as W-2 pay. As long as the payments and deferrals are executed properly and the plan document describes the compensation properly, there is no discrimination with respect to benefits. Benefits are based on W-2 pay amounts. The differences with respect to W-2 pay are not an issue for plan. Such differences occur under almost all 401(k) plans that have more than one participant.

How are the benefits funded? If the employer is funding the benefits, disability payments are taxable. Also, I am skeptical about any claim about a lump sum disability benefit. There is a lot more to say on the subject, but you probably don't have to dig too deep to get a negative answer.

If you embed a message with your two cents worth, is the new message now your four cents worth, for a total of six cents, or only an additional two, for a total of four, or do you not get credit for the second message at all (except toward becoming a moderator), so it is still a total of two. Is this covered in the exam?

"paid after you separate from service with your employer during or after the year you reach age 55" This one does not apply, but distributions of substantially equal payments after age 55 will avoid the penalty. Get help before doing it, important details apply. Some of the other items listed above either obviously do not apply to IRAs and some have an IRA twist (e.g. qualified domestic relations orders have an IRA counterpart). Best to get the IRS publications 575 and 590, available on line.

"including salary reduction contributions you made to an Employer sponsored cafeteria *** plan"

The salary reductions do not go anywhere. You might say they go to the employer's bank account, but that is where they start. But the discussion is academic. If an employee is not happy with the coverage and can arrange to have the coverage cancelled, but the salary reduction cannot be changed, the employee would rethink the unhappiness and keep the undesired coverage rather than lose it because the employee gains nothing by dropping the coverage. This thread has become very confused over the difference between the insurance coverage and the cafetria plan election to reduce pay, and possible differences in the ability to stop coverage and the ability to change the pay reduction election. Each element must be considered according to the applicable terms of the respective plans and the applicable law. In most circumstances there will be no differences: the coverage cannot be dropped by choice mid-year and the pay reduction cannot be changed by choice; if coverage changes because of changed circumstances, the pay reduction can be changed in a way that is consistent. None of the posts have dealt with the whole story. Each has missing pieces, so none of the conclusions are conclusive, leading to the appearance of strange outcomes that you will not likely find in practice.

At a recent presentation by IRS audit and enforcement representatives, the informal comment was that the IRS was very skeptical about these arrangements, but the IRS is coming to the conclusion that maybe, if done correctly, some form of the scheme could work. Lots of qualifications in the statements, with particular warning about prohibited transactions that can occur at various stages, including exit strategies. The IRS did not mention the issue of allowing the principals the right to purchase employer securities for their 401(k) accounts, but then shutting the door on other employees/participants. At best, is is a delicate proposition with uncertainties that cannot be completely resolved. The IRS knows that promoters are out there, especially in franchising, and that some of them are scum. Apart from the compliance issues, the IRS questions the economic wisdom of the investment of the retirement funds. Q: How many new businesses fail in the first five years?

457(b) and 457(f) arrangements tend not to be viable except as top hat plans or governmental plans because of ERISA requirments other than filing Form 5500.

And catch ups are elective deferrals.

Different plans have different ways of dividing pension benefits. Nothing against your husband, but he may not be describing the situation with the precision that you are able to understand becuase of your related experience. Start with a copy of the order and any correspondence from the plan. It is also likely that the rules and procedures for division of benefits is in published regulations or adminstrative rules. Many govenment plans and the governing documents are unecessarily complex and difficult to understand, so good luck. Maybe you will get a more focused response from someone with experience with the plan.

"So I guess I'm asking, how can you prevent or enforce an employee who wants to cancel coverage under a POP plan from doing so and, is it possible to incorporate into the plan document a provision that would terminate the coverage for non-payment of premiums." The employer prevents cancellation of the section 125 salary reduction agreement by not amending or terminating the agreement (it is a bilateral agreement) and by not increasing the the employee's pay. Or, in terms that most people use, but is no correct for tax purposes, you continue the deduction from pay. How can the employee cause an increase in the pay check without the employer's cooperation? As LRDG indicates, the insurance coverage is a separate matter, to some extent. The employee may be able to drop the coverage (or maybe not if it is group coverage or has terms to the contrary). If the coverage is properly dropped, no premiums will be paid on it. But the section 125 salary reduction is unaffected unless what happens with the insurance is not elective. Under the salary redution agreement, the employer agrees to provide the coverage in lieu of pay. The employer needs to understand the coverage and whether or not it can be dropped, or has been properly dropped, to make sure that the employer is meeting its obligation to provide the coverage. The possible asymmetry can be unsettling, but it can also be the correct outcome.

1. The law does not require ESOPs to distribute cash. 2. Apart from the participant's ability to demand distribution in employer securities, subject to some exceptions, ESOPs are governed by the qualified plan rules and no special rules apply to medium of distribution. 3. Your question raises suspicions.

Depends on what end of the telescope you look thorough. If you accept the idea of annual elections, the requirement to cover the newborn is an exception with obvious motivation and implications (primarily mother and child, but throw in the father to assure that employee is covered). Why would the advent of a newborn raise an expectation that an employee would be able to change an earlier decision not to cover the siblings? That would have very different policy underpinnings.

And yet, it is true.

An audit request will pick up the letter, but will not pick up conversations. By the time the adviser is asked to testify, the agency will already be deep into the issues. The concern is ease of discovery, not stonewalling. Being professional has risks. You are correct that a written response is more protective of the adviser. Is a memo to the file an adequate balance between protecting the adviser and not putting the advisee in a worse position? All actions depend on circumstances, but I have advised a client to fire a consultant who wrote "the sky is falling" letters as a way of communicating observations. Nobody needs to be handed a smoking gun. It is especially touchy when the advisor does not have enough information to fully evaluate the situation.

The plan (possibly driven by the insurance policy) does not have to extend as far as the allows. The plan only has to provide for what the law requires, and the law does not require opportunity to cover the other child.

No obligation to give you the data unless your contract calls for it. I hope your contract does not call for you to do the testing without the means. Seriously, even if the contract is silent, if the client will not cooperate by providing the necessary data, you are not obligated to do the testing. So your argument is a practical one, not a legal one.

Is not having an emergency a substantial risk of forfeiture?

If you are not a lawyer and are not in the confessional, then do not send anything in writing that suggests or descibes a compliance problem unless the client asks for a writing. Your characterization of the letter as confidential does not make it privileged and does not prevent the IRS or DOL from access to the letter in an audit or investigation.

A prohibited transaction has probably occurred every year since the contribution, too. It will indeed be "interesting" to resolve.

Assume the rule is what we understand it to be. How would you write the rule without using the word "agreement"? It can be done, but the way is it written now is pretty efficient straightforward English construction, and some other word choices are more awkward. In first year contracts classes in law school, one of the first lessons is the silent exchange of goods for money in a store to illustrate that agreements come in many forms, and a writing is not necessary for the agreement nor for the agreement to be enforceable. It is a good practice to drill down in words to find the intent of the expression, but I think you are trying to find too much nuance of meaning in the word choice.

Perhaps the use of agreement in that context distinguishes between the agreement of an individual to work for an employer (an employee or an independent contractor) and the agreement between the employer and the agency for someone to work for the employer (a leased employee).

If the individual has a choice about receiving pay (in the check) or the HSA contribution (taken from the check), then a cafeteria plan is the only device.