QDROphile

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.

An agreement does not have to be in writing. Services through a temporary employment agency are pursuant to an agreement.

Subject to disqualification even if the policy terms were plan terms, as already noted, would it be beyond credibility to argue that the policy was a plan amendment? Yes, if the plan were submitted for a determination letter without the terms.

MexDomer: I don't know how to ask what you mean by "intellectually insulting" without fear of insulting you. I thought Bird was adding some humor to his comment, and thereby make it more interesting, by using a term (socialism) in an unexpected context. Perhaps that is what some might call a wisecrack. I thought he or she might like to extend the game, and maybe expand on the substance of the comment by responding to the proffered foil, which was also in an unexpected context. Bird tentatively recognized the wisecrack response for what it was, chose not to continue to play in the same vein, but did take the opportunity to expand on the substance of the comment. Since Bird did not appear to take offense, I hope that none was taken where none was intended. I was not insulted that the exchange of wisecracks terminated after one round. Perhaps you can help my social development (at the risk of social-ism) by explaining where the insult was. I understand the "intellectual" part and make no apologies for it. "Intellectual" is all over this forum and gives it its value, both in substance and pleasure of discourse. Perhaps your explanation will allow me see the virtue of your gratutious intercession. Lest I insult you mistakenly, only your first sentence is gratutitious. The remainder is an appropriate addition to that part of the discusssion.

On what basis would a Form 1099 for a distribution in 2008 be appropriate? It looks like the distribution was in 2007. I don't see how the timing of the filing of the participant's tax return has anything to do with legal requirements; tax returns can be amended.

You prefer antisocialism to socialism?

I agree with J Simmons. The Order should be implemented in accordance with its terms. The ability to modify after benefits start will be limited. It will get interesting if the plan does not have a birthdate or a social security number, but that should not block implementation. Some cruel device may be in order to get the necessary information, such as assuming that the AP is 18 years old. The AP will come around.

An expense is not eligible unless is an expense of a dependent.

How about a plan amendment?

Section 105 of the tax code requires a written plan document, but nothing says that the writing must have the word "plan" in it or have its pages be joined by a single staple. What constitutes best practices is another question.

A cafeteria plan is relevant only for an employee choice between cash (or taxable benefit) and a qualified benefit, such as health insurance. You describe a choice between two different kinds of health insurance, both of which appear to be nontaxable employer health coverage. No meat for a cafeteria plan.

I have not seen anything that would cause the plan to be administered pending mazss distribution in a way that is different from how the plan has always been administered, except the plan should be amended to eliminate the requirement for a loan before hardship. I think the concerns about the determination letter are misplaced with respect to distributions in the regular course pending the mass distribution on account of termination. If some error were discovered, those distributions would have to be corrected whether or not there is a termination. Having a viable plan sponsor makes a lot of difference. But all this must be decided in the larger context of what the employer is going to do about a retirement plan for its employees. Some better thinking ought to be applied to that issue first.

For those who are too lazy or unsure to draft in English.

Why did the plan terminate? Are all participants eligible for distribution, but for the plam termination (e.g. termination of employment). Was the plan amended to restrict distributions pending receipt of a determination letter? Seems like someone should give a hard look at what the plan terms say about distribution.

The plan administrator has an interpretation issue. The interpretation advanced by Janet M is plausible and reasonable, but it would only be an interpretation, not a rock solid certain conclusion. It would be helpful if the plan's written QDRO procedures spoke to certain interpretation presumptions on common matters such as these, but the QDRO procedures of most plans suck so Jodi S. will get no help from the QDRO procedures. The basis for the interpretation offered by Janet M is that the plan administrator presumes recognition of time value of money, absent express provisions in the order to disregard time value of money, and that the plan's procedure for recognizing time value of money is to recognize both postive and negative actual investment results with respect to the amount awarded. Since the interpretation is uncertain, the plan should use its usual procedure of notifying the parties and explaining its interpretation (whether the Janet M interpretation or the unadjusted amount interpretation), but not implementing the interpretation without a reasonable time for objection and correction. That is the usual procedure, as provided in the written QDRO procedures, right? The other option is to reject the order based on ambiguity.

Agency fees are eligible expenses if they are a necessary part of obtaining the services and linked to the services. Expenses are not eligible unless incurred during the period of coverage. The stipend is eligible to the extent that it is paid for eligible dependent care. A TIN or an acceptable alternative is required for exclusion from taxes. I don't recall if a TIN is part of required substantiation for reimbursement.

Assuming the statement in question begins with "However" I can understand the idea, but I disagree except in one circumstance and a lot more detail is necessary to describe that circumstance. A starting point for disagreement is that the plan has to state what method is used. Plan terms must be followed. If the payroll period method is used, you can't just decide to true-up based on the year. If you make a mistake within the payroll period method, you have to correct the mistake according to appropriate correction methods.

If it is OK to have a multiple employer plan, and the terms of the plan are not violated, yes. But you mentioned deferrals. Multiple employer plans with elective deferrals have securities law problems. Still, for a few weeks, I doubt that anyone will be taken to task. The end game will have fewer options because of the post acquisition participation in contributions.

You should read the provisions of Notice 88-56 that cover amounts that are subject to diversification, but are not required to be diversified under section 401(a)(28). They have implications for record keeping and other administration, depending on how the plan implements diversification.

What does the plan say about timing of payment and termination of coverage relative to failure of pay reduction? If the terms are not pretty clear about the timing of coverage termination, the coverage should not be considered terminated until the period following the period of failure.