QDROphile

Consider EPCRS, Rev. Proc. 2006-27

When brokers call, the answer is negative. That is a top ten rule.

If you think an unrestricted window is a designated option then you must have to conclude that it is an inappropriate option, with only a handfull of exceptions in the universe of particpant directed plans. Surely you cannot conclude that it is appropriate in up markets and inappropriate in down markets. No reasonable fiduciary could make such calls. So your position is that a fiducairy must resrtict the window. That is a rather daunting task unless the restriction is so severe that the fiduciary personally picks each option. Or do you think there is a middle ground? Except for limitation to domestic publicly traded securities how can a fiduciary limit the options to categories of investments? Some elements in each category are likely to be inappropriate. Perhaps the best arrangement is a reasonable menu of investment options, for which the fiduciary is responsible. If, in addition, an open window is available for the multitude of investment experts out there (who have been trained by Money magazine and golfing partners and believe they have a constutional right to direct investments), the participants are on ther own, withoust recourse to the uninvolved fiduciary when they get unlucky. But we don't have solid legal support for that proposition. The wiser course for most plans is not to allow participant direction at all.

Within the 404© playing field, I understand the statement that a fiduciary is responsible for monitoring the investment options that the fiduciary selects, and is responsible for the choice of particular investments that are "offered" by a plan. The fiduciary is also responsible for making a reasonable number of reasonable investment options available. Mort Klevan of the DOL once commented that he could not see how offering an unrestricted window could comply with 404© regulations. Are you saying that an unrestricted window is an option selected by the fiduciary in the same way that a fiduciary might construct a menu of mutual find investment options? Or are you saying that the window is outside of the 404© protections (or merely outside of the 404© regulations -- if that makes a difference)? If the window is outside of 404©, do the 404© protections still apply within the menu? Or is the the window not an investment that is designated by the fiduciary (see, e.g. references to "designated alternatives" in regulation section 404©-1(b)(2)(B)(1)(ii)), so different standards apply? Where the lines are drawn is interesting and important. It would help to be more precise about what is meant by statements about liabiity and how the responsibilities relate to the more traditional framework of a limited menu of options designated by a fiduciary, and more important, to provide reference to authority that speaks to fiduciary responsibilities outside of that framework.

If the distribution is not rolled over directly, 20% withholding is required and assets must be liquidated to the extent necessary to cover withholding subject to some exceptions not applicable to gold. An interesting question is whether or not the particpant can use outside funds to cover the withholding. If the participant did not elect a direct rollover of a cash distribution, the participant could use outside funds in that amount of the 20% withholding to achieve a 100% indirect rollover. So if the same principal applies ... ?

Oral surgery and new crown should be eligible for payment by the HSA. The terms of the FSA will determine what is eligible for payment by the FSA. FSAs may be limited in unlimited ways.

What plan terms provide for not allocating for a year the contribution made for that year?

What do mean by "coverage received to date"?

No blanket proscription, but you have to look at what is being proposed. A plan cannot write uncovered call options, for example, because the potential obligation could exceed the balance of the account. I don't see any problem with publicly traded options because the maximum exposure is the amount invested -- the option could expire unexercised. My personal opinion is that these sort of investments are inappropriate for retirement plans unless they are part of a sophisticated professional hedging strategy. Not stuff for individual participants. But those who want to do such things can seldom be advised. How much is the broker going to make on the trading? Rhetorical question.

All three. The easiest to address are plan document and then administrative rules and procedures. If the option trades are not disallowed by the plan design and administrative limits, you have to go to various legal standards. Hint: covered call options are OK.

The beneficiary account has different rights and features that must be tracked, however you may accomplish that.

Separate coverage and ADP tests, assuming only one unit.

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.