QDROphile

What do the plan/trust documents say?

The Department of Labor would prefer that the Trustee vote the shares and would probably be unhappy with the current provisions.

Help you did not ask for specifically: Has anyone thought about securities law compliance? I am assuming you have what you say, a multiple employer 401(k) plan.

Food for thought: Whether or not the reimbursement is paid at the same time as compensation, it is not compensation; it is a medical benefit that the employer is committed to deliver in accordance with the terms of the plan.

"The physicians are planning to lease the staff from some other organization." I assume that you mean that the LLC is planning to lease employees (probably at the suggestion of the physicians). Employees of the LLC (the physicians) are not the employer. More important, someone needs to determine if the LLC is a governmental unit or an instrumentality of a government. The 100% ownership is a very important factor, but it is not impossible to have other considerations cause an affiliated entity to fail to be a governmental instrumentality. If the LLC fails, the LLC plan is not subject to the exclusions from discrimination rules that apply to government plans. I do not know how the disregarded entity rules would fit into the analysis.

Depends on the plan design. The plan could be almost the same as a 401(k) plan. At the other extreme, it could be more like a bank account with annual deposits. The plan could also be more like a qualified defined benefit plan. You might also want to consider that a mistake could have more serious tax consequences and be impossible or more difficult to remediate compared to a qualified plan. Finally, ask who will be responsible for the securities law compliance and how that will affect your work.

vebaguru: I think the statement that FSAs can reimburse long-term care premiums needs a bit of qualification given the terms of section 125(f) and the fact that most health FSAs are delivered through cafeteria plans.

Misrepresentation upon misrepresentation, assuming that the statements were understood correctly. I suspect everyone is guilty of some misunderstanding.

Whoa! What you are describing does not look like it will comply with the exemption from ERISA trust requirements. It looks like you are setting up a separate fund for the health FSA. Is the money going to be held in trust?

My bad. I had another recent situation in mind and did not give the question adequate separate thought.

I agree with your proposition about an election effective for compensation after the expiration of the six months in the new year, but others disagree and would impose the moratorium for the reminder of the next year. I don't worry about it much because I think that those who use the six-month safe harbor deserve all the grief that may come their way.

The preamble to the original regulations said that a plan could not provide for not matching catch up amounts (although other wording could accomplish the same thing), but there is nothing in the regulations to match the statement in the preamble. I don't understand all the resistance to matching catch up. Outside of extraordinary matching formulae or very unusual circumstances, catch up amounts will not affect the actual match. Do the math. Possible different story if the plan has ADP problems.

See Treas. Reg, section 1.409A-3(j)(4)(viii).

If you are referring to transportation fringe under section 132(f), where do you get the idea that testing may be required?

You would probably be able to correct under VCP, but the correction would probably require putting the money back.

Other than you can't do it? No.

HRA Advisor: The advice you got from your ERISA counsel is so outrageously incompetent that you should fire the person unless you get both some sort of explanation and a profuse apology. Even then, I don't see how you can trust any future advice. I am very curious about how you are going to respond to this situation.

The plan will be disqualified if benefits are assigned and paid other than in accordance with the terms of a qualified domestic relations order. In this rather ticklish situation, professional help would be a good idea. You may have several ways to skin the cat.

You are mixing COBRA with section 125. A person eligible for COBRA is not necessarily eligible to have compensation reduced to pay the COBRA premium.

Not quite on point, but you might enjoy reading Dahlgren v. U.S. West Direct, 12 EBC 2275 (D Or 1990). According to the lawyers for the plan administrator, the matter settled, so we don't know if the administrator would have had any responsibility for a lawyer overlooking an unexpected death consequence. My advice is that plan administrators should not try to help or explain and should confine themsleves to what the law requires -- is the order qualified or not? I think the adminstrator can and should state the interpretation of the order when the order is not clear or complete, and that explanation might make use of illustrations of consequences. The explanation will give the parties a timely opportunity to revisit the interpretation or the determination when it makes sense, not years later when the latent issue becomes the unpleasant surprise and remedial options may be unavailable.

Please explain the statment about the plan containing certain language and the effect either way.

If a db plan provides for a truly separate interest, then someone should should be on the carpet for not providing complete and comprehensive documentation about all of the possible events and outcomes realteing to domestic relations orders. More likely the plan does not allow a separate interest award and the order can't make it so. Generally, death of the AP before starting benefits causes a lapse of the interest and the participant's benefit is restored. The plan administrator has some explaining to do about determining the order to be qualified without at least some conditions and interpretations relating to those terms.

Did you think through the prohibited transaction issues?

Premiums for health insurance are not eligible expenses of an FSA.

If you are deciding how much "to invest," you hope it is a 457(b) plan. The informal postion of the IRS is disbelief that anyone would subject good money to a substantial risk of forfeiture. Exposure to creditors of the employer is an entirely different matter and is not considered to be a substantial risk of forfeiture. That, in turn, is not a comment on your risk of employer bankruptcy.