QDROphile

I am sorry, I did not read the original post correctly. The employer should not be bound to make any contribution for 2008 as long as plan terms are set by proper action before 2008. Once the plan year starts under terms that include a safe harbor 3% contribution, the employer is bound to make the contributions and cannot resort to testing.

I recall that if a 3% contribution feature applies, failure to contribute is a qualification failure. You do not resort to ADP testing.

The provision you quote is an obligation of the plan administrator for the benefit of participants. You might argue that inability of the plan administrator to have access to plan documents makes the administrator unable to comply with the law; that would be true for a lot more law than the provision you quoted.

Have you considered whether or not investment by an IRA in an LLC managed by the IRA owner/beneficiary is a prohibited transaction?

IRC section 4975( c)(1)(D), (E) and (F); similar provisions under ERISA section 406(b).

The correct outcome depends on many things, including terms of the plan, but section 414(u) would not require a contribution unless he returns to employment. You might look at the summary plan description for the plan to check on conditions for contributions.

Rights generally depend on the return to employment after the military service, within the prescribed time. If the employee returns with rights, the result is that the employee is treated as if employed during the military service (including a last day requirement).

Sorry, I just dug these out of an old file because they spoke to the issue and I don't have time to refresh myself on the specifics. Each of the two rulings has another similar ruling of about the same vintage if you want more words to consider.

Compare PLR 9112022 and PLR 9522017

See Prop. Treas. Reg. section 1.125-2 for election rules. There are no rules as such for "open enrollment." ERISA disclosure rules apply to the ERISA plans that are funded through the cafeteria plan, such as health benefits, including health flexible spending accounts.

PLR 9522017 might provide some food for thought.

Qualified governmental plans are generally no different from other qualified plans with respect to rollovers.

Masteff: I disagree. Life outside the safe harbor is not very scary. However, you are correct that an amendment would not solve the problem if the appropriate standards outside the safe harbor were not met by the hardship distributions in question.

Kim Sheek: Please support your implied statement that the law requires a sx-month suspension. It does not. Whether or not an amendment is a viable solution depends on timing of the events. Whether or not a six-month suspension is a desirable plan feature is a separate question, usually answered by product and not other considerations.

Amend the plan to remove the provision for suspension.

Why do you care?

No regulation refers to shared interest or separate interest and no regulation ever has. Those terms are artifical and sloppy, and have no effective meaning. They describe only a rough concept. They are useful for discussion purposes, but dangerous when trying to decide legal rights.

If you are not trying to have the reimbursements excluded from taxable compensation, you have no problem. You can pay employees whatever you want, subject to the excessive compensation rules. If you are thinking about nontaxable reimbursements, start with section 105(h) of the tax code.

Rather than fuss over the discrimination issue, why not go to the heart of the matter and ask why the plan has a combined FSA limit? If you find no good reason, then eliminate the source of the discrimination issue and possibly other legal issues. Since DCAPs are not subject to the uniform coverage requirement, a good reason for the combined cap escapes me. If what you are saying is that the employer provides $10,000 of benefit credit to apply to FSAs, the $10,000 credit does not have to be changed to provide a $10,000 health FSA limit and a $5000 DCAP limit. The difference can be covered by salary reduction. Since your arrangement is so unusual, I wonder if the FSA is reimbursing health insurance premiums.

The participants cannot choose investments. The employer can agree to credit the deferred compensation accounts according to the results of some specified measuring investments, and the participants can choose those measuring investments. The employer will usually actually invest its money in the the same investments as the measuring investments in order to match its contractual obligations with its assets. You can compress this fiction without much concern and allow the participant directions about the measuring investments to function as the direction of the actual investments. It is still a good idea to make it clear that the employer invests its assets as it sees fit and the participants have no enforceable rights in the assets, including the right to direct invesments.

The plan can postpone the determination of the retirement benefit for a reasonable period to resolve qualification issues. It is up to the fiduciary to decide whether to evaluate the domestic relations order based on pre-retirement circumstances or post- retirement circumstances. The decison should take into account the communications that have occurred, plan terms and policies and the writen QDRO procedures and the policies reflected in them. The fiduciary will probably have to read between some lines. As for policy considerations, adverse selection lurks generally in the background. My personal preference is to disregard draft domestic relations orders. They have no legal effect unless the plan gives them effect (e.g. under terms of the QDRO procedures). Under my approach, the domestic relations order would be evaluated based on the circumstances at the time of delivery. You make it sound as if the order will arrive after the benefit is in pay status. I don't see how the Fund could request changes in the first place. The Fund should limit itself to advising if the proposed form of the order meets qualification requirements. If the Fund engaged beyond its appropriate role, the Fund may have compromised itself and may have to act differently because of its prior actions.

I am not aware of any prohibited transaction exemption. The proponent of the transaction needs to convince the plan administrator that the transaction is exempt.

The employer cannot donate health FSA experience gains to charity even if the plan document provides that it can be done. Health FSAs are group health plans under ERISA and the employee salary reductions amounts are treated as employee contributions and plan assets. ERISA restricts use of plan assets to plan purposes. Donations to charity are not a legitimate plan purpose under ERISA. The tax code looks at the arrangements differently. The section 125 regulations to not reflect the ERISA requirements and restrictions.

Charitable donation does not work for disposition health FSA experience gain if you want to comply with ERISA. oriecat: ERISA sees the salary reduction as employee money, therfore the money becomes plan assets. The tax code sees salary reduction as salary reduction. The employer holds money that is not paid to employees because of the salary reduction. In a sense, the salary reduction is employer money, which is why the employer can do as it wishes with the money (including charitable donation), subject to the special rules about trying to give it to employees.

Marriage trumps. On the other side, the plan document should take control of what happens if the participant was married (without naming another beneficiarry with spouse consent) , but is umarried at death.