QDROphile

Fire the consultant. The new regulations are under the tax code. That has nothing to do with ERISA requirements, which still apply to ERISA plans. Therefore you have differernt standards applicable to health FSAs (ERISA plans) compared to dependent care FSAs (almost never ERISA plans). EBIA is correct. I am serious about firing the consultant. If you have questioned the advice and the consultant has persisted, the consultant is displaying fundamental incompetence, not just ignorance or misunderstanding about new regulations.

The person claiming to be married should provide the information that is reasonably necessary for the plan administrator to conclude that the person is legally married. The administrator can refuse to enroll until the administrator can conclude that plan standards have be met. The administrator may have to provide an explanation of what the plan means by legally married.

The plan's attorney shoud be able to give a cogent explanation for the conclusion, or be fired.

Assuming that the applicable documents give authority for distributions to the trustee. The plan administrator might have that authority and you stated that the sponsor is also the administrator. I don't know how the bankruptcy trustee actually acts; court or other approval may be needed. I doubt it is your job to worry about that.

Termination of a plan is a sponsor function, not a fiduciary function. Unless the sponsor has a contractual obligation to reckon with the trustee in connection with a termination, the trustee has no say about termination. All this stuff about who is the plan trustee is misguided. However, things that happen after the plan termination (le.g. liquidation and distribution) can be the responsibility of the trustee and would be governed by the trust agreement. Also, the plan sponsor usually has authority to remove the trustee and appoint a replacement, so the bankruptcy trustee, who ususally stands in the shoes of the sponsor, is in control. It appears that the control could be exercised, or at least explained, with more appropriate formality.

So how are the DC multiple employer plans with 401(k) features handling securities law registrations?

The employer has a cafeteria plan, or would have one if the employer complied with the applicable rules, such as having a written plan document. By not complying with such rules, the employer is creating taxable income for those who have medical benefits. I think that is the starting point for working through the questions you raise. And it sounds like getting some competent advice would be in order. If the noncompliant arrangement gets caught, it will be much more expensive than the cost of good advice.

The IRS issued the notice because not enough people were listening to statements that 409A overlays and applies to 457(f) situations. The intended audience was predisposed not to hear, so they brought out the hammer.

"Instead" is not a word to use when dealing with 457(f) and 409A.

According to the 409A regulations, refraining from sevice is not a risk.

This is really a bad day. I dropped part of the cite.

merlin: Sorry, I was looking through the wrong end of the telescope. The cite under the new regulations is 1.415(f)(2), but the rule has not changed.

Ask the proponent of the arrangement for explanation and justification. If the participants direct investments and the fund is an option, is does the disclosure warn that new money is helping to pay for a prior charge to the fund by suffering its share the amortization charges? If it is a wasting fund, how does the fund account for some people getting out earlier than others and not bearing their share of the amortization? How does the fiduciary justify the arrangement if there is any mismatch (time or amount) between the orginal investors (who got the benefit of postponement of the value adjustment hit) and those who bear the cost of amortization? When we were presented with this option recently, we nixed it. It is problematic all around, even it it can pass technical muster. I would love to see a decent comprehensive analysis that concludes that the arrangement is appropriate.

Nothing in your post indicates repayment. Or is repayment diguised by an artificial low rate of return?

I think you are missing the proper treatment of the 415 limit. Under the circumstances you describe, the qualified plan limit is unaffected by participation in the University 403(b) plan

Tell us who is the borrower and who is the lender. It looks more like a bribe to me.

With respect to prohibited transactions, see section 408(e) of ERISA. An independent appraisal is effectively required.

Treas. Reg section 1.401(k)-1(d)(3).

Discussion and debate at an old thread that started on November 12, 2001. Search the ESOP topic for "scam."

This is a sham ESOP design. You are right to question it because it is bogus. However, the IRS buys the idea that the stock fund is the ESOP, so the ESOP is always 100% invested in employer securities. The concept passes the road test and many companies use it. Why not? It is a way to get essentially free deductions if you already have an employer stock fund.

Put your finger on the word"and" in the passage. The exception applies to regulated trust companies or insurance companies.

Try www.yourlifeonasilverplatterforfree.com

A couple of options: 1. As an adminstrative matter the plan will apply the election only against a defined limited portion of the compensation, such as amounts that would otherwise run through a paycheck in the regular pay system. This may not be possible if you have a restrictive and rigid plan document. Intelligent plan documents are vastly underrated. 2. The elected amount reduces other contemporaneous cash compensation. This can be very difficult to catch because the payroll system is often unaware of the other compensation. Even with knowledge, the individual sporadic adjustments to the regular deductions may be too difficult. Also, if the extraordinary compensation is significant, the paycheck can be decimated just in time for the rent or mortgage payment, sort of like a negative bonus. Under both approaches, the procedures should be described in the summary plan description and in the election form. When participants eelct, they should understand what the election means so they can plan accordingly.

Information is correct. For this year, amounts are includable in compensation that you did not expect. You should seek advice about what to do for past years. You should ask for an explanation from whoever sold you the 125 plan.

You have got to be kidding if you are suggesting that the credit risk was a substantial risk of forfeiture for section 457(f) purposes. If you are not kidding, you have nothing to worry about for section 409A compliance because all of the accrued amounts are already taxable.