QDROphile

It is neither eduction of participants nor advice to participants. The particpants have investment choices and no one is telling them anything more, or at least not that you have revealed. However, the choice of investment options and portfolio structuring makes the adviser a fiduciary -- which is at the heart of what is going on here. The adviser is either ignorant or a bit of a scoundrel if the adviser is claiming no fiduciary role. So get the "F" word on the table and have the adviser declare rather than pussyfoot around the issue with indirect labels. However, the fiduciary duty stops at the choice of reasonable investment options unless more is going on, assuming compliance with 404©. The description of the funds could open a new can of worms.

Name your exemption.

Not so sure about that. How do you get a distribution of the 403(b) amount for rollover to the qualified plan?

Fiduciary. Several determinations have to be made for each loan.

If payments stopped, how can they be automatic? Was there a fiduciary breach? Was there a bankruptcy? Apart from those curiousities, the loan stays in place and payments after the deemed distribution are after-tax amounts. Note that I am not saying anything about whether the participant can be forced to pay or be prevented from paying.

You can do it wih a plan amendment that provides a special benefit to the participant, so you might not be able to do it for a highly compensated particpant

Joel: At one time I decided not to respond to any of your posts because you take strange postions and then cling to them without regard to the responses that you are suppposedly soliciting, but I cannot resist joining the chorus against your proposition that is so clearly wrong. Not that it will matter.

Record keeper should fix its mistake unless it contracted for no liability. The fiduciary who allowed a contract for no liability would then be responsible for fixing the mistake. It is not a problem to restore the account because of the mistake. You cannot rely on what you see on the board.

How is the option to elect between health benefits and receipt of $1000 not a cafeteria plan?

Transition rule is not available to postpone a payment scheduled for 2007.

I think the DOL might see it as a loan to the employer in anticipation of a contribution. I don't see how you can bury it as a gain. I looks more like an operational failure, but consistent conclusion has to be reached. Better that is was a mistaken distribution rather than a deliberate advance against funds to be received. That is a serious conscious error; the DOL would be all over anyone who thinks that distributions can be done that way.

Wow. You may have some other issues, such as prohibited transactions, to consider.

Please explain how the distribution included an amount that was not yet funded.

Only if it occurs on your 65th birthday. See Treas. Reg. section 1.409A-3(a).

See 414(p)(3)(A) and 414(p)(5) and hire someone who knows the law and has had experience with the processing of actual domestic relations orders to help design plan terms and written QDRO procedures.

The article does not say how to effect the special entry date. No one said you can't amend the plan to provide for the exception. If you are dealing with a new hire, the prospect is unlikely to be a highly compensated employee, so discrimination should not be an impediment to the amendment. No one said that what you read has to be practical. Jounalists get paid for words, not necessarily for worth.

Don't get me wrong. You don't have a mistake of fact within the IRS view.

Your recordkeeper is in no postion to call the shots. Record keepers either do what they are told or they resign, or they are fired. Dan has the best suggestion to avoid the confrontation and adverse economic effect.

You can't have an elective deferral under a 401(k) plan without a cash option. You can have a section 125 arrangement without a cash option, but there must be some taxable option (cash is usually the taxable option). You might be able to design a retirement plan to pick up the unused welfare benefit amount, but it would not be a 401(k) elective deferral contribution. I would not attempt such a design. The additions to compensation testing purposes usually cover all the amounts that would have been included in taxable income but for an election to reduce pay under 401(k), 125, 132(f)(4), 457. I am confused by the phrase "defrrals to compensation."

Seems like the shorter payment schedule would have the effect of accelerating payments compared to the longer schedule, so I would play safe and treat it as a separate form for purposes of the rule. If you don't, then can you argue that a lump sum is an installment form with a single installment?

You don't have a problem. A reasonable gap is nothing to be concerned about, absent (i) skulduggery born and bred in Texas, or (ii) an express promise to do otherwise. You don't need to be hyper on this one. Of course, it helps to have intelligent plan documents to deal with bumps in the road rather than ones that paint you into a corner.

I knew that noncompetes were almost certainly bogus and rolling risk of forfeiture was bogus the way that most people were doing it.

As a practical matter, you are correct that the IRS is not likely to go after arrangements before 2005. That does not justify them or make them any less improper. Many arrangements proceeded with the understanding that enforcement was unlikely, for various reasons. Although it took the shock of Enron to move the mountain, the improper "smart and helpful" behavior is why we got 409A, which is so far reaching that it presents problems for some common and innocuos arrangements. I still say knaves, and I am unimpressed with your defense of those who simply did not get caught in the enterprise of making themselves money while leading others astray. Actually, I am impressed that even in hindsight the bad behavior is recognized for what it was and the echoes of that bad behavior are evident in the current efforts to twist and get around the rules rather than understand and comply with them.

Not quite. Removal takes advantage of retroactive amendment capability. If one can amend on October 15 to add a plan feature effective the prior January 1, can you amend to remove a plan feature? Not if the plan has operated in the year to give effect to the feature.

If the Roth feature was added in 2007, you might consider removing it effective as of the original effective date.