QDROphile

Ask for another copy of the summary plan description and ask if it is up-to-date.

What business do you have allowing or disallowing amendments? If you are in a position to be responsible for such matters and you deal with liability on a case by case basis, you have some inherent problems that you need to address.

1. That is up to you, but installments of a small amounts usually do not make much sense unless you are on the edge of a tax rate. Also, you should be able to leave the money in the plan until something happens to your former spouse, such as he takes a distribution or reaches retirement age. Many plans try to push out alternate payees. You need to understand the difference between a distribution (getting the money from the plan) and rollover (the money goes to your IRA) because of the different tax consequneces. Whether or not or not you elect to roll over money taken from the plan, you will have a distribution. You can have the money sent directly from the plan to your IRA. That is called a direct rollover, but it is still a distribution. A direct rollover has the best immediate tax consequences. All of your money goes to the IRA (no withholding) and you have no taxes until a later distribution. Before you take a distribution, the plan should give you written information about your distribution options and about rollovers and direct rollovers and the federal income tax consequences. 2. True. If you roll over to an IRA and then take a distribution before age 59 1/2, the penalty will apply unless another exception applies. 3. Check the tax and rollover information from the plan. If you do not elect a direct rollover, 20% will be withheld from your distribution for federal income taxes - lump sum or installment. Also check IRS publications about distributions from retirement plans, available on the IRS web site. The plan should also tell you about state tax withholding, but it may not do so automatically. You may have to ask if state taxes will be withheld. 4. Not as far as the retirement plan is concerned.

No participant consent to a correction. The IRS does not need participant consent to disqualify the plan. Would you mind explaining how catch up contributions get matched? Under most match terms, it is mathematically impossible to match catch up contributions except when the ADP test is the limiting factor. And if the ADP test is the limiting factor, one would think that catch up contributions would be matched.

Whether or not you can make the arrangements work legally, it is stupid, so just stop.

If one can choose a "model" allocation by checking a box, it is an investment option and the adviser has constructed it, unless the investment form was done without the adviser knowledge or consent. The adviser has the responsibility of a fiduciary who has chosen an investment option for the menu, the same as if the plan administrator has chosen some "lifestyle" fund for the menu. Depending on the adviser's engagement, the adviser may or may not have the same duty to monitor as the plan administrator has for the chosen lifestlye fund. Anthing else that is disclosed on the for or otherwise might cause the adviser to have more fiduciary responsibility. It does not sound like the disclosure is adhering to the guidance about education. Among other things, the guidance does not anticipate that education will focus on the particular investment options of the plan.

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."