QDROphile

The key word is "explicitly." If you have a sloppy plan document that does not define compensation based on pay period to match the terms of the contribution per pay period, you are lookg at a true up. If the match is a function of compensation and compensation is defined as compensation for the year, I think that controls despite a provision that allows periodic contributions.

Just wait until some executive comes and reams you about not collecting the full match. Then you will want have had all sorts of disclosures about the dangers of having such a plan design.

The recipient has the following options: 1. Roll over the distribution of the shares to the IRA and then the IRA puts the shares to the buyer. The IRA owns the note and collects the payments. 2. Accept the shares and immediately put them to the buyer. Roll over the note and the first payment to the IRA. I assume that the intial cash payment happens at about the same time as the distribution/put. Option 1 is usually preferred. Timing is everything. Not many IRAs will take the shares or note.

Somebody seems to have forgotten that 409A overlays 457(f) already. Proceed at your peril. The IRS sent a pretty clear message that it will remove the tools of the knaves who persist in the same mischief under the 457(f) regulations that helped bring us 409A in the first place.

No IRS guidance supports breaking down the expenses. In other contexts, the IRS has supported allocation of expenses. I think the consensus is that overnight camp simply is not eligible.

Could be 457(b) if the contributions stay within the limits.

You did not really answer my question, but here is what I was getting at. Since COBRA only continues coverage that could be maintained but for the qualifying event, if regular participants (employees) become ineligible for coverage if they fail a condition, a person on COBRA continuation would lose coverage for failure of the same condition. If an employee participant fails to provide the information, what would happen to that employee?

What would happen if a covered employee were to refuse to provide the information?

I subscribe to Mike Preston's speculation. Another very remote possibility is that the actuaries think it is appropriate to take into account that a single life benefit has been divided into two lives, even though each portion is measured by a single life. The label is still wrong because the factor would not be the same as a joint life benefit (implied by the word "survivor"). Would the participant's portion be subject to a reduction, other than the 50%, because of the QDRO?

LRDG's response goes beyond the scope of the question, and it is not a good idea for the plan administrator to figure out or propose the options or the "best" solution. The employee must figure out what the court demands of the employee and the plan should react to what is asked of the plan. The questions may eventually come around to the matters LRDG discusses, but they do not seem to be there yet.

PTE 80-26, as amended

What does the plan say?

JSimmons: The new regulation added absolutely nothing to the law. The Department of Labor went through a completely unhelpful exercise simply for the sake of form. In its defense, the statutory mandate was also vacuous, but the Department of Labor made absolutely no effort to address any interesting questions. Mike Preston: I agree that an order would be qualified if drafted as you suggest. That is why I qualified my response. I am still willing to bet that the order is not drafted that way, and the question was whether or not the order be modified. Apart from state law concerns, the order could be modified to provide the remaining 30 payments to the participant. This is a test for those who believe in Hopkins v. AT&T, which I do not.

If "due on transfer" clauses or special security arrangements to meet adequate security requirements were necessary, I am sure your first response would have noted them. Most plans prefer not to have the real property secure the loan, even though commercial lenders do. Loan acceleration is usually a function of the security terms. I think section 72(p)(2)(B)(ii) of the tax code and section 1.72(p)-1 Q&A(6) are helpful, but a plan can be stricter.

Repayment depends on the terms of the loan. Despite mandates, many plan loans do not have the same terms as their commercial counterparts.

If you want a simple answer that is likely to be true even if it disregards relevant questions, the participant is out of luck. The participant cannot retrieve any benefits awarded to the alternate payee if payments have started.

Indeed. The DOL has advised that it definitely depends.

Don't overlook a big catch in flogger's example. If the participant terminates employment before age 65, the participant gets nothing. Also, you are not avoiding 409A. You are providing deferred compensation that is not taxable until a substantial risk of forfeiture lapses, in accordance with 409A. Especially because of the novelty of 409A, this is not a playground for the uninitiated or for the old dogs who refuse to let go of the old tricks.

I would be concerned that expenses incurred in the period prior to effective enrollment would not be eligible for reimbursement. Also, you would not know the amount of coverage until the salary reduction agreement is effective. The employer could provide coverage for the initial period at no cost to the employee, but it would be impossible to match the coverage with the amounts that are actually elected.

Look to the published prohibited transaction exemption for guidance about terms of the agreement.

Locust: You are really going to enjoy a new IRS notice about 457(f).

Treas. Reg. section 1.409A-1(d): An amount is not subject to a substantial risk of fofeiture merely because the right to the amount is conditioned, directly or indirectly, upon refraining from performance of services. Rolling vesting is out, too. A risk that is added afterward is disregarded. The IRS deliberately blocked the dirty tricks under 457(f).

Then they had better get something in place. The plan will have to figure out to whom it will distribute benefits. One thing the plan cannot do is hold the money indefinitely. What do the plan reprsentatives say they will do?

Good on you, RLL.

Correct conclusin. Not the correct reasoning. You tried to come up with logical and consistent reason, which is the wrng tradition when dealing with ESOP rules.