QDROphile

Although you can probably correct mistakes, you have to be convinced to a high degree that the enrollment was really an error and the length of time before the question was raised is not a helpful fact. What other evidence do you have to support the claim of error?

I did not state that allowing the AP to wait until 401(a) (9) requires distribution is a violation or is evil. I think it is not the best way to run a plan because of the administrative complexity. It is simply easier to require the AP to start when the participant starts, which will reduce the chances of violation 401(a) (9) almost to zero. There is nothing to prevent such a plan design because a domestic relations order cannot require a plan to do something that the plan is not designed to do. The plan starts benefits when the participant starts benefits; it does not reserve a portion of the benefit for a later start. Compare Fidelity (talk about evil!). If Fidelity sets up a separate account that is completely under the AP's control, without regard for the age of the participant (which is what Fidelity does), compliance with 401(a)(9) happens only by chance. Lucky for the 900 pound gorilla that most APs do not have the luxury of postponing payments to the point of violation.

As your post notes, the separate account is still based on the participant with the AP treated as the spouse, not independent of the participant. I guess we could discuss degrees of separation, but it is not a completely separate interest if the status of the participant still affects the AP's benefit.

The plan got a stupid start by allowing the AP to postpone start of benefits after the participant started benefits. This is something that Fidelity foists on unsuspecting customers, by the way. Shame on Fidelity for setting up a potential violation. I don't know if you can fix the plan with respect to the AP at this point. Second, there is no such thing a a separate interest. The 401(a)(9) rules do not divide the benefit and apply the rules to each separately. It is all the participant's benefit, but treated as a separate account with the AP as the spouse. Comply accordingly and see section 1.401(a)(9)-8, Q&A(6) of the regulations. You have a right to be Grumpy.

When I see such provisions, I think that the drafter is trying to assure the the AP's interest is not totally lost because of death of the participant before the AP starts benefits. You did not say directly that the plan is a DB plan, but this is a legitimate concern in a DB plan. Since the term "separate interest" does not have an accepted meaning, the drafter cannot be sure of the consequences of its use. A more direct approach to making sure the AP gets a prescribed share of the death benefits is better. I do not presume that the AP intended to get a piece of the participant's remaining interest, but was simply inept. Since I do not believe in separate interst under DB plans. I believe that the portion of the award to the AP can be used to define the dealth benefit payable to the AP if the AP fails to get the portion of the regular benefit becuase of untimmely death of the particpant. While I agree that the plan should not get involved in trying to correct conceptual errors or attempts by one party to fool the other, there is nothing wrong with the plan to say, as a condition of qualification, how the plan interprets the provision, including an example of an outcome that makes the point. The plan has an interest in avoiding later disputes over interpretation, so it is best to get the issues resolved to the plan's satisfaction now, while the plan had total control. You don't have to guess at what was intended -- state how it will be interpreted and let the parties work out what was intended.

Will the amendment break the prototype?

You are probably not dealing with a deemed distribution. You are probably dealing with an offset distribution. The difference does not matter for purposes of your question. The 10% tax under 72(t) applies unless the loan is rolled over.

The plan terms need to fit better. Someone needs to evaluate application of discrimination rules, especially with respect to the health FSA.

Are you referring to real annuities or fake annuities? Any plan asset that is not purchased at the direction of the participant is not covered by 404( c). The fiduciary is responsible for the asset. The plan sponsor should have nothing to do with decisions about investment of plan assets because investment is a fiduciary function. If the sponsor is a fiduciary, serious consideration should be given to identification of the individuals who will have fiduciary responsibility. Any individual who is a fiduciary but takes no action to discharge fiduciary obligations because of ignorance of the fiduciary status is at substantial risk. Any fiduciary who purchases an annuity or makes annuities available as an investment option must be able to explain how the asset works and its value and disadvantages relative to other investment options, including true cost. I challenge most individuals to be able to succeed in that endeavor. Most of those who are able to evaluate annuities would not allow them in a qualified plan except as a distribution option.

I don't see a requirement for an invesment policy, although one would be a good idea.

You still have to fit the standards for medical care. Recommendation by a health professional is very helpful, but how do the books fit with the specific terms of the statute and regulations? I am skeptical.

I would go so far as to say that a corrective contribution by the employer would NOT be be permitted if you were dealing primarily with HCEs.

To clarify, the full amount of the medical spending account coverage elected is available from the first day of coverage. The amount of employer dollars devoted to paying for the coverage is irrelevant, even though it may be identical to the amount elected.

Certain expenses, such as comissions and possibly other investment transaction expenses (not including investment advice) would be treated as contributions if covered by the employer. Most expenses would not be treated as contributions.

You have to follow the terms of the plan. If the plan provides that matching contributions can be made for this employee, then it can be done, subject to the relevant qualification rules. If the plan terms do not provide for the difference in match relative to others, and others don't get the match, then the contribution will disqualify the plan. The wording of the provision for the special match might be interesting. Qualified plans are not bridge games. You don't get to declare trump, even if you win the bid.

Stop with the double tax BS already. Also, the interest can be deductible if you know what you are doing. Not recommended because it is easy to make mistakes and blow the deduction.

#1: If the purchase price of the house is greater than the maximum hardship amount, you have eliminated the uncertainty. If the designated hardship amount is more than is necessary for the minimum down payment, then the down payment will be more than the minium to use up all of the hardship amount. #2: You still have the uncertainty about closing, an all-or-nothing proposition. That is a risk of any house purchase, whether or not plan funds are used for the purchase. It might be well for you to explore whether escrow is a technique that should be used generally by the plan. What would you do with a "normal" house purchase that fell through? Same issue.

401(k) regulations

Issue #1, uncertain amount: Are you suggesting that the full purchase price of the house would be covered by the distribution from the plan? Issue #2, possible failure: All house sales have the possibility of failure of closing, so the issue is not unique to the auction. Consider whether or not escrow solves the problem. Also ask yourself if the escrow agent needs to be bonded.

The post did not say so, but I bet the plan does not prevent an employee from getting individual coverage, paid through the cafeteria plan, because the employee has a domestic partner.

If the new account was not an IRA, you also need an IRS ruling that the repair worked. If the broker was at fault, it should get the ruling for you.

You are way too many steps ahead of me, so back up. The $98,550 is not included in gross income for income tax purposes. The $1450 is gross income, but is obviously not avaible to pay the individual or to charge for contribution to the plan. Most 401(k) plans use some variation of gross income as a base for measuring. To start, the plan could consider the $1450 as part of the available base for deferrals, so if the plan limited the employee's deferrals to x% of compensation, the employee could elect to defer an additiional x% of $1450. An increase in deferral could increase the match as long as the other deferrals had not caused the match to hit the maximum. The plan could also consider the additional $1450 as part of compensation in the match formula, so the maximum match could be greater whether or not the employee defers more based on the the $1450. I do not see how the $1450 itself could be a contribution. Any deferral based on the $1450 would have to come from other dollars. You cannot just call some amount a contribution. Real dollars have to be delivered to the plan/trust.

STP: I was having a little fun in how I answered your post. The problem is that 401(k) plan interests relating to elective deferrals are securities, but almost everyone forgets about this because there is a general exemption from registration requirements for 401(k) plans. The exemption does not apply if employer secuitires are offered as an investment option for elective deferrals -- which is pretty well known. The exemption does not apply to multiple employer plans if the exemption is read literally and carefully. To my knowledge, the SEC has not spoken about its interpretation of the exemption. It is possible that the SEC does not think the exemption was meant to treat multiple employer plans diferently, but I can think of arguments about why multiple employer plans are different from a policy perspective. The solution/requirement is not to guarantee investment returns. The effective guarantee of investment returns comes about because a penalty for violation of the registration requirements is that the investor has a right to rescind (get the invested amount back) and get statutory interest on the amount for the period of investment. Whether or not the SEC thinks the exemption applies to multiple employer plans, the participant can rescind if it can convince a court about the interpretation of the statute. The statute of limitations for rescission is one year, so only the most recent deferrals are subject to the right. If you want to delve into relevant authority, search the securities law board. The issue is discussed in some detail there and some authority is cited.

One reason a multiple employer 401(k) plan is better for participants is that the employer guarantees that each elective deferral will have positive investment earnings for one year. The plan will be in violation of securities laws, so the participants will have a right of rescission until the expiration of the one year statute of limitations. If the participant does not like the investment return during the year following the deferral, the participant can rescind, which will also include interest at the applicable statutory rate. The downside for the plan could be disqualification because the tax laws do not accommodate rescission, and it will be unlikely that a distribution event has occured, unless the particpant just happens to have terminated employment. Disregard if the plan has properly registered.

You have the same deal as everyone else. Get your insurance and the firm will pick up the portion of the cost that it has agreed to pick up. The firm is under no obligation to solve your insurability problems.