QDROphile

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.

Why is this windfall any different from any other mistaken distribution windfall?

Since you asked for "any help," I suggest that Company X should make an informed decision about whether or not it wishes to risk violation of securities laws by participating in a multiple employer 401(k) plan. Several other threads discuss this issue.

Perhaps the fiduciary of the plan would be breaching its duty if it failed to accept payment from another source. I cannot imagine tha ERISA would allow the fiduciary to turn away money to cover amounts owed to the plan even if the plan were drafted as you say. I would not want to be that fiduciary. We sometimes forget that participant loans are loans by the plan and the fiduciary has the obligation to prevent the harm of loan default by taking reasonable actions. Fiduciaries are required to disregard plan terms that are contrary to ERISA. ERISA may not require the fiduciary to take enforcement action (it depends), but when the money is proferred, how can the fiduciary refuse?

The plan had better have some default rules to deal with not enough funds to cover all the specified allocations. Either that, or someone with above average skills will have to review each designation to be sure that the designation itself avoids interpretation problems. In any event, make sure the plan terms are compatible with specification of a dollar amount.

When it comes to labor relations, mendacity, ignorance and foolishness are rampant.

The collective bargaining agreement is separate from the plan. If the plan does not say that a match should be made then the plan has no problems under its regulatory scheme. The employer may have a problem under the labor agreement. Even if the plan calls for a match, failure to contribute could disqualify the plan, but would not be a prohibited transaction. The ERISA regulations specify when elective amounts become plan assets, but there is no similar regulation that applies to nonelective employer contributions. The story about the match seems flawed, which makes your entire post sound like it comes from an assignment or an exam. Why don't you try to answer the questions yourself and then seek comments on your answers, assuming that is within the rules?

Please explain "It seems to me that they can decide to defer 12 months prior to the scheduled payment for 5 years." I can't make out what you are saying. Are you saying that they can elect 12 months before year 5 to take 20% in cash? Or do they elect the 20% 12 months before the initial award that starts the 5-year clock? You have also said nothing about when the election is made to take the phantom stock instead of the cash bonus.

Definitely fiduciariy issues and possibly securities law issues, especially if the converted amount included elective deferrals.

I think #3 is a little weak. The participant cannot adjudicate qualification of medical expenses. The plan administrator will have to decide whether or not the airhead claims for Airborne will be reimbursed. As for #2, it involves making sure that the expense is incurred within the coverage period.