QDROphile

The IRS has a bounty program. I have never checked into what it covers.

Since when is the TPA the boss? The employer can design the plan as it chooses. If the employer gets comfortable with compliance under a different approach to orthodotia expenses, the employer can change the terms of the plan as a last resort in a power struggle with the TPA. The employer might have to find another way to administer the plan if the dispute goes far enough to cause the TPA to resign over the issue.

If what qualifies as a plan asset? The regulation applies to determine if the plan is treated as owning only the LLC interest or if the plan is treated as owning an undivided interest in each of the assets of the LLC. If the latter, then one of the consequences is that the person that manages the assets of the LLC also manages assets of the plan.

Depends on the application of the plan asset rules, ERISA Reg. section 2510.3-101. The offering memorandum for the fund should discuss the issue.

So many interesitng statements, but could you tell us more about a hardship distribution for "some work" on your home? That would not be a typical use for a hardship distribution.

The IRS will treat this as a prohibited transaction even if the DOL does not. If this person is the fiduciary with investment control over plan assets other than those in the person's own account, the fiduciary with responsibility for apponting the person as a fiduciary should reconsider whether or not the person is fit to be a fiduciary. The suggestion of the transaction shows that the person's instincts are all wrong. I retract my statement if the person proposed the transaction by saying, "it seems like this would not be allowed, but I wonder...."

Sounds like the employer effectively decreased an employee's share of the cost of health coverage. Depending on how and when the amount is paid, some employees who do not participate the entire year may get a windfall if the the intent was to reduce the effective cost for the year. While the cost may have affected the decisons of some employees to enroll or not, I am curious about why a change of cost would require open enrollment. Please elucidate.

If options are granted to you, after the exercise of the option the stock will be owned by you. You cannot sell stock to your Roth IRA. See section 4975 of the Internal Revenue Code.

Are the employees terminating or continuing employment?

By referring to amounts charged to an account, I was trying to avoid confusion about the reference to "his assets" in the original post. Amounts in a participant's plan account are not the participant's assets. Amounts in the account should be used to pay insurance premiums and real estate taxes relating to real property in the account. From your second post, it appears that insurance premiums have been paid from the account, not the participant's funds. Real estate taxes should be paid the same way.

Insurance premiums and real estate taxes for real property credited to an account should be charged to the account, not paid from the participant's assets.

Although you will probably not prevail, I wish you luck in efforts against Fidelity. In this case, it is not obvious that Fidelity flauted the law, but it does in other respects relating to QDROs and I constantly hope that Fidelity will get its comeuppance. At least do your best to spread the word that Fidelity is a villain when it comes to QDROs. Maybe someday the 900 pound gorilla will become civilized if it gets enough public shaming. The real culprit is your plan administrator, who simply bought into the Fidelity system and did not establish prudent QDRO procedures. A prudent system would delay implementation of the QDRO for a reasonable period after the notice of qualification is issued. 30 days is my standard. However, I don't think you would prevail aginst the plan administrator. Although ERISA fiduciaries are held to the highest standards known under human law (or so some courts say), intelligence does not seem to be the paramount factor. By the way, I disagree that the 11/29 notice provided no basis for action. You should have known whether or not an order was going to court. If Fidelity said it was looking at an order and you did not already know about it, you had reason to start asking questions, not that it would have made any difference in catching the money before it was gone.

Sorry, I am pretty tied up, and I am not inclined to be doing specific work anyway. Others may be more generous. The more sensible solution is to provide for another loan rather than refinance and end up with a single loan that has to satisfy two layers of requirements.

There is another way to skin the cat. You need to look at the regulations.

You must comply with transition rules for vesting. See section 411 and regulations. For example, anyone with 3 years of service by December 31 will have to be 100% vested in post 2006 contributions after 5 years of service, unless we get some regulatory dispensation. Indeed, any IRS guidance would be appreciated.

Looks like it would violate 409A.

Just Me: Please explain how deferred compensation becomes transformed and is no longer deferred compensation simply because payment is immediate upon the payment event.

You must distribute.

When the company offers a good enough deal that the fiduciary thinks justifies the transaction.

You may wish to inquire if the condition is caused by a congenital defect, disease or accident, but I suspect that if it were that easy, you would already have the explanation.

Most 401(k) plans allow distributions after termiantion of employment at any age. You will have to request a distribution. You will probably not be able to use the plan like a bank. Many plans require a lump sum distribution only, many allow installments oan other forms. Be prepared to roll over the amount you do not intend to spend right away. You can use an IRA like a bank, but beware transaction/withdrawal fees when you chose an IRA provider. If you do not roll over, the amounts will be taxable at ordinary income rates and subject to withholding at a rate of 20%, plus an additional penalty tax of 10% because you are under 59 1/2 (subject to some exceptions). When you request your distribution, the plan will provide you with some information about taxes and rollovers before you have to commit to the distribution. The IRS has publications on retirement plan distributions and on IRAs, available at the IRS website.

You have struck out because defining an ESOP by the investment decisions of participants is not legitimate. However, the IRS buys into it and you can find some letter rulings that demonstrate that the IRS is in on the scam. The rulings do not discuss the deduction question. Once you buy into the defintion of ESOP, the deductions follow from the statutue. This has become common with public companies that allow investment in employer securities. I don't understand why you are looking for an answer. The lawyer involved in the design of the plan (and probably the registration of the plan securities) a should be both familiar and comfortable with the arrangement and its implications for deductions.

The escrow puts the plan in a better position to maintain that the funds were not delivered because the condition failed, and therefore there was no distribution. Certainly there is no delivery to the participant. This is based on general legal principles rather some specific authority under section 401.

The employer is providing benefits. Now go look at the regulation. It says the "all the benefits provided for participants who are highly compensated individuals are provided for all other participants" and "any maximum limit ... must be uniform for all participants ... and may not be modified by reason of a participant's age or years of service."

The TPA is correct about effect, but not correct in the description -- at least the description you gave. Under section 125 the employee has a choice between benefits and cash. If the employee chooses benefits, the employee foregoes the cash compensation. The employee does not get the cash compensation and then contribute it. No employee contributions are transformed into employer contributions. The employer provides the benefit with employer funds. ERISA looks at the arrangements differently, but you are dealing with tax code provision in your question, not ERISA. By the way, the same deal applies to 401(k) plans. Elective deferral amounts are employer contributions, not employee contributions.