QDROphile

You have to see what the plan says. While it is true that spouses have certain rights, it is also true that plan procedures prevail, and if the plan provides for payment to a beneficiary, the plan will pay the beneficiary unless spouse rights trump the beneficiary designation. Plan procedures will also also determine if the designation of #2 will weather the interim rights of #3 to become effective again after #3's rights lapse.

This may not apply to you personally, so don't take it personally. It looks like the ESOP setup was not understood or thought out in the first place and it is likely that the testing prior to 2006 was bungled. Your plan document probably suffers the same disabilities and will be of no help, but the plan document could have made all of this very clear and prevented problems both before and after 2006. You need help from someone who understands basic concepts and can see through the ESOP clouds. For example, a contribution is a contribution is a contribution, and a contribution is not an investment. Your comment about "pick the method" is curious, bordering on scary. Take solace in the fact that everyone, including the IRS, has bought into the floating ESOP scam, mostly without thinking through the consequences and issues, so it will be difficult to hold your plan to task for the common shortcomings. That is no excuse for noncompliance now, especially with the relief provided by the new 401(k) regulations.

A fiduciary is generally excused from concerns relating to state law, such as procedural rules. If if the ordered was issued by the court, the fiduciary does not look behind the issuance. The fiduciary takes it at face value.

"What are the options?" is a test of imagination under section 125 because there is no formal guidance for correction. You don't really want a list of options. I suggest that the employer leave the chips as they fell with salary reductions and pay the full amount of benefit elected by the employee to the extent the employee submits timely claims for qualified expenses.

What do investments have to do with ADP testing?

Plans are required to be operated in accordance with their terms. Follow the terms or change them.

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.