QDROphile

So what does this do to the broker's credibility on other matters?

Although the Department of Labor is incorrect, the Department believes that a plan should divulge otherwise confidential information that is sought for purposes of obtaining a QDRO. Perhaps the Department could be prevailed upon to informally unloose the information. Otherwise it will take take legal process. Another approach would simply be to get an order that required payment of all or some percentage of payment amounts (whatever they are) until a certain target is reached. The process of getting that sort of order is likely to bring the information out before the order is actually entered. If your CSE agency will not proceed, you will need a lawyer, both for the QDRO issues and the state law issues. A right has to be established under state domestic relations law before it can be satified through a QDRO. State law will determine limits. I can't say if you CSE agency is just wimpy or ignorant or if there is some other issue involved.

A controlled group has a single welfare benefits plan the covers multiple varieties of benefits, such as medical, dental, and life insurance and different versions of coverage for different companies in different states. For example, company A in Maine provides medical and dental insurance to its employees, and company B in Florida provides medical, dental and life insurance to its employees. The coverages and the insurance companies are different in Maine and Florida. From "Section: Line-by-Line Instructions for the 2006 Form 5500and Schedules" of the instructions to Form 5500: "A separate Form 5500, with box A(2) checked, must be filed by each employer participating in a plan or program of benefits in which funds attributable to to each employer are available to pay benefits only for that employer's employees, even if the plan is maintained by a controlled group. A 'controlled group' is generally considered one employer for Form 5500 reporting purposes. A 'controlled group' is a controlled group of corporations under Code section 414(b), a group of trades or businesses under common control under section 414©, or an affiliated service group uner section 414(m)." How does one reconcile these successive contradictory paragraphs? Does company A file a Form 5500 for its two coverage and company B file a Form 5500 for its three coverages? That squares with the first paragraph. But the second paragraph says that a controlled group is considered a a single employer for purposes of Form 5500, whcih suggests that one Form 5500 is sufficient. Later instructions say to check box A(2) if the Form 5500 is for a single employer plan, also defined as "an employee benefit plan maintained by one employer ***." So does one plan, the umbrella plan for the controlled group, maintaineed by one employer (a collection of controlled companies), file more than one Form 5500?

Discretionary match done that way defeats the ostensible purpose of the match. If the match is just a device to enhance owner benefits, it does not matter.

The company has no obligation to design or change a deferred compenstion plan to fit your desires.

I still think your interpretation of the regulation is aggressive and I don't see what spousal consent has to do with anything. I don't think you can get to 414(p)(3)(A) by a special provision that cuts back only on alternate payees. You have to have other authority. For example, if the plan allows in-kind distributions to participants, I don't think you can have a special rule in the plan for cash only distributions for APs. If the plan does not allow in-kind distributions, a domestic relations order would not qualify because of 414(p)(3)(A)if it specified an in-kind distribution.

mjb: My last paragraph says that plan can require the AP to take a distribution no later than when the participant receives a distribution. You believe that the plan can require the AP to take a distribution immediately and that a domestic relations order that requires consent may be rejected if the plan has such a requirement. I think that intepretation of the regulation is aggressive, but I have no other authority to offer on the subject. Because I do not subscribe to your interpretation, my last paragraph notes the exception to my interpreation -- a domestic relations order cannot require to the plan to postpone the AP's distribution to a date later than when the participant starts.

To clarify, if the terms of the QDRO do not cover timing of distribution, such as a provision that says that the alternate payee may elect when a distribution is made, the plan or QDRO procedures can provide that the alternate payee's benefit will start distribution whether or not the alternate payee wants to start. An alternate payee could be stuck with an incompetently drafted QDRO and forced out. A well drafted QDRO would protect the alternate payee, but aggressive plans don't pay attention. Also, if a distribution would be made to, or in respect of, the participant under plan terms, then the plan or QDRO procedures can require the alterante payee to start and provisions in the order are not proper if they try to trump.

Would you care to challenge being forced out of the plan now? Section 402(e) certainly suggests that an alternate payee's treatment is based on the participant's status, but I have not looked for any other authority that might support a different interpretation. If you really, really want to get capital gains treatment, then you will need to stay in the plan until the particpant would be eligibile. I don't think a plan can force out altnernate payees, but I know a lot of them try (and get away with it).

If the payroll system behaves that way and the plan does not expressly provide for the same timing limitation, the plan will have a disqualifying operation. Many payroll systems used to operate that way; I have not heard so much about it recently because people have wised up. But until we start shooting people who claim that the 401(a) (17) limit is a timing limit, the notion won't go away.

Physicians are exempt from securities laws because medical school teaches them never to make bad investments. Under the attribution rules, a physician's 401(k) account is therefore exempt from securities laws. The transaction is also exempt under family attribution rules because the sister-in-law is treated as the same person as the physician and everyone know that banks can sell securities to their employees. But just to be safe, the sale should be handled through a broker in Canada to avoid securities laws altogether.

A director who could receive fees currently but chooses to defer payment is buying an investment contract with the otherwise current compensation. For securities law purposes, it is as if the director got paid and then bought a bond of the company. It is a sale. The same principle applies for 401(k) plans and elective deferrals. The participant is investing in the company's ability to pay at a later date. You should get expert advice before you make any decisons.

You file the 5500 for a plan. If you file one 5500 you have one plan. You must have defined your "plan" for puposes of the 5500 to include the health, dental, vision and cancer plans. You can expand the definition to include other plans that require a 5500 and stick with one 5500 that covers the other features that you currently perceive as separate plans. Some people call the arrangement an umbrella plan or a wrapper plan -- various plans are packaged into one. The inclusion of the other two plans does not mean they are an inappropriate part of the cafeterial plan. The definition of plan for purposes of the 5500 has nothing to do with the structure of the cafeteria plan. You have to be clear and careful with plan terms to assure that everything is covered and kept straight. Gratuitous comment: Cancer policies can be inapprpriate for cafeteria plans because they oftern have a refund feature. If you don't get cancer, you get some cash. That violates cafetria plan rules against deferred compensation.

Was the plan smart enough to deposit the money in escrow for the closing with instructions as to the disposition of the funds? If the closing does not occur, return of the funds by the escrow agent provides a much more comfortable position for replacing funds in the account on the basis that there was never an effective distribution.

Is the plan disqualified if says that the participant's account will get a 15% contributionand it does not (most plans state a time limit for contributions)? Failure to comply with plan terms is a disqualifying event. If the employer is supposed to contribute 15% and does not, is the "past due" obligation an extension of credit by the plan and therefore a prohibited transaction?

The thread is available. It started April 28, 2005. Make sure you have the proper setting for dates. It is easy to see if you simply ask to see all messages under the topic; it appears on the first page of listings.

I don't think the "in-between" position of informal agreement is efficient and it may not be effective either. The more efficient approach is to include the interpretation in the notice of qualification, with copies to the lawyers. If someone does not like it, the interpretation can be appealed to the plan administrator or the order can be modified. Chances are the the parties had no precise benefit in mind, were only working from a general concept and they won't even know of an alternative to ask for. Do it my way and you are probably done. The other way, you have more work and the parties will still be clueless about the actual benefit and alternatives, and thant can generate even more aggravation. Make sure the interpretation is very clear (use numbers), especially if it is a shocking result, such as the former spouse gets nothing if the participant dies because the order fails to award any death benefit.

Don't overlook Treas. Reg. section 54.4980B-6 Q&A 6. What does it mean to have an independent right to elect COBRA coverage? Under regular health insurance, the former spouse could get full overage to the policy limits (duplicating the coverage that the employee gets). How does that apply to FSA coverage? Does the former spouse get a duplicate limit coverage limit, or do you get to divide the limit and provide a reduced ratable share to each person? If you do that, will it violate the uniform coverage rule?

I recall that IRS thinks the former spouse can elect the full coverage amount, less amounts reimbursed to the former spouse. The regulations can be interpreted another way, but you don't simply cut the pie as you suggest; the employer has to provide more pie. Either way, the former spouse could be in a position to get more benefits than the amount of COBRA premiums actually paid and the election would be rational, especially if the former spouse knows of expenses for the year. Read the regulations and decide.

Plan A can spin off a portion of the plan to become the plan of B or to merge with the plan of B. Whether or not the acquisition allows participants to elect a distribution has no effect except that participants may be able to decide whether to go for the ride to B's plan or take the benefits under A's plan to manage themselves. A is not compelled to engage in the spin off.

So what would cause the forfeiture?

Consider what the plan says about the period of coverage and how that relates to the date of termination. The salary reductions should not be made for pay outside of the period of coverage, but should be made for pay within the period of coverage. Coverage usually ends on the date employment ends. The statement about COBRA makes no sense to me.

You are on thin ice if you represent the plan or are a plan fiduciary and have any involvement with personal matters of the particpant or a beneficiary, including how to deal with the plan in their efforts to divide plan assets. Once you go beyond a naked recommendation that they seek legal assistance you are exposing yourself or others to liability. You may explain the plan's charges and provide estimates, clearly explained as such.

Sorry. I meant multiple employer plan, as I stated correctly in my first post.

Go to the Securities Law Aspects of Benefit Plans forum and look at a thread started on April 29, 2005. The securities law exemption that applies to excuse 401(k) plans from registration does not apply to multiemployer plans. Company stock is irrelevant, although employer securities in the plan is another circumstance that can cause a 401(k) plan to be subject to registration. In addition to the Securities Act issues, the plan might also have Investment Company Act issues.