QDROphile

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.

You will probably have securities law compliance issues if you have a multiple employer 401(k) plan.

What could constitute a QDRO, and whether or not a divorce decree or a judge is involved, depends on the the state's domestic relations law. I can imagine that child support enforcement would be part of a state's domestic relations law, so an agency order could be a domestic relations order. Then the question is whether or not the order meets qualification requirements of federal law.

A divorce decree is a domestic relations order whether or not it qualifies. If one is submitted to the plan, the plan administrator is required to take some action with respect to it. The action will depend on the circumstances.

If they think they can properly discharge their fiduciary duties without the assistance of a financial or other expert, nothing requires otherwise. Does not matter who sponsors the plan; the question is, who has the horsepower to cover the responsibilities? Who has the duty to advise about the fiduciary responsibilities and standards?

She has her foot in the door. Whether or not the divorce decree is qualified, it is a domestic relations order and she will have a reasonable time to come up with an order that qualifies. That is why the pension benefits are suspended. Your husband may become involved in (1) the state court if further state court action is required to produce an order that will qualify or (2) the qualification process in any event.

My take is to disregard stories about apparently bizarre arrangements until full details are provided with some credibility. I take the same position about analyzing or monitoring proposed legislation. It needs to ripen to avoid a waste of time.

You should get a document called a "summary plan description" that explains your benefits in some detail, but with understandable terms. Ask for it if you don't have it already.

So outlaws can get lawyers, but not record keepers?

1. The plan may have provisions that are violated by the transaction. Whether or not those provisions are grounded in ERISA, you lose 404© protection if you let a participant violate a plan provision. It is fundamental to ERISA that the plan be administered in accordance with its terms. The phrase "consistent with ERISA" does not mean required by ERISA. 2. Sorry about the mistyped reference to Form 5300, I meant Form 5500. Form 5500 is a report to both the Department of Labor and the IRS. Non-exempt party-in-interest transactions are required to be reported on Schedule G. I am not offering whether or not the transaction fits within the exclusions from reporting, but someone needs to determine if reporting is required. If required, I think it is an audit risk.