QDROphile

It is still potentially a plan interpretation question because the plan may not define catch up in the way that the law defines catch up. The plan could define catch up as the "extra" $5000 without regard for how the limits really play out. If the plan does not try to distinguish the extra $5000 from other deferrals (except that it is available only to the elders), I would be inclined to agree that you have no basis for not matching the catch up; the catch up is a deferral like any other deferral.

What do you mean "no longer"? See Q&A 4 of Treas. Reg. section 1.402©-2, in effect for a number of years now.

What is being waived?

The identity of the alternate payee determines whether or not a distribution is an eligible rollover distribution, not the purpose of the award. If the agency drafts/issues an order for an amount to be distributed, and the agency does not figure correctly on withhholding (could that possibly happen?), then the amount delivered will not be the amount the agency wanted. The agency then has to get another order for the shortfall. That was my point. I was musing about real world questions, not what should be. Or perhaps I was asking if the agency "should be" bound by the legal consequences of its actions and not get a second bite from the retirement plan. But that is not a QDRO question.

Since you asked for opinions, here is mine. I think you ought to try to understand the reasons for the advice you give. Then when you encounter a particular situation, you can decide if the advice applies to that situation. If my opinion is mistaken, then I offer the observation that most NQDC plans are not subject to most ERISA provisions and do not operate under tax statutues that relate to employment status, such as 105(e) and 401(a).

The preamble to the catchup regulations indicates the the IRS views catch up amounts the same as other elective deferrals and actually suggests that it is not proper to provide that catch up amounts will not be matched, as opposed to saying what will be matched (which allows you to get to the same place, so it is not a substantive rule, as demonstrated by its absence from the regulations themselves). I have found that it does not make any difference under most matching formulas whether catch up is matched or not.

Depending on how literal you are, the words you mention do not say that an in-service distribution is allowed after age 59 1/2, so it does not contradict a plan that (i) has no provision for distributions after age 59 1/2, and (ii) probably has a general proscription on in-service distribution. You can substitute any age in the sentence and get the same result, consistent with the plan terms. One may speculate that the SPD was created from a form. While the editing got the basics right, that fine detail did not get the proper attention for conformity. You should ask what the plan sponsor would like. If the plan sponsor wants age 59 1/2 distributions, amend the plan and the SPD.

What happens if the alternate payee elects a direct rollover? Just thinking. It does not matter to the plan, but I wonder how much credit the participant will get for the distribution, the amount distributed or the amount delivered net of withholding? Were it not so sad, it would be funny how little the agencies understand what they are doing compared to how adamant they are about it.

A cafeteria plan does not need to file Form 5500. The cafeteria plan is merely a funding mechanism. The health benefit plan (including a health FSA) or other ERISA plan funded through the cafeteria plan is subject to the reporting requirements of ERISA. If you use the cafeteria plan to wrap you ERISA plans it will look like the cafeterial plan is is filing the Form 5500.

You can accomplish what you wish by taking a distribution of your old 401(k) balance, but rolling over only a portion to the new plan. The portion you don't roll over will be taxable. You may use that taxable money (net of taxes, effectively) to pay the loan. If you don't like that idea, at least you now have a clue about why the rollover amount cannot be used to pay the loan.

Yes.

I disagree with papogi. The employer can give everyone a $500 FSA credit for the year (whether or not they can really use it), but I don't see how participant can be given an election to take any portion in cash instead of FSA credit. It would be the same as the employer giving everyone a $500 raise and allowing employees to elect how much of the $500 would go to FSA credit. That cannot be done mid-year.

Generally, rollovers do not bring any taint with them if the receiving plan is not aware of any taint; if there is an actual problem but the receving plan was unaware, the solution is distribution and plan qualfication is not a concern. Check the regulations for the standards for due diligence. But since the distributing plan is not a stranger, the receiving plan may be less able to be ignorant and innocent. Please understand the a rollover occurs only if there is a distribution. If the participant does not take a distribution, the transfer under Treas. Reg. 1.411-1(e) is not a rollover and any taint is imported.

Treas. Reg. section 1.411-1(e)

Treas. Reg. section 1.411(a)-11(e).

What happened to the trust agreement in place before replacement of the former trustee? Removal of a trustee and appointment of a new trustee does not evaporate the trust instrument. The document may need amendment to reflect the change. Or did you really mean that the former arrangement was an annuity contract?

Plans must be operated in accordance with their terms. The plan has failed if it did not properly follow deferral instructions. The failure disqualifies the plan. The plan can be corrected to remedy the failure. The remedy depends on the circumstances, but generaly involves putting the plan into the position it would have been in if the mistake had not occurred. The personal tax consequences may not be the same under the correction. Your employer is ignorant, unimaginative, and insensitive to compliance. Pointing out a qualification issue may get attention. The mistake should be fixed, whether or not you want to have it fixed.

If your account balance is more than $5000 (or maybe less), you can maintain your account under the old plan. New contributions will go into your new plan. You may have both. Your account may get charged maintenance fees under the old plan that were not charged before. None of my business, but 40% investment in a single company stock does not seem like a good idea for a retirement fund.

Does not fit the deferral limits of 457(b) and does not fit the risk of forfeiture required for 457(f). Section 457 is the only opportunity other than qualified plans, section 403, and the IRA family. I am sure you can get an insurance sales agent to try to convince you that some insurance product will do the trick.

It will be very difficult to pin any liability on the new employer or the fiduciaries of the new employer's plan unless you were implored to rollover the funds and you can show the the new employer or fiduciary undertook the responsibility to advise you about all aspects. Mere offering of explanations about the transactions and encouragement will not be enough. The new employer is not obligated to tell you about the old plan if the new employer is unrelated to the former employer or plan and it is unlikely that the new employer undertook that responsibility. You may have recourse against the fiduciaries of the LF plan for failure to disclose a material feature of the investments and consequences of an election to take a distribution, but the going won't be easy. You should check the summary plan description of the plan and all materials that were provided and available concerning investment of plan assets, and all materials provided or referred to in connection with the transition before you put any money on the line in pursuit of your claim. All sorts of facts and circumstances will be relevant, including ones you may not recognize currently. You will need to follow the plan's formal claims procedures for any claim relating to benefits, including amount of benefits; woe (and whoa!) to you if you disregard the procedures. You will have less chance of success in any event if you go at it alone. You should consider collecting all similarly situated particpants. You may seek help from the Department of Labor. The Department has offices in major cities. The Department has a website: www.dol.gov/ebsa.

That is exactly my point and that is why the decision is wrong. The way the court incorrectly viewed the "separate interest" as disposing of the question, the court glossed over the separate death benefit issue. Having said that, we don't know much about the actual plan design, so I am assuming usual DB plan design. Even if the plan was designed in a way that justified the result, the failure of the court to point out the design feature (if any) means that its incorrect view of "separate interest" is going to plague us.

The court does not understand how DB plans work. The "separate interest" as described by the court in fact does cause the plan to pay more than the average DB plan is designed to pay (the court does not tell us the plan design); a "separate interest" must take into account the death features of the plan and cannot thwart those features. The court disregards the statutory language to the effect that an alternate payee does not get a death benefit unless the order expressly provides for it. I agree with the court that a domestic relations order does not have to be presented to the plan before the participant's death, but no order can insulate the alternate payee from the consequences of the participant's death unless the plan is designed to allow it. The only way to justify the result is to conclude that the plan was somehow responsible for a delay in the altnernate payee's start of benefits that caused the benefits to start after the death. Finally, while the alternate payee can go back to the state court to clear up qualification defects after the particpant's death, the division of the benefit must specify the essential property rights before the death of the participant. If death benefits under the plan are not awarded before the participant's death, that property interest cannot be awarded after death. The circumstances are too suspicious even to allow "clarification" of that point after the particpant's death -- it is either blatant adverse selection or correction of an error that should stick. The case should have been left as a malpractice case. I am very concerned that the simplistic "separate interest" concept in the decision will allow bad orders to disregard plan design and the provisions of 414(p)(5).

And Files v Exxonmobil is wrong.

The IRS presumption is otherwise. To the IRS, the catch up is merely elective deferrals in excess of certain limits. You don't have catch up contributions except to the extent the deferrals exceed a limit, no matter what you call them. The preamble to the original regulations even suggests that you can't exclude catch up from the match, but the regulations did not follow through. The IRS tried to explain its position by saying that a plan should not define a match by what is not matched. So if the plan says to match elective deferrals and does not state some sort of limit on what elective deferrals are matched, the plan may well provide for matching catch up amounts.

You are not giving enough information to give an answer; details make a difference. This is a complex, technical matter that regulations by themselves will not answer; other published SEC guidance is important to the analysis. One could offer a guess based on your statements that registration is not required, therefore an 11-K is not required, but you should rely only on competent leagl advice.