QDROphile

One thing can be said without qualification: HSAs are a very good thing for wealthy people, so much the better if they are also healthy.

Do the circumstances give the fiduciary cause to question whether or not the loan will be repaid?

I don't use this forum for marketing. I am two-faced, like everyone else. I have a totally diferent image under a different name.

I get a higher quality of plans because we draft them, and we have very little by the way of professional corporation plans. I can't answer your question off hand. I would start from the proposition that the plan had to follow its terms. However, I have been getting an education from out estate planning group about state law on disclaimers, and related tax coordination, so I would not act only on my knee jerk ERISA reaction. Fortunately, I have not had to deal with as many issues because our plan documents help avoid them. Since the documents do a lot subtle heavy lifting, sometimes I forget all the reasons and authority behind our standard terms. That is why I am notorious for claiming that other documents suck. They often do.

What does the plan say? Section 401(a) (9) and related regulations set a standard, but the plan can be designed to be more restrictive.

Have you thought about looking at overtime in terms of an amount in excess of regular pay rather than as some special kind of hour? If I work an hour, I get paid a rate, assume $10. If the hour is an overtime hour, I get paid a rate, assume $15. Now look at overtime pay as $5 on top of $10 regular pay for the hour. If I work 2000 hours in a year, my regular pay is the same for those hours, no matter how many hours are overtime. If the plan excludes overtime, it is not disregarding my hours, it is simply disregarding the additional pay for those hours that is overtime pay ($5 per hour). That won't solve the complaint that not all pay is counted for benefits.

You don't need a separate plan and all of its trappings to provide different benefits (e.g. match terms) to different groups.

You have to have someone stupid and wealthy enough to litigate the issue before you get a reported case. No matter what outcome you want, there are cheaper alternatives.

Good plans have terms that allow a beneficiary to disclaim the benefit.

I observed that the regulations did not follow through on the preamble statements about matching, or not matching, catch up contributions. I do not disagree with the statement that no binding authority compels matching of catch up contributions. I cannot identify a disagreement between mjb's statements and mine. He made the valid point that this forum can provide only limited assistance with interpretation of plan terms. You made the valid point that limited assistance can be helpful.

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).