QDROphile

Can a chicken mate with a duck? Think about rollovers.

You said the plan does not allow the distributions. That is your answer. The plan can be designed differently.

What do you think about Treas. Reg. sections 1.457-2(g) and 1.457-4(d)(2)? No direct answer, but food for thought.

I am only guessing at what you meant by your question, but salary reduction elections under section 125 reduce compensation for federal income tax purposes and wages for FICA tax purposes. In other words, the elected amount is not subject to to either tax. By contrast, 401(k) deferrals are excluded only from compensation for federal income tax purposes and not from wages for FICA purposes. Taxation by states is another matter.

Government plans are not subject to ERISA or section 401(a)(13), but who would take the collateral? There is a good chance that state law makes the plan benefit nonassignable, or the plan might not recognize the assignment.

It is proably not called a "true up" in the plan document or the adoption agreement. You will have to read all the provisions relating to matching contributions to see what they say. It is possible that they say nothing about matching per pay period. Then you are in another pickle if the per period match results in less than the match if you look at the aggregate for the year.

You have to look at what the plan document says. While not required by law or good sense, it is possible that the document actually does cut off deferrals when income reaches the limit. But it was probably a misguided effeort in payroll processing. If you have a prototype, the prototype probably does not say anything about limitation of deferrals, so you probably have an administrative error and failed to have adequate contributions. The IRS has EPCRS guidance about correction of operational failures relating to inadequate contributions. You will have to go on principles rather than specific identification of your problem. I suppose one could argue that the fiduciary reasonably interpreted the plan to require the limitation and therefore plan terms were not violated, but that would be aggressive. I don't know what you mean by "true up." That is meaningful whan you speak of matching contributions and adjust them at the end of the year to account for limited matching contributions during the year. For elective deferrals, since you have time left before the end of the year, you can allow the participant to restart deferrals at a level that will achieve the desired amount by the end of the year. Then you might have to look at the match problem if the match is made periodically during the year, which can understate the match for the year. Separate discussions relate to the match problem.

There may not be much one can do with someone who has adopted the view of the "free citizen" (or choose your label) nutcakes, many of which live in Idaho. In their twisted world, the govenment has no legitimacy, so they will not get involved with anything involving real matters -- as opposed the the nutcake reliance on bogus "common law" -- and the government is pure evil, hence the theft of the house an opression of a widow. I suspect that is why the marriage is a common law marriage. While common law marriage can be legitimate, I suspect the root of it for your brother is the nutcake view that the government (state) has no authority over such matters, so one should not get official sanction. If you brother is a nutcake, he enjoys this stuff (despite "worrying" about it) and won't do anything within the established system to learn about or fix any issues. Most of the participants in this forum are concerned with learning the law and complying with it. We work in a different universe from your brother, and he would not accept or recognize anything we offered. Or are you putting us on, too? By the way, the government may, in fact, intend to take his house. Free citizens do not believe that the federal government has any right to tax income and might feel the same way about state taxes of any sort. It depends on what cell they belong to. The govenrments, on the other hand, tend not to look to kindly on the view.

Other than applicable state or local law, if all the employess are govenment employees, what governmental plan discrimination rules did you have in mind?

No trumping. Not a limint on timing of deferrals. Other threads cover this false issue exhaustively.

Not everyone agrees with Mr. Reish on all points, and despite his claims that the DOL agrees with him, that is uncertain.

The nature of the transaction is important. Loans are treated differently than sales. If you want more specific help, you will have to describe the PT and the correction in greater detail. Form 5330 is of some help.

Whether it is a Roth contribution or an elective deferral, the plan should have some documentation of what it applies a percentage election against, and it needs to communicate that to participants so they can make the intended election. The plan document will usually define compensation rather broadly, but most plans do not apply the percentage aginst all sources. For example, there are elements of W-2 pay that are often missed when it comes to reduciing pay, such as auto allowances. At the end of the day, the deferral amount won't be the same percentage of W-2 pay. Employees usually think of regular gross pay when they make elections.

If a plan wishes to provide benefits through an insurance policy, there is no point arguing about what a plan could/should/must provide. The terms of the policy will determine the mimimum benefits (the plan can provide for more than the insured benefits, but not less). Mary C is questioning insurance policy terms and wants to find the source in state law that compels the insurance company to include certain benefits in the policy.

Can you provide an example of court decision that disputes the ability of a state to determine terms of an insurance policy issued in the state? I would expect the case to involve ERISA section 514(b)(2). There are cases that question whether or not a law regulates insurance. But terms of insurance policies are set under laws that regulate insurance. I think you will find that plans may not be regulated, but policies are. So If you want to provide plan benefits through an insurance policy, you are stuck with the terms of the policy, which is within the authority of the states. If you are self-insured, then you can exercise control over the plan benefits without regard to state mandates.

While you may disagree with what should be mandated, federal law allows the states to regulate insurance. So if you want third party insurance coverage, you are stuck with what the state requires in the policies, according to their own state mandates. If you want to be self insured, you can limit coverage to what the feds require. I think it is wrong to impugn state regulators for "disdain" of federal standards when federal law expressly allows states to set different standards. You can impugn them for all sort of other reasons and I won't quarrel.

An S corp ESOP does not have to distribute employer securities. That is what I was getting at with the comment about the participant's right eventually to get the dividends distributed in the form of employer securities. Public company KSOPs usually allow the participant to move the entire balance into the stock fund before distribution, thereby assuring that all amounts are distributable in company stock if the participant wants the stock.

Noncompliance is not a problem if you don't get caught. It's not like the law of gravity. That is probably the prevailing approach, since most service providers don't seem to provide that service. I personally don't like to live that way. You may be able to determine if you comply by looking at plan design and some demographic information. Actual number crunching is not always necessary.

What do you think of Treas. Reg. 1.401(k)-1(e)(6)?

Please explain why your lawyer was no use to you. You wrote that your lawyer argued your position and the result was was what you wanted.

If you want to ask a different question that may moot your questions (i) go to the Securities Law forum on this board and check out the question about registration requirements for multiple employer plans and (ii) ask if the plan sponsor is aware of the issue and how to comply with the law. A public company can probably comply with the law without too much trouble. Beware. You can't tell if you will be a hero or a goat for bringing it up.

You might take some comfort from the letter rulings that are the basis for so many public companies turning the company stock investment fund option within their 401(k) plans into ESOPs. The ESOP portion of the plan is defined as the fund with company stock, to the extent of the company stock. The ESOP waxes and wanes according to the investment elections of the participants. The new 401(k) regulations facilitate operations under this point of view by changing the rules on aggregating ESOPs for ADP testing. I think the whole idea is intellectually bankrupt, but it is now quite well established. Other threads on the board have discussions about the phenomenon. The point for you is that you can make the ESOP whatever you want as long as the artificial basket you put it in is primarily invested in company stock. If you define the ESOP as whatever part of the plan happens to be company stock, you can't fail. If you were not dealing with an S corporation I might wonder about whether the participant has a right to take a distribution of the dividends in the form of company stock. But I might wonder about such niceties because I still don't believe an ESOP can be defined simply by how assets are invested from moment to moment.

An employer can determine an amount that will be available under an FSA. The matter of amounts elected by employees is a separate matter. FSAs are not limited to cafeterial plans. The employer can design the plan to provide certain benefits and not others. Limitation of benefits is a good idea because of the difficulty of deciding the eligibility of some types of benefits. A typical way to influence choice of providers is to reimburse at a different rates for preferred providers. Providers can be limited. For example, it is possible to exclude entirely certain types of treatment such as accupuncture.

Maybe the plan is designed not to get into complexities by not allowing coverage of children of domestic partners, hence no way to identify or designate them. Your 2003 proposed reg is obsolete. The applicable stautes have changed since.

You need to zero in on whether or not the child is within the definition of "dependent" of the employee, and be wary of looking at combined support from the employee and the domestic partner. Then you need to distinguish between the premium paid for the taxability of amounts paid for the premium for health coverage (section 125 issue) and the taxability of the health benefits provided to the child (sections 105 and 106). Sorry, not a quick answer. Quick answers usually require definite and complete facts and applicable stttled law. The law is the easy part here.