QDROphile

Different tax rules apply if the AP is not a spouse or former spouse. Beware of subtle withholding issues. The participant is the taxpayer and gets to make the withholding election. What would you do if you were the participant? What would your reaction be if you were the alternate payee and the participant elected 100% withholding? Do you want to be the plan administrator in the middle?

No. There is a big difference between appointing a fiduciary and engaging an agent. The ERISA liability relationships are very different.

Very creative use of section 405, but a bit off. Have you ever tried to appoint a mutual fund company, brokerage or other services provider to be a fiduciary in any context, let alone this one? Also, you can't make someone a fiduciary secretly. I think a more realistic approach is to consider the service provider to be the agent of the fiduciary. Instructions to the agent are instructions to the fiduciary. Fiduciaries don't really handle much administration directly. How many fiduciaries perform an ADP test? Of course, the fiduciary retains responsibility for what the agent does. The agent is not appointed secretly. The agent is doing the job for which the agent is engaged, such as receiving investment orders.

You should really be using Rev. Proc. 2003-44, and it is about to become obsolete..

GBurns raises a good point. If the salary reduction election is subverted, that is a problem. But we don't know if there is any pay that would be subject to the salary reduction agreement. We also don't know if there has been a legitimate change in the election. "Out on disability" could mean different things.

This is from the Internal Revenue Manual: (6) Under Reg. 1.411(d)-4, a section 401(k) plan may not have a “catch-all” hardship category (for example, “and other events which the plan administrator deems to be hardships”) because this would be impermissible employer discretion. The plan may be amended to add or eliminate a hardship category or to change the conditions for receiving a hardship distribution and this will not violate IRC section 411(d)(6). Hardship categories (general or deemed) must be both currently and effectively available to a group of participants that satisfies Reg. 1.401(a)(4)-4.

What part of a cafeteria plan is a voluntary ad hoc decison by the employer to pay health premiums that does not in any way affect salary reduction amounts? The employer is not paying the premium in lieu of the salary reduction by the employee, or so it appears from the original post.

Preventing bankruptycy is a nonspecific catch-all proposition. Give some very serious consideration to whether or not it is a legitimate reason.

Please identify the provisions of ERISA "that basically say that employers should treat all employees of a class the same."

What is the problem? Most DC plans distribute to participants and spouses have nothing to do with it. Why are you not doing that, assuming he is eligible and has asked to be paid? Is J&S the normal form of benefit?

Whatever happend to giving back money that was received by mistake? Your message does not suggest that the recipent was induced to to some detrimrental action by the mistake or is unable to return the mistaken amount.

Section 105(h) has discrimination rules, but applies only to self funded plans. Where are the discrimination rules for health plans provided through group insurance? If you design a cafeteria plan to provide employer funding for medical benefits and the employer funding levels are different for different employees, you may fail cafeteria plan discrimination rules, but the original post made it sound like the employer just stepped in as needed to pay the premium. The post for E as in ERISA did not state anything about discrimination rules, and my posts say nothing about compensation issues relating to the employer's decision to cover premiums.

There are no discrimination rules applicable to payment of premiums for group medical insurance policies.

g8tr: Please explain how this is done. I think the answer may depend on how you define "pre-tax." In most benefit contexts, "pre-tax" is associated with salary reductions and does not include what happens on a personal income tax return. Also, since cafeteria plan salary reductions also reduce FICA wages, one may wish to distinguish "pre-tax" for income tax purposes and for FICA purposes. The question cuts out the employer, so the traditional associations with "pre-tax" under a cafeteria plan do not apply.

You are not going to get any answers on this board. You will get questions or tidbits that may or may not be relevant or helpful. Your situation is too complicated both factually and legally for anyone to reach a reliable conclusion that applies to you. If you enjoy the topic or the exposure, have at it, but you should be getting your information from your lawyer(s) and this is no place for a second opinion.

You did not ask, but if you have a multiple employer plan, you should go to the Securities Law forum and look for an April 2005 thread about registration requirements for multiple employer plans, or to be more specific, the lack of an exemption from registration. The registration requirements may make maintenance of a multiple employer plan too much trouble.

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?