QDROphile

But who can determine the value? Does it have to be a valuation professional with certain credentials? A person who is involved in the business (e.g. a real estate agent)? An unschooled fiduciary or participant who makes an effort to look at recent comparable sales or otherwise tries to determine value on some reasonable basis and facts? Does it make a difference if the valuation is only for interim reporting purposes (Frome 5500) and does not affect amounts of distributions or amounts reported for taxation purposes (Form 1099)?

See Treas. Reg section 1.72(p)-1 Q&A 20. While there is no limit on the number of times a loan can be refinanced, refinancing is subject to various limitations that will have the effect of limiting the number of refinancings. The complexity of the rules is a good reason for the plan terms or procedures to disallow or substantially restrict refinancing.

The regulations under section 72(p) of the Internal Revenue Code now give a lot more guidance about loan refinancing.

It is a matter of corporate governance. If she is authorized to sign on behalf of the entity, she may sign. Authority can be special or general, express or implied. Authority may be inherent in the position. One would not expect to find inherhent authority in a "manager," but that term has no particular meaning except as the entity gives it meaning. Your question cannot be answered with any certainty in the abstract. Perhaps it may help to ask if any board member (or equivalent if the company is not a corporation) or officer would assert that she should not have signed. If no one would object, that is a clue she has at least implied authority.

j-g: Does your answer apply to FSAs that have employer credits from sources other than salary reductions?

Don't be so hard on yourselves. Appropriate plan terms depend on the circumstances. 401(k) plans are nowhere near welfare and cafeteria plans with respect to annual periods. For example, there is almost never something akin to annual enrollment, so there is no need for express provisions dealing with the annual elections and what happens if an election is not received. As long as the procedures for elections and changes of elections are covered in the plan document and related formal administrative procedures, nothing requires special attention to the turn of the plan year. I still think the SPD should say that the deferrral election and the invesment instruction will stay in effect until changed. However, the plan, together with formal procedures, does have to deal with periodic and extraordinary events, such as bonuses. For example, are bonuses subject to a separate election or will the latest election simply be applied to the bonus? What if no separate bonus election is submitted? Does the last separate bonus election carry forward (dangerous)? Also, note the current interest in ideas such as automatic enrollment and automatic periodic escalation for elective contributions. Implementation of those ideas needs specific plan terms. Welfare plans are much more sensitive to the turn of the plan year. Benefits and costs can change dramatically from year to year, with related enrollment ceremony. The plan terms should be geared to the plan needs and enrollment and elections are much more of a big deal, requiring much more attention. While many persons other than idiots use prototypes, the quality of ..., oh, never mind.

Only idiots will allow plans to fail to have terms that resolve the question or SPDs that fail to cover the point. With respect to elections to receive the benefits, the plan terms or related cafeteria plan terms should determine how to deal with a change to the employee's cost of the benefit, and the terms should be prominently disclosed. Except for an election not to receive benefits, elections that carry forward to a new year are not a good idea, and may be impermissible, for spending accounts.

COBRA rights require a qualifying event. Failure to pay premiums is not on my list of qualifiying events. Anlaysis of how to treat retirees under COBRA is sometimes tricky, so watch out for other angles.

Charges should be applied according to well considered and documented policy that is formally adopted. Appropriate disclosure should be made in the SPD and it would be a good idea to remind participants at termination. Competent professional advice is part of "well considered" and "well documented." Although imprecision in language is tolerable when discussing the matter informally, analytically you start from the position that an account maintenance fee applies to all accounts. Check the Department of Labor release on the subject.

Read section 72(p) and the related regulations for taxation, section 4975 for prohibited transactions and then consider remedies for disqualification because the plan was not operated in accordance with its terms.

#1 either determines the the order to provide a "separate interest" or presents a problem or you are not telling us everything. I am a simple person. I don't see how you can determine the amount of payment for a "stream of payment " approach from what you have provided, hence your first question. #2 is consistent with #1 as a "separate interest." #3 is determined if #1 and #2 lead you to a separate interest. #5 shows that the term "separate interest" is not such a great term, but I will overlook that point of language. I don't think #5 is incompatible with "separate interest" because "separate interest" has no detailed intrinsic meaning. #6 needs to tell us more. The alternate payee automatically has post retirement survivorship protection under a "separate interest," but cannot have a form of benefit that is not provided under the plan or that could violate 401(a)(9). The old 401(a) (9) regulations were easy to work with. I am not sure I understand how to apply the current regulations. You are correct that the AP could always legally have the participant be the contingent annuitant. In general, it is not a good idea for plan to allow a "stream of payment" approach if the order is qualified before the participant starts benefits. If the plan adopted the right policy, it would simply the analysis.

I observed that the issue of who sponsored the SEP (LLP or the individual "consultant") could be a problem, but that is nothing compared to the mess if anyone provided services to the LLC other than the single individual.

Silly me. I would not have expected a real estate development firm to be able to conduct business without the efforts of the partners or employees. If you are the only person providing services to the firm, you don't have a big mess. You may have questions concerning who is the correct sponser of the SEP. Once another person gets into the picture, the correct characterization of your relationship with the firm and what you are paid from the firm gets more sensitive. Your consulting efforts may be treated for retirement plan purposes such that you and the firm's employees are treated as working for a single employer. Whether or not that happens or can be avoided depends on the particular circumstances and application of the rules is not simple. You need to know your status before you can design the optimal retirement arrangement or arrangements.

What are the other partners doing? For retirement plan purposes, partners are treated as employees under section 401© of the Internal Revenue Code. You could already have a big mess, cowboy.

How about writng the check to the escrow agent/title company? That should be standard practice when the payment is from a hardship distribution.

If you can't get this information from your broker, or you don't feel you can trust what you are told by your broker, you need to change institutions. Almost certainly you will pay, and pay, and pay.

Depends on all the circumstances. Community property states tend to be more formulaic and would tend to award an interest based only on the time of marriage. That would be the starting proposition in any case, but where it comes out depends to some degree on other things, including the interpretation of what was already ordered. A strict interpretation would be that the former spouse interest covers the accrual before the date of marriage, and some courts would not go back to rethink the issue. The court would probably approve anything you agree about. If you want to fight, you take your chances.

Until a domestic relations order is received by the plan, you have all the rights of a spouse and the former spouse has no rights. Unless a domestic relations order is qualified, the former spouse has no rights, except the right to try to cure any qualification defects in the domestic relations order within a reasonable time, which depends on the circumstances. Federal law does not impose an limits on timing of issuance or delivery of domestic relations orders. State law may limit the ability of a party to a divorce to obtain or modify orders after the proceeding closes. In certain jurisdictions, a domestic relations order may be ineffective with respect to the survivior benefit rights of a contingent annuitant under an annuity form of payment if the order is delivered to the plan after the payments start or after the plan participant dies. However, the payments to the participant while the participant is living can be divided even in those jurisdictions. In short, until the participant retires, your interest is in jeopardy. Once the participant retires, you may have have more protection, depending on the jurisdiction. Even if the former spouse obtains an interest under a QDRO, it would be unusual for an alternate payee to be awarded the entire interest or the entire survivor interest. I have seen QDROs that award the entire pre-retirement survivor interest. It is extremely unlikely to see an order that tries to award a survivorship interest in whatever interest is left to the participant after the normal benefit is split with the former spouse. If the benefit is split before retirement in some way between the participant and former spouse, the former spouse almost never gets any survivor interest in the portion of the benefit that remains for the participant. How benefits are split depends primarily on the divorce terms and state law.

Purchase of interest in the property from the plan is a transaction between the plan and a disqualified person. What is the exemption? Even if the son and the plan each bought a 1/2 interest from an unrelated seller, co-investments are dangerous. There is always a way to look at the transaction as a use of plan assets for the benefit of a disqualified person. Why didn't one or the other buy the the entire interest? How was the split decided? Who is getting some part of the deal that was otherwise out of reach? Who gave up something that was otherwise available? Some answer will suggest improper use of plan assets.

I disagree. Suppose son wants to buy the property, but can't cover the entire cost. Daddy Trustee steps in to cover half, thus enabling the transaction (or at least half of it) that otherwise would not have occurred. Plan assets have been used for the personal benefit (outside the plan) of a disqualified person. At best, one may have a facts and circumstances argument in defense.

Sounds like you are trying to be too clever by half.

It won't be subject to ERISA, but it will have to apply ERISA to itself if it incorporates ERISA by its terms. Then you have to look at the terms of ERISA that got actually incorporated. You may find a few paradoxes, such as the ERISA requirement to file Form 5500, but ERISA only requires filing of Form 5500 if the plan is subject to ERISA. One wonders if ERISA permits filing of Form 5500 if the plan is not sbject to ERISA. This should you you busy for a while. Or you can contemplate whether or not the adoption of that plan document by the employer is sufficient employer involvement to cause the plan to be subject to ERISA. I think that is a viable position because adopting an arrangement that that goes beyond being a mere conduit (by imposing ERISA terms) is much more involvement than necessary.

Since plans usually do not allow benefits to be reformed after the benefit starting date, I generally agree with Effen. But I can see an argument that the AP should get more or less than 50% of each payment while the participant is alive, depending on how one values the benefit now. The value of the death benefit that the AP will get (assuming survival) may be a reason why the AP should not get 50% of each payment otherwise scheduled to go to the participant. Perhaps the AP should get less than 50% if you are trying to redivide the value of the benefit to provide 50% of the value of the entire benefit to each while staying within the confines of the form of benefit in place.

A pre-REA domestic relations order may be given effect as a QDRO. How and whether that is done depends on the circumstances.

You may be thinking about what is commonly called a "blackout notice," which does not apply under your circumstances. Unless you try to understand that a 457(b) plan is fundamentally different form a 401(k) plan or 403(b) plan, you are going to find lots of things that seem wrong to you. The fact that you elcted to defer income does not make any difference. The money is not yours or even legally set aside for your benefit. Your employer made a promise to pay certain amounts at certain times. The employer is in control of how it manages its money in a way that you hope will allow it to live up to its promise.