QDROphile

The decree can't make the plan do what the plan is not designed to do. It is almost unheard of that a DB plan would allow a change in the form of benefit after the start date. Any order to the contrary is not qualified and is ineffective. See section 414(p)(3) of the Internal Revenue Code. They may be asking you to come up with a value for the purpose of deciding what portion of each payment the former spouse should get, but I think they are fooling themselves about the ability to get a "right" answer. I suppose you can't just tell them they are fooling themselves, look at the payment stream and be done with it.

I am glad you mentioned you are in Iowa, because the rule is different there. Normally, when one is amending the plan, one is amending the plan document. The SPD is a summary of the plan. The SPD reacts to changes in the plan as the plan is amended. One vehicle for the reaction is a summary of material modifications (SMM), but a restated SPD may be warranted if the changes are extensive. The SPD should identify the date as of which it describes the plan and any SMM should identify the date of the change it describes. Some folks try to have the SPD serve as the plan document. In that case, a plan amendment automatically changes the SPD as well. The change must still be published according to the SPD/SMM rules.

The plan or the written QDRO procedures should dictate how benefits in pay status can be divided. The usual approach is to limit the division to splitting the payments, not dividing the value of the benefit. The usual approach has many virtues.

Nothing prevents the loan from being secured by a mortgage except plan design or policy. No comment on maximum term.

What kind of business lets its clients unilaterally decide whether or not to pay fees for services rendered? Something seems wrong with the picture. The agreement could be a binding right to receive payments based on collections. It may be that there are no collections or irregular collections, but I would expect a least an implied term for reasonable good faith collection efforts. There could be other aspects of the arrangement that would make it either not covered by 409A or compliant with 409A. What is the compliance problem that concerns you?

I tend to follow the proposition that anyone who takes an unusual position has the burden of supporting it. The idea that deferrals are affected by a loan is unusual. It is not your job to find the provisions to support it. It is the employer's job to show you why your normal right (to defer and have money delievered to your account) is being compromised. Demand to see the support. If they can show you that the position is correct from the perspective plan terms, report back here to explain. It is unlikely that the position is allowed under 403(b)(12), so you may have to go to round 2.

State law controls and might have something to say on the matter.

Mortal sin if the fault is in the communication. The communication was not sufficient to allow the participants to get all the benefits that they could have received under the plan if adequately informed. Violates the SPD rules and is a breach of fiduciary duty. Also, if the employer is going to make the employees whole anyway because of the stupid behavior, don't be so fast to try to soft pedal whether or not there was an operational error in administering the plan in accordance with its terms. Admit to the error because that becomes the basis for the make-whole contributions. If you don't have an error, you may not be justified in making corrections within the plan.

Perhaps "SPD" is simply meant to mean an information or disclosure document. Most arrangements need them for some purpose, even if the arrangements are not subject to the formalities of ERISA.

Why woudl you prorate? The summer months are heavy childcare months for school age children.

See Treas. Reg. section 31.3121(v)(2)-1(e). You are on the right track.

How about suggesting to the appropriate fiduciary that the choice of investment provider should be reviewed to assure that the best interests of the participants are being served? Reseach some alternatives and show the fiduciary that you have an inferior arrangement. If the cost of administration is one of the shortcomings, go to the Department of Labor website. It has plenty of material to suggest that the fiduciary needs to be conscious of costs. Ask whose golfing buddy is involved.

You can't tell if the reduction is proper without knowing what the plan says and more facts. You can know that a limitation on benefits because of compliance is not a status change described in the regulations that would allow mid-year change under the plan of either person. So even though the reduction may have been proper, it may not be a change in election. The spouse does not, by reason of a change, necessarily have a change in the HCE spouse's plan that would allow a mid-year election under the other spouse's plan. Does the other spouse have another event that would allow a mid-year election? The IRS is very generous about what constitutes change in cost or coverage when it comes to childcare FSAs. See Example 5 of Treas. Reg. section 1.125-4(f)(6).

Why the reduction?

The answer is entirely within the standards of that program. "Pension" means what the program says it means; there is no generally ageed upon meaning of "pension." The program may look outside its own terms for a defintion, but the programs terms would provide for that. It is also possible the the program has not settled on all points of meaning. You will be extremely lucky if anyone who uses this board has familiarity with the program. If you can't get anyone in the program to answer your question, take the position that you do not have a pension, but any time you communicate or fill out any form, DISCLOSE, DISCLOSE, DISCLOSE that you have the IRAs. Disclose even when the communication or form does not ask about pensions. Draw stars at the disclosure. In your disclosure, include that you have asked program personnel about the IRAs, but no one would answer. Keep copies of the documents with the disclosure. Governments have a habit of trying to recoup overpayments in 20-20 hindsight, even when they had active blindness in the beginning.

What is the last sentence in your first post? You said the plan treats anyone employed as employed. That is a conventional plan design, conscious of the possibility that the person might not be in an eligible position. It is parallel to the legal requirement for vesting -- employment in an inelgible position is still counted as service If the plan intended to exclude, it should have said so. Generally, uncertain terms are interpreted in favor of the participant.

A conventional way to come close to your goal is to adopt a section 125 plan, also known as a cafeteria plan and sometmes known as a premium only plan if it is limited to premiums. Assume that the premium for individual coverage under your plan is $300 per month. Under the plan, each of the eligible employees would choose for the coming year between individual coverage and $300 per month. Elections can be changed mid-year only under certain circumstances. A person who chooses the coverage would not be treated as having any additional compensation. A person who choose the money would have $300 per month of additional compensation, so they would really take home less than $300 per month. Can you try to shape the $300 per month amount to fit the individual and the cost of the individual's alternative health coverage? Probably not. Also, unless you took extraordinary action, any of your employees could decide to forego coverage in favor of the $300 and you could end up with uncovered employees and higher employer FICA taxes. The extraordinary action involves some complications and may not be feasible in any case. If employees start opting out, it might affect your cost of coverage. Your premiums are affected in part by how many people are covered under the group health insurance policy. There are other possibilities that might get you closer to your expressed goal. You are likely to get other messages that describe at least one of them.

That is controversial. At least one court has ruled that the valuation is a "plan document" to which particpants are entitled. The circumstances may be important, and the plan or the employer may be able to obtain protective restrictions even if the information has to be produced.

A top hat plan filing is an ERISA matter and has nothing to do with 409A. No deferred comp plan files with the IRS. For that matter no qualified plan has to file with the IRS, except for Form 5500. Lack of filing with the IRS is not relevant to 409A. However, 409A is likely to apply to the deferred comp plan. Consider the DOL Delinquent Filer program , as suggested in prior posts. The DOL website has information to get you going. Deferred comp plans must be anlayzed for compliance with federal and state securities laws. Exemptions from registration are often available, but that cannot be taken for granted. As has often been stated by Kirk Maldonado, your source of ERISA and tax advice is often clueless about applicable secutities law.

It is very popular to erase the distiction between the ESOP shares and shares of employer securities in another plan or the non-ESOP part of the plan. It is also a legal abomination, but the IRS allows it. The usual approach is to define the ESOP to include all the employer securities, whether or not the participant has the right to provide instructions concerning the investment of plan assets into or out of employer securities. The ESOP will not be a separate plan. See Treas. Reg. section 54.4975-11(a)(5). The trend is driven in large part by the desire to be able to deduct dividends on all the employer securities in the plan, not just the real ESOP shares.

One purpose of section 609 was to provide for coverage of children of noncustodial parents. I would not advise a plan administrator to refuse to qualify an order on the basis of section 609(a)(4) unless we have some other authority supporting the refusal. I cannot think of any basis for refusal other than 609(a)(4). Although WFTRA may have changed tax consequences, and plan may have realigned with the amended tax provisions, section 609 appears to be indifferent to tax consequences. If you stand on section 609(a)(4), you need to take into account the state law that may provide an exception.

Redemption fees seem similar to commissions from the IRS perspective for this purpose and the IRS ruled that a commission must be netted and reflected in the value of the asset. Any attempt to treat it as an expense could be viewed as a contribution to the account. I am not aware of any authority that expressly mentions redemption fees.

Don't rely on any of this response, but it looks like the employee was eligible from July through November (Janet M is correct; I misread the facts -- but November coverage is uncertain depending on how the plan handles a partial month). The employee changed to an ineligible class (not employed in a position that is expected to have 1000 hours in a year) for periods after November and was ineligible for any contribution by the employer and ineligible for any health benefits. The health FSA is a plan separate from the cafeteria plan. The annual FSA amount elected was $3180 (12 x $265), so the employee has that much coverage for expenses incurred before December. This is my best guess. It is possible that the plan was designed differently. The health insurance plan is separate from the cafeteria plan. Premiums were paid through November and eligible expenses incurred before December should be covered. The employer probably has the ability to change the employee's status, but that depends on many things. Terms of employment are ripe for dispute. If the employer changed the employee's status for the purpose of preventing the employee from receiving benefits, the employee may have a claim under ERISA with respect to the ERISA plans. The FSA and the insured health plan are ERISA plans. The cafeteria plan is not. Such claims can be very difficult to win.

Are you now saying that X and Y are employees of the partnership and have W-2 income from the partnership?

Not if the corporations are C corporations. Even if they are S corporations, what flows to shareholders is not the partnership income, but corporation income. While that may seem like a fine point, it may determine the matter you are trying to resolve. I don't think "attribution" is really the correct concept when you are tracing the money. Attribution is important when you are analyzing ownership for purposes of controlled business and affiliated service group rules. Edit: This message is not a response to the message of GBurns. The GBurns message is interposed. I am saying pretty much the same thing as GBurns.