QDROphile

Ideally, one would want to consider what the QDRO says the alternate payee should get in light of the need to distribute assets, then decide what to do. But it may not matter if the alternate payee will not cooperate and the plan decides it is not worth going after the distributed money. One possible approach is to distribute $1000 from the participant account and advise the alternate payee that the remainder is attributed to the alternate payee's distribution, and not eligible for rollover. I would go with the idea that the participant is the recipient of all of the taxable dollars but transferred $4000 of them to former spouse pursuant to the divorce.

The tax regulations are very clear that a plan cannot require payment for any period of coverage earlier than 45 days after the election to continue, so no payment deadline could expire before. The regulations say that once the election is made, you are on a 45 day clock. However, if the 45 day payment period or any 30 day payment period expires within the 60 day election period, I am not aware of any authority that adresses an argument that as long as the election period is open, the employee could elect coverage even though an earlier election was made and then either expressly or implicitly withdrawn withdrawn or coverage based on that election was discontiuned. There is a conflict between right for a full 60 days to elect coverage and the right to terminate coverage if the premium is not paid within 45 days. You could send the notice of loss of coverage and then see what happens. But if the former employee tenders appropriate payment before the 60 day election period is over, do you want to be the test case? The employee could have waited 59 days to elect and then paid the first premium 45 days after that. Does that ability evaporate when the employee steps up sooner with an election? Maybe. How important is it to you to cut off coverage? I have not tried to understand on what date the 60 day election period began. I have no comment on specific dates.

Don't screw with COBRA, it is simply not worth the risk. Interpret most favorably to the former employee, which means that earlier payments do not shorten any deadlines or create any new deadines that can cause eligibility or coverage to end sooner, compared to what the law allows in situations where there has been no election or payment.

Start with publication 4406, available on line at the IRS website, and then use the resources mentioned in the publication. Unfortunately, the publication itself does not explain that an individual's deferrals under 403(b) and 401(k) plans are aggregated for purposes of the deferral limit, but that deferrals under 457(b) plans are not aggregated with deferrals under 401(k) or 403(b) plans. That is what is meant by "no longer coordinated."

Fire everyone in your office who persists in arguing a position that they cannot support with credible authority. Mistakes to some degree are tolerable, but standing on ignorance is not, despite its pervasiveness in our country. By the way, the "reasonable time" is at least 30 days.

That does not mean there is no fiduciary status/duty. It only means the assets do not have to be held in a trust.

Disregard the reference and use the plan's usual actuarial factors.

The "local attorney" is too clever by half. The likely treatment is that the "reimbursement" of the premium is compensation to the recipient.

My sugggestion was to spend money on an independent advisor, not money to get wet in the arrangement.

The regulations specify the exclusive methods for dealing with ADP excess.

Most of what you describe sounds like playing with fire. Start by hiring that competent independent advisor. If you don't want the to spend the money up front to get a better sense of the proposition, you don't have enough money for the investment activities that you are proposing. A bad arrangement will do worse than nullify all of your investment success.

Effen is making sense, but I will up the ante and confirm that it IS legally wrong. A plan fiduciary is obligated to keep participant personal information confidential. The TPA is an agent of the fiduciary (or perhaps is a fiduciary itself, despite its claims to the contrary). As the agent of the fiduciary, the TPA is bound by the same restrictions; it has no separate right or authority to breach confidences, especially not to further its own interests. It may be possible wiithin the scheme of administratration for the fiduciary to arrange for an eligible participant to be provided with certain information about options for disposition of distributions from the plan, but a TPA has no business acting except in strict conformance with the directions from the fiduciary. And the fiduciary had better know exactly what is going on under its authority.

Lori: I think you meant to post the following message: No Name: It is true that elective deferrals must be fully vested, but this discussion relates to the special provisions of Reg. Sec. 1.411(a)-4(b)(6). If a benefit is payable but the participant/beneficiary can't be located, the benefit may be forfeited. The forfeiture gets reinstated if the individual later makes a claim. The discussion of forfeitures and the regulation have nothing to do with the regular vesting rules. The regulation provides for forfeiture of all fully vested amounts, including elective deferrals.

No Name: Why are they any less forfeitable than vested matching or discretionary contributions?

Seems to me that the plan has an operational error. Look at Rev. Proc. 2003-44, which provides information that answers your questions directly, perhaps with the exception of the 1099 questions. Making the plan whole is part of the exercise, but not all of it.

Curious: You misunderstood my statement. You don't get to continue the roll (assuming you could do it in the first place - which is doubtful). When the restriction lapses according to the schedule in effect in 2004, the amount is taxable. Or maybe before. No problems does not mean no taxes. No problems means that the outcome is rather clear. Confusion (which drew you to the board) is a problem. Thinking that such a scheme was workable in the first place is a problem. Now you have no problems.

The Department of Labor informally says to provide the information, but the Department of Labor has not clearly thought about all of the issues. When it comes to QDROs the Department of Labor is imbalanced. I believe that the plan needs either legal compulsion (which may be more expansive than a court order -- agencies may have authority to compel disclosure) or participant consent. If the plan is going to produce under complusion, the plan should notify the particpant in advance so the participant can attempt to quash the order, which will be futile.

There are no problems. If the amount is not already taxable, it will become taxable at the time scheduled for the risk to lapse.

Go to www.tagdata.com, click on About Us and then click on Fees. You are toward the end.

As a legal matter, this is a limit applied for the year. This pont has been discussed in several other threads. I think it is a sign of incompetence, but a plan can be designed to apply the limit in some way over periods within the year, with the result that the annual maximum permitted match is not received. Then you have a disclosure issue. A stop like you describe should work to keep the match amount within the legal limit, but won't necessarily assure you the correct match, depending on how the periodic match works. The match could still be be too low. Unfortunately, a lot of systems apply a similar stop when the pay-to-date amount reaches the limit, regardless of the accumulated match amount.

You are correct that the match must be limited by use of the legal maximum rather than the higher actual compensation. Kick ass on the record keeper.

Hey Blinky, you are mentioned on the tagdata website! Go check it out!

Payment options, if any, for beneficiaries are governed by plan terms.

grafals: I think your statement misrepresents the position of the IRS. The IRS will not strain to cobble together a plan document from stray pieces or infer formal adoption from vague actions that are consistent with having a plan. I also don't think the DOL gets into the picture because section 125 plans are not ERISA plans, although the medical FSA component is subject to ERISA. You are correct that the courts have been more flexible and forgiving, especially with respect to corporate governance, as noted by mbozek. I also think "don't worry" is a bad general message. Retroactive actions are more acceptable in the retirement area because of the rules on retroactive effective dates. There are no similar rules under section 125 and people tend to get into bad habits based on retirement plan rules. Employers should respect the applicable rules. When you play defense, you play with what you have. It is an interesting dilemma when compliance with the formalities shortly follows initiation of operations. Do you hope for the best on defense, or do you call off the first month or two and put yourself on solid ground?

Those facts aren't so good.