QDROphile

Most noncompete provisions in support of forfeiture are abusive. You don't find them much in responsible "normal" section 83 situations because they are not supposed to be used much, as the regulations state. The IRS probably won't be very aggressive about going after them but I wish they would. A few hammer blows to scumbags would be very satisfying. If not for all of the abusive activity, promoted heavily by accounting and consulting firms, we would not have section 409A to vex us.

See Q&A 23 of Notice 2005-1, effective through 2005.

One of my favorites: distribution rules ("investment in the contract") for after-tax contributions and the special implications for loans.

Yes, a QDRO is different.

It is not simply a matter of the recipients of the cash paying taxes. If you don't do it through a cafeteria plan, everyone who has the choice of taxable income will be treated as receiving the amount as taxable income even if they choose the health benefits. The employees who take the health benefits will rightly be very unhappy about paying taxes on money they did not recieve. So make sure the arrangement becomes part of the cafeteria plan. I do not disagree with Steve72, but expert help is necessary if you are thinking along those lines.

Isn't that a choice between taxable income and nontaxable benefits? That can only be done through a cafeteria plan.

SoCalActuary- I completely disagree with your statement. A domestic relations order is a domestic relations order. Where in the applicable law does it say that the participant has to agree to it before the order can be determined to be qualified? Courts order a lot of things that the litigants don't all agree with. That is one of the main purposes of courts.

And why is the plan administrator questioning the validity under state domestic relations law? I can understand that the administrator might wonder if the order is issued under state domeatic relations law, because that is a valid qualification question. For example, if the order is issued under state probate law, it cannot be a QDRO. That is why I suggeted that the administrator be more demanding and less assuming about the 414(p) requirements. If the order recites that it is issued under state domestic relations law, end of story. If it recites that is is issued under statutes that are cited in the order, maybe is should go to "legal" for confirmation that the statutes are part of the state's domestic relations law. It might even be reasonable to assume that an order that provides for support of a spouse is under domestic relations law (but watch out for probate if someone is dead). If it is issued under state domestic relations law, the administrator should have no concern for whether or not the court had the authority to fashion or approve the particular terms. Once the administrator starts on that slippery slope, where does it stop? Should the administrator be worried about due process? The plan administrator does not get to wear black robes. By the way, the DOL has issued an advisory opinion, 92-17A, that says the administrator does not have to pry into state law. I would never argue against seeking assistance of competent legal counsel. Between the incompetence of the drafters and the deceptive appearance of simplicity of the law, most domestic realtions order need review by a lawyer.

Plan to plan transfer if the terms of both plans allow it.

Plan administrators are not required to question a domestic relations order with respect to state law aspects and it would be foolhardy in almost all instances to even think about it.

Start with your employer's 401(k) plan. Does it allow amounts to be rolled in from an IRA? The law allows it, with some limitation, but the plan does not have to accept rollovers. The summary plan description should say. If it does not, ask the plan administrator.

See ERISA section 3(1) and ERISA regulation section 2510.3-1.

One possibility is tha the plan will be treated as frozen, which will cause full vesting.

Nothing in 414(p) requires a divorce. However, you might be a bit more demanding about the terms of the order to assure that the requirments of 414(p) are met. Perhaps it is sloppy, but an order within or subsequent to a divorce can be presumed to involve marital property rights without specific terms to that effect.

Does the health plan allow the employee to elect to drop coverage mid year? If so, the employee can drop coverage. Then ask the same question about changing the salary reduction election under the 125 plan. Did something happen that allows the employee to change the election and is the change timely? It is possible, but unlikely, that the employee can drop the health coverage but be unable to change the salary reduction. It is unlikely that the employee can make a change under either plan just becuase the employee wants to make a change. Or are you asking about the consequences of allowing violations of the 125 plan terms and rules? If the terms of the plan are knowingly not enforced, then the IRS could treat the entire plan as not meeting the requirements of section 125, with adverse tax effects to everyone.

Tell us more about the successes. Gerlib describes a very high barrier to use of scrivener's error as a means to correct unintended terms. Since ERISA puts so much weight on written plan document terms, it seems that it would be even tougher under ERISA. Before EPCRS we often relied on scrivener's error because we had no viable alternative, but now EPCRS speaks to reforming the document to match what the plan did (or intended?). Does that mean EPCRS is the final word and the only means for dealing with a document mistake that is not plainly erroneous on its face? If EPCRS is the only means, it does not seem that restoring less favorable terms will be treated kindly.

It is absolutely necessary "to approach legal" if you expect to get any benefits or compensation for incompetent legal work.

You are wise not to turn money over to the TPA. You did not go into details about what you meant by "turn over," but that is potentially the type of set aside that can cause compliance problems.

The employer has the obligation to pay claims in accordance with the plan terms. How it manages particular dollars is not prescribed and prudent use of employer resources depends on the circumstances. In fact, too much set aside can cause compliance problems. I gave you that last sentence so you can continue your tirade on a new angle, if you like.

So share the joke with all of us. Looks like a perfectly good answer to me. An FSA can be funded through a trust, but usually is not.

No reversal. Yes Form 1099 on the entire distribution. The amount she pays back to restore the unvested portion is after tax. She does not escape the 10%, but that is none of the plan's business.

If you are going to charge anything to the account, are you going to allocate the charge between the participant and the alternate payee? It seems to me that if you are going to charge, you need to figure out when and how you are going to charge, have a published warning (e.g. SPD) that you are going to charge, and have the details available in writing in advance, such as in the written QDRO procedures.

Nothing has changed for federal tax puposes. The marriage is irrelevant. Federal law does not recognize the marriage. The same sex spouse might be a dependent. Code section 152 has been rewritten and that has made a few changes, but not on the fundamental questions about dependency of unrelated persons. At least the relationship won't violate local law!

I assume you have read Field Assistance Bulletin 2003-3. I think you need a good disclosure foundation for charging expeneses to accounts.

30% of zero is zero.