QDROphile

Without some court or agency document that provides for the former spouse to have a a legal interest in the plan, the former spouse gets nothing. If the court or agency document that provides an interest to the former spouse is from before January 1, 1985, the Retirement Equity Act allows the plan to give it effect under the QDRO rules even though it does not meet all of the formal QDRO requirements (good luck with interpretation!). If the document is after 1984, it must be a QDRO to give the former spouse anything. If it is a domestic relations order, but not qualified, the former spouse has a reasonable time to get the order qualified, but must observe the 18 month rule of section 414(p)(7)(B) and (E). Since "they never addressed" the 401(k) balance, it sounds like the former spouse has no interest, perhaps unless community property law applies. Whether or not a state court will consider doing anything with any situation that old is a matter of state law and the plan administrator should not care or get involved with what happens in the state court. There are other threads, including one that provides the cite to the Retirment Equity Act.

No federal withholding is required if the recipient elects no withholding. Otherwise withhholding applies, but not the 20% rate.

You said you needed the distribution to pay for school. Don't forget that when you sell the shares to get the cash to pay for school, the difference between the basis and the sale price is taxable gain. Depending on the holding period, long term gain rates may apply. You don't get the appreciation tax free.

The loan can't be distributed until there is a distributable event anyway. The loan will be deemed distributed for tax purposes under the usual rules. When the loan is repaid, the account will have after tax money. Interesting conflict if the participant terminates employment and the plan would distribute the loan under its usual terms. I don't know if the bankruptcy court can require the plan to hold a loan and accept payments beyond what the plan is designed to do.

I did not give an answer and would not without all the facts and considering all the options and having input from the employee. Maybe the employee could stand a current catch up on the missed amounts out of remaining pay. Maybe you have to go to EPCRS methods.

Just in time for Christmas! If you really mean back charging as described above, you need to think about it carefully. The employee authorized pay reduction from each payment. The back charge will not be in compliance with the employee's agreement. The mathmatical solution may not be optimal or even proper.

The loan is distributed by offset but is not included in taxable income. The interest accrued since the deemed distribution is not included either.

Just to keep the voting even, I don't think that a safe harbor design is that much safer and it is an imposition on an employee (although much less of one now that the suspension is 6 months and many plans are increasing the plan-imposed limits on elective deferrals). I wouldn't push for amendment. I have an old fashioned bias that favors use of brains over automtic systems. But use your brain to decide if the safe habor suits your situation better. More important, your forms should fit the plan rules. Having conflicting but inapplicable information in the form (even if the inapplicable stuff distinguishes itself to a careful reader) will cause confusion or trouble.

The diversification window is only required to be open for 6 years. If yours opened at age your 55, it may now be closed. If you missed it, you may ponder the interesting question of whose responsibility it is that you missed it. What is adequate notice to you, both content and timing? Check your summary plan description to start.

Be careful to make sure that the section 125 amount (the opt out cash) is properly reflected in the employer's retirement plans for the persons who do not opt out. The persons who opt out will get the cash as taxable w-2 income, which should show up properly in the retirement plan unless the payroll system is inadequate.

Beware Treas. Reg. section 1.411(a)-11(e) if there are any other DC plans in the controlled group.

No withholding on a distribution that is solely employer securities. Look at the IRS model tax/rollover notice form. The purchase of the distributed shares is another transaction, it is not a distribution.

Outside of a safe harbor design, hardship withdrawals of matching contributions and discretionary employer contributions may include earnings on the contributions. Matching contributions or nonelective employer contributions (as applicable) must be subject to the in-service withdrawal restrictions that apply to elective deferrals in order to qualify for the safe harbor. Notice 98-52 specifies that Treas. Reg. section 1.401(k)-1(d) must be observed, which appears to restrict earnings on matching contributions and nonelective contributions from hardship withdrawals. Any authority, rumors or thoughts to the contrary?

Have you informed the participant the the efforts to solve this problem are being charged to the plan and that his/her account is the only one to bear the costs?

That is a matter of interpretation of the plan document.

You have to test the portion of the plan that does not comply with the safe harbor -- the participants who do not have a year of service. Because it is very unlikely that the tested portion will have any HCEs, it should pass. I assume that you are looking at the match as the safe harbor option, but it works the same same way for the nonelective contribution option.

MWeddell makes a good point, but despite the payroll deduction, someone on the verge of bankruptcy could be denied a loan because the bankruptcy would thwart the repayment arrangement. The fiduciary has a serious judgment call to make.

I tend to be uncharitable to persons who purport to be professionals. Peple who don't know should say so. If the broker (was "borker" a Freudian slip or bad typing?) simply answered a poorly asked question, it is still shame on the broker. The nature of the question, even if poorly asked, deserved a careful and complete examination and answer because the issue can be confusing to a civilian and the consequences can be significant and irreversible. Perhaps I am unfairly harsh because the client's impression from the answer would lead to transactions that are likely to generate more revenue for the broker.

Don't spend your time trying to prove a negative with idiots. Give them the answer politely, refer them to the avaliable resources and go on with your productive activity.

The plan needs the bond, but not for the organization itself. The plan should be designed so that the organization is not a fiduciary. My point is that the organization is not bonded.

The QMCSO statute says the a plan cannot be required to provide a benefit under a QMCSO that it is not desigend to provide. If your plan does not provide stand alone dental benefits, the MCSO is not qualifed and can be rejected. But the plan could separate benefits specially for QMCSOs if you want. If so, the written QMCSO procedures (you have these, of course, because ERISA requires them) should specifiy, and it would not be a bad idea if the plan said so, too.

If the plan's loan provisions were drafted competently, they would say that a loan will not be made if the fiduciary does not expect it to be repaid. In your situation, a loan is not available under that standard, so the hardship requirement of borrowing under the plan to the extent available is satisfied. But so few loan programs are written and run properly ... .

Proponents of flaky ideas have to show why they are right, not the other way around.

Tell me who you think is supposed to be bonded.

And get yourself another borker. This one is completely self interested or incompetent.