QDROphile

It is a mistake to make the employer a fiduciary.

And even if the NHCE percentage is less than 20% I don't think it works because the exception only applies to the leased employee rules and does not address the other contolled group rules that would aggregate at least all of the 100% owned businesses. In your situation, the leasing organization is 100% owned, too. Pretty transparent device. Not effective.

There is a reason for having provisions about leased employees in section 414(n) of the Internal Revenue Code. Section 414(n) is followed by section 414(o). If you like puzzles and can break the code, the answer is: 414(n), 414(o), which reduces to (n),(o), which further reduces to "no."

It is a mattter of interpretation or policy whether or not a plan will allow proceeds from a second loan to repay the first loan under a "one loan" restriction in the plan. Nothing compels the plan administrator to allow it. As noted above, there are compliance issues if the plan administrator does allow it.

You have a deemed distribution if any loan payment is more than 180 days overdue (and probably before that). Under the circumstances the probability of a prohibited transaction or a disguised distribution seems very high. You need help from someone who knows how to deal with this stuff. The issues get fuzzy and the consequences are complex.

Depends on: 1. Whether or not the plan has an assigment of pay. 2. Whether or not the payroll deduction authorization is irrevocable. 3. State law concerning payroll deductions (the pre-emption of state law is the subject of some debate). 4. What the plan and loan documents say. The plan administrator cannot simply let the participant off the hook because of unpleasant circumstances, nor can the plan administrator walk away from easy collection of loan payments. If the participant does not have the right to cancel payroll deductions, the administrator can't let them be cancelled simply because the participant would like it. The loan must be enforced. The plan administrator can decide whether or not extraordinary collection efforts are warranted under the circumstances if the particpant is able to cut off the easy money because of a right to cancel the payroll deductions.

It is also common not to allow distributions until 5 years after termination of employment unless you retire or die. IRC 409(o). This is actually a good rule, because otherwise the ESOP could string you out until you are 65.

Why don't you ask to have the learned legal counsel brief the plan on the proposal?

Other threads have addressed these questions. An alternate payee may roll to a qualified plan if otherwise eligible, including the plan that makes the distribution under the QDRO. Plans are not required to accept rollovers. Amounts rolled over remain rollover amounts subject to any special rules of the plan applicable to rollovers. The applicable regulation is ambiguous, but the the IRS model rollover notice is not.

And what fiduciary of sound mind would exchange liquid diversifed investments straight across for company stock, especially in a privately held company? This is an extemely sensitive proposition and I know many expert professionals who will have none of it.

You should probably also consider that the 403(B) plan is subject to ERISA because of its pairing with the 401(a) plan. Sounds to me like that may have been overlooked or misunderstood.

Why is this deadbeat different from any other deadbeat as far as a court is concerned?

Please explain how you get after-tax contributions into a 457 plan.

I have never encountered what you describe; pardon my ignorant assumptions. I don't understand why a participant gets a certificate, so I am missing something here. I assume the participant is in pay status. It seems to me that if the plan continues to hold the contract, the contract is simply a funding vehicle and is a plan asset. The plan is making the annuity distributions and is is no different position than a plan that makes annuity payments and takes the investment risk (defined contribution plans can't take investment risk on aanuity payments). The plan administrator has responsibility for determining the qualification of domestic relations orders and administration of them. The annuity company is nowhere in the process. I assume that the annuity contract simply pays in accordance with its terms and the payments are set once the participant starts benefits. If the plan andministrator makes a decision that causes payment form the plan to diverge from the stream of paments under the contract, so be it. The contract is simply a plan asset and may not necessarily match the plan payment. It seems unlikely that a plan administrator would be in such a position if the annuity contract were designed to fit the benefit in the first place. The plan adminstrator would need appropriate QDRO procedures to make sure that the benefit could not be divided in a way that caused problems. For example, the only way to divide benefits in pay status would be to divide payments. The plan could not allow the value of the benefit to be divided and give each recipient an annuity based on the recipient's life. If the particpant is not in pay status, I hope the annuity contract anticipates that the benefit can be split. The plan administrator is still responsible.

"Read all the documents" is good advice. So is "get advice on all the documents before they become a problem." I did not see any suggestion that the annuity provider had contracted for the plan administrator to be responsible for property division issues. Woe to the plan administrator who agrees to such a contract. After the distribution form the plan, the issues multiply and state law is more of a factor, if not completely controlling. What about annuity contracts issued on plan termination? What plan administrator retains responsibility? I am afraid that I don't see the contempt issue if the domestic relations order applies after the plan has distributed the benefit. Perhaps the annuity company advises the court that it would love to follow the order, but the plan administrator is breaching the contract to instruct the annuity company how/whether to comply with the order? The court holds a contract party in contempt for its breach of contract with the annuity company?

If I were a plan administrator that had distributed an annuity contract, I would not consider any subsequent request by anyone to take any position on how to divide the annuity. Proper distribution of the benefit ends the plan's responsibilities, whether or not some judge thinks a QDRO is the means for the division. Separate point: If section 414(p) of the Internal Revenue Code applies, the better view is that the S in a J&S benefit does not have a "vested" right if one means by "vested" that the survivor benefit cannot be invaded by an alternate payee's interest awarded under a QDRO.

Unless you have state law that addresses the subject (which is unlikely), tell the life insurance salesperson lurking somewhere behind this ridiculous proposition the same thing that Glinda the good witch said to the wicked witch: "Be gone. You have no power here."

Medical spending accounts cannot be used for payment of premiums for health insurance.

How about "it is mandatory"?

Here are answers to questions you did not ask (except indirectly). A 457(B) plan for a nonprofit, nongovernmental entity is still subject to ERISA, which limits its use to a select group of management or highly compensated employees. That will be a very small group in the average "smaller non-profit." Also, the plan must be unfunded, so any amounts set aside would be lost to creditors in a bankruptcy. If the non-profit has uncertainty about its funding or finances, would someone want to bet a portion of a paycheck? You also need to worry about securities law compliance, although exemptions from registration are probably available under state and federal law.

Perhaps you could discuss reimbursement in year 2 of an amount paid in year 1 when the services are not received until year 2. Seems like there would be timing issues. Or perhaps I misread your message. Do you require that the payment and the services be in the same year, even though it is OK for the services to be later than the payment?

EBIA rules.

Section 72(m) (10)

None other than the ones applicable to all other defined contribution plans.

Apart from the draft domestic relations order and where that might go, the injuction is most likely a domestic relations order. The plan needs to send a notice of receipt promptly. The plan needs to determine qualification within a reasonable time. What amounts to a reasonable time depends on the circumstances. I suggest that under these circumstances a reasonable time might be a while, especially if the participant does not actualy request a distribution. Meanwhile, the plan adminstrator needs competent legal advice about what to do and when to do it. The plan is in a difficult position and needs very sophisticated help to navigate. As the plan navigates, the circumstances can change and the changes will require appropriate response. This is an interesting situation and there is lots to say about it and various court cases that have a bearing on it. But don't waste any more time with the thought that you can deal with this without direct expert help.