QDROphile

Sounds like a zero benefit to me, too. It would be a good idea for the notice of qualification to state that the order is qualified, and the alternate payee has a zero interest. I like to shock idiots into recognition, as it prevents disputes years down the road when reality otherwise dawns on them. One might argue that the order is not qualified because it does not assign an interest, but I think zero is a number.

The "appropriate language" in the restatement covers the retroactive effective dates of changes to the nonsurviving plan document. The restatement is effectively the GUST amendment of the nonsurviving plan document, so it must comport with that function. You also have to watch other aspects of plan mergers that are not GUST issues, such as vesting schedules.

Plan sponsors that allow the sponsor to be a named fiduciary or that take on any fiduciary functions deserve all the liability they can get. However, even a properly situated plan sponsor is likely to have indirect liability to the extent of agreements to indemnify fiduciaries.

All service to an employer counts whether or not the employee is a position that is covered by a plan, subject to a possible exception in the event the employer has not had any plan before. Various rules determine whether or not that service may be disregarded for various purposes. The plan document determines who is covered and determines certain details such as whether the plan uses an employment year or a plan year for counting years of vesting service.

I have asked IRS officials about how one-time elections work under USERRA. They don't have an answer, other than to acknowledge that it is an interesting question. Eventually, some poor soul will have to consider proposed terms under a determination letter request that treat the one-time election amount as the employee's contribution/deferral.

If the employer is a government or an instrumentality of a government, the plan is a governmental plan and the top-hat inquiry is inapplicable because it is solely an ERISA concern. You need to settle the question of plan status first. "Quasi-governmental" has no bearing except as a clue that you might have a governmental plan.

What did the plan say when you asked it this question?

Why doesn't 409(h) apply?

The plan document controls, regardless of the other possibilities and refinements the law may allow. Expect your plan document to require the spouse to be the beneficiary for all of the account unless the spouse consents to another benefiticiary. Ease of administration of the plan usually dictates these terms. But check it out if you are offended by the idea.

Taxwoman: A prohibited transaction is (1) a transaction between a plan and a party in interest (or disqualified person) or (2) dealing with plan assets for the benefit of a fiduciary. If the IRA (plan) loans money to a person that is not a party in interest and no fiduciary benefits from the transaction, where is the prohibited transaction? Uness the IRA owner or other fiduciary gets a benefit outside of the economic benefit to the IRA (such as a loan fee paid directly to the owner or fiduciary), I don't think clause (2) is violated.

I was referring to JimJ's proposal.

Why wouldn't a sale of a plan asset to a participant be a prohibited transaction? And if it is, what would be the exemption for the proposed transaction?

For withholding, take a look at Treas. Reg. section 31.3405©-1 Q&A-9

Yes. but it would be a good idea for the plan document or a written loan policy to cover the issues. Among other things, you need to know what the acceptable payment arrangements will be, what happens to the rest of the account (for example, may the remainder of the account be distributed while only the unpaid loan balance remains?), when the account will be distributed upon default and a bunch of other things you won't think of until they actually happen. I assume that you assume that the opportunity will be available to everyone. Terminology lesson. When a plan loan is in default and the amount is distributable (for example, because of termiation of employment), the distribution is not a deemed distribution. It is an actual distribution, often called an "offset distribution" because the loan distribution offsets the loan obligation (or vice versa).

How does a plan cease accrual of contributions and benefits but not have to vest 100%?

My vote is that interest keeps accruing and is part of the loan balance at the time you do the calculation of eligibility for the new loan.

A 401(a) plan offering is not limited to a matching plan. The school could have any kind of 401(a), unless the school is governmental. Then it could not offer a 401(k) plan unless it had a grandfathered 401(k) plan available (see other threads).

Yes, if the governmental employer could do it whether or not it had 501©(3) status. Layering on the 501© (3) status can get you a 403(B) plan, but not a 401(k) plan.

The answer depends mostly on how the plan defines compensation.

Odd as it may seem, if one has other coverage at the time, one can still elect and maintain COBRA continuation. If one does not have other coverage and elects COBRA continuation, getting other coverage later will allow the COBRA coverage to be terminated (unless the pre-existing condition limit exception applies).

The plan document should have rules for distributions after death. In these circumstances, you may not even reach the 401(a) (9) rules because of limitations in the terms of the plan. If you do reach the 401(a) (9) rules you need to handle the situation under what is decided for plan terms that comply with 401(a)(9). An inferior plan document may throw you into these questions without providing answers or at least guidance.

All can say is that I personally think they are being too stiff. I am ignorant of the state law and procedures that apply, so I cannot evaluate how close to eviction you are.

I realize that in ESOP land that it is allowable to have a provision that is applied circumstantially. But even though it may be legal (for policy reasons that are questionable), that doesn't make it a good idea. First, it puts additional responsibility on the adminstrator to make sure it is applied correctly. Second, I think it is a bad idea to tell participants, "Maybe you can, maybe you can't, and we can't tell you in advance if the feature is available." Generally I am uncomfortable with all the the special vague rules under ESOP lore. I prefer more solid authority than anecdotal evidence that someone in the IRS didn't take issue.

Let me offer a refinement on RLL's comment. The liquidity problem goes to the wisdom of having a hardship distribution provision in the plan. If it has one, the plan must distribute and the company must honor the put option. In that sense, the liquidity problem is the company's problem, not a limit on the plan's ability to distribute. Perhaps one could design a hardship distribution feature to be limited to times when the plan had adequate cash to make the distribution in cash. I would not try such a provision.

1. First, understand that the stuff about early retirement subsidy is based on legislative history, and is therefore questionable. Second, you have to put everything in context, follow the plan's written QDRO procedures and read what the order says. Third, read what the QDRO procedures and the order say. Fourth, read what the order says. Repeat 3 and 4. Generally, if the alternate payee starts a benefit before the participant starts, the alternate payee will get a portion of the early retirement subsidy only if (a) the participant starts at a time when the participant's benefit is subsidized (e.g. nothing happens if the participant starts at normal retirment because ther is no subsidy), and (B) the order awards the alternate payee a portion of the subsidy. The alternate payee will then get a payment enhancement based on the portion of the subsidy awarded to the alternate payee. If the alternate payee starts when the participant starts, the order probably does not have to say anything expressly about early retirement subsidy. It still depends on what the order says. If the order says to split the benefit when the participant starts, the order will split the subsidized benefit. If the order effectively requires the alternate payee's payments to be determined when the plan is paying a subsidized benefit to the participant, the alternate payee's benefit is based on the subsidized benefit. The reason for the rule about mentioning the subsidized benefit is that when an alternate payee's benefit is determined before the participant starts, the plan does not know if it will be paying a subsidy, so the alternate payee does not get any subsidy then. If the plan starts paying a subsidized benefit later, the alternate payee gets to share the subsidy, but the sharing is not presumed. The order has to say that the alternate payee is supposed to pick up a portion of the subsidy after the start of the alternate payee's payments. If the alternate payee does not start payments until the participant starts, the plan knows that it is paying a subsidized benefit and can split the benefit between the alternate payee and the participant once and forever according to the formula in the QDRO. 2. As you describe the situation, I would expect the alternate payee to get a share of the unreduced (subsidized) benefit according to the formula in the QDRO. But the outcome depends on what the order says and the outcome may be affected by the QDRO procedures. It is also possible that the disability subsidy is not treated by the plan as a normal retirement benefit; it may be a specially designated subsidy. If the QDRO awards the alternate payee a benefit based only on a normal retirment, it may fail to pick up the special subsidy. You have to read all the documents and sort out what they cover. The alternate payee does not get anything "by law." The alternate payee gets what the order provides. But it is not presumed that the alternate payee does not get a part of the subsidized benefit if the alternate payee's payments are determined when the subsidy is in effect.