QDROphile

The proposition is that the employer wishes not to allow participants to be able to choose to default by simply invoking wage deduction law limitations. Plans are not required to allow loans. Plan loans can have adverse effects on retirement savings, especially premature distribution because of loan default. Most of the responses say that wage withholding laws are fatal to preventing elective default. You may consider the proposition to be overly paternalistic and the efforts not worthwhile and you are on firm ground for that position. The overwhelming prevalence of automatic administration products and cost sensitivity makes the the concept of adequate security into a nothing burger, with alternatives seeming bizarre, but it is not true that elective default is unavoidable.

It is not wage withholding. It is a creditor remedy more like garnishment.

The well-worded language would refer to the attendant wage assignment and security documents., which would have collection operate under the uniform commercial code instead of wage withholding statutes in the event of elective default. Those of us more affected by sumpsimus than mumpsimus might even argue that securing plan loans by wage assignments is required in an environment of potential elective default under wage withholding laws. It appears that the IRS and the DOL are not interested, so there is no practical concern. But there is practical ability to prevent elective default if one wants to go to the trouble.

Properly structured, a plan loan can avoid the proscriptions of state wage withholding laws and prevent the employee participant from electing to default. I am not going to bother with an explanation because neither the IRS nor DOL seem to care about their standards (including prohibited transaction rules) concerning loans or fiduciary compliance with loan origination standards, and plan sponsors and fiduciaries do not want to go to the trouble, and the big automated system providers will never do what it takes. But don’t say it can’t be done like justanotheradmin did.

Short answer is negative. I am sure some maven will give you a fuller explanation, which is not unique to ESOPs.

The essence of section 125 is a choice between a taxable benefit (cash compensation) and a nontaxable benefit (e.g. health coverage). If there are different coverage choices, they probably have different employee premium requirements. To the extent that a difference in the premium amounts may be reflected in the paycheck (taxable cash), there is some room for section 125 to operate, even in a mandatory coverage/payment arrangement, but you would not be looking at a traditional section 125 arrangement.

You might consult your therapist and spiritual advisers concerning doing the right thing and achieving peace of mind. Sometimes the options presented by lawyers do not come with recommendations weighted according to non-legal values. In other words, a course of action that is likely to give you an economic outcome that is better than you expected based on the original conceptual property division may not be the best for you in non-tangible aspects of your life. I agree with Larry Starr about the legal questions.

While I hate to suggest an increase to administrative burden and to create an additional opportunity for administrative error, after an election is first implemented, or would have been implemented if submitted by deadline, a confirming notice can be sent after the first affected paycheck (so the employee can cross check and so can the payroll administrator for that matter): “Your deferral election of ___ has been implemented ... .” Or apply it only to the zeros, including the failures to elect. I am not suggesting this is required.

Is the bonus discretionary or committed contractually?

Hence asking for the explanation. You don’t really think the inquiry would be framed by presumption of wrongdoing.

You you have the stomach for asking the CPA to explain why he/she should not be reported to an appropriate professional or regulatory authority and the take appropriate action based on what you hear?

Is that a dispositive answer or is someone unclear on how non qualified deferred compensation is reported?

Your plan document should say.

The PA screwed up, but not the way you think. The PA should have either determined that the order was not qualified or stated as part of the determination that the PA would not enforce the provision about the election, which should have resulted in amendment of the Order by the parties. PAs are required to follow plan terms and cannot interfere with participant elections provided by the plan. Someone will argue with this assertion, and I will not engage in the argument. The direction in the Order for the participant to elect a form benefit and designate a survivor is enforceable by the state court, through its powers of contempt, which is an inappropriate and usually ineffective approach to achieving desired division of the benefits. This points to a possible mistake of the drafter of the Order (someone’s lawyer?). One would need to know more about the plan, the terms of the Order, and the facts, but it may have been impossible at the crucial time for the alternate payee to have been named as survivor, which leads back to a possible mistake by the PA in determining qualification.

And what is in it for the “vendor” to espouse the position? Or what is the vendor hiding (consciously or not) to be espousing this position? For example, is the vendor limiting the scope of a search or a list of candidates based on the confining perspective? The vendor now has a huge burden to overcome — to convince you that the assertion is correct against a well-founded suspicion that the assertion is incorrect.

I have enjoyed and benefitted from your participation.

Another vote with CuseFan.

In addition to the determination by the fiduciary that the loan is reasonably expected to be repaid (for which pay deduction is extremely helpful), If a loan is not timely repaid, the fiduciary is put in the position of having to decide what to do about it, such as foreclose on security (as required by the fiduciary to decide that the loan would be repaid), or other enforcement or collection action. Whoever is in the fiduciary position needs some education about the fiduciary aspects and a little fear to impress about the responsibility that is seldom given appropriate attention.

And a publication called “Cracked” was a one-time competitor of “Mad” .... H’mmm.

Yes, your example fits my statement, assuming that the words of the amendment are also prepared or approved by the sponsor. Your puzzlement about the need for having the “3(16)” sign under the circumstances matches my skepticism about the need for the “3(16)” to be involved.

If your question is, can a fiduciary (or an administrative agent), purely as a matter of documentation, sign an amendment that has been properly adopted by the plan sponsor, then, yes, if the plan sponsor authorizes the execution by the fiduciary (or agent). It is still a bad idea to mix settlor, administrative, and administrative functions, but not as bad as circumstances involving judgement or discretion.

A person who has amendment authority (plan sponsor) can delegate that authority. The delegate can amend within the scope of the delegated authority. It is a very bad idea to delegate a settlor function (amendment) to a fiduciary. The fiduciary is required to act in the best interests of the participants and beneficiaries, which is a responsibility that is not a settlor function. That can create a conflict for the fiduciary, and one could argue that the fiduciary should decline to accept simply on principle. One can argue against the purist approach in certain circumstances such a purely formal amendments or emergency situations (e.g. required amendment deadlines), but I am skeptical. A fiduciary has no inherent authority to amend unless provided in the plan document (which is also a form of delegation). So, if you want a short answer to a bare question, no.

Doubtful because lenders know that qualified plan interests cannot be assigned, so they will not lend"against it", meaning they will not accept it as security because it will fail as security when the lender seeks to foreclose. Any contractual designation to deposit the payment must be revocable at will and lenders do not like to be subject to the whim of borrowers.

Who is the plan fiduciary with responsibility for investment of plan assets? Are the 401(k) accounts participant-directed and are the plan and trust terms appropriate for this type of investment? What are the terms of your engagement? Are you competent to assess the plan and trust terms concerning investment of plan assets? One issue of substance: Be very careful about joint interests, such as H and W accounts, in an illiquid asset. People get divorced and may wish to take distributions at different times for any number of reasons. I would not allow two participants to invest in one mortgage loan under self-directed individual accounts. And then we have the well-worn question about whether or not the other participant must be given the opportunity the opportunity to invest in THE mortgage if the mortgage is being broken up to parts to fit with individual account interests.

There is no connection between the ordinary income from a distribution from a traditional IRA and the deduction for capital losses except that they each contribute in their own respects to taxable income -- increasing it or reducing it. You can look at the deduction as an offset to the income, but you could be fooling yourself by missing the big picture and the possible effects of other tax phenomena, such as rules relating to quarterly tax payments.