QDROphile

You couldn't get a distribution under the old regime until you terminated employment. You haven't terminated employment. What makes you think you should be able to get a distribution?

You may have a disqualification event that can be remedied, but you also have a prohibited transaction. Prohibited transactions are not handled in VCR.

No exemption from Part 5. You need a claims procedure.

The authority is under . A plan provision that death is a default event is unusual. The plan may have other unusual provisions, so take this response subject to plan provisions to the contrary. I would expect death also causes the participant's account to be distributable (to the beneficiary). Because the account is distributable, the loan is offset and treated as an offset distribution. See Q&A-13 of the proposed regulations and compare (a) and (B). Because distributions are taxed to recipient, the beneficiary gets the offset distribution and is responsible for the taxes on the distribution. Could you get a different result by treating the offset distribution as a distribution to the participant, and therefore the participant is charged with the income for income tax purposes? Maybe. But one would expect all distributions after a participant's death to be made to the beneficiary. What does the plan say about that? [This message has been edited by Dave Baker (edited 12-07-1999).]

RLL: I found a 1998 PLR that had all the right facts for the ruling you describe, but it ruled only on the primary benefit issue. It stated that it would rule on two other issues under separate cover. I assume that one of the two other issues is the annual addition limit. But I have found no such published ruling in 1998 or 1999. Do you have a citation or other suggestion for finding the PLR that follows the TAM?

A plan does not have to use the safe harbor suspension. Abandoning the safe harbor requires more attention from the administrator, so the big systems don't like them and often people are told that the suspension is required by law. Not so.

You don't have a deemed distribution. You have an offset distribution to the beneficiary, who is responsible for the taxes on the distribution, which includes the amount of the loan.

Don't mess with sham terminations.

You might fit under section 401(k)(10) if the Branch Operation could be itself a trade or business and substantially all of the Branch assets were acquired. Check the letter rulings for what constitues a separate trade or business.

Why bother with a SIMPLE? A SEP is easier and can get you the same thing and more as long as there are no other employees.

Though there are probably exceptions, if the employer is simple enough to need a simple 401(k), the employer should not have employer stock in the plan. If the employer is an exception, it will already have access to the answers through its regular legal counsel or other professional advisors.

Depends on what the QDRO says and possibly what the interpretation policies are, as set forth in the plan's written QDRO procedures. Generally, if a QDRO awards an alternate payee a portion of the benefits accrued during a period and the plan upgrades the benefits accrued during the period, the alternate payee's portion of the benefits would be upgraded unless the QDRO provides otherwise. If an alternate payee is awarded a percentage of each benefit payment rather than a portion of the accrued benefit, you get a similar result. But it is ultimately a matter of interpreting the plan and the QDRO.

While I am a big fan of close and literal readings, I don't think the Notice requires using age and service requirements that are both below the statutory minimums in order to disaggregate. That would be rather tricky and the IRS should be more forthcoming if they really mean it that way.

Check Rev Proc 98-22. In Walk-in CAP you may be allowed to amend the plan retroactively to conform to prior administrative practice. You might have some luck in VCR, but not with the conforming amendment. The VCR correction would be to write a letter to the alternate payees and request that they return the contribution, perhaps warning them that the Form 1099 will report the distribution as nonrollable, but not pursuing the return. Call the VCR people first to get some guidance. A plan must have express provisions if it wishes to permit alternate payees to get distributions before the former spouse participant is eligible.

It is better practice to treat alternate payees who are also participants the same way that nonparticipant alternate payees are treated. So an account or subacount separate from the alternate payee's participant account should be established. The rules governing alternate payees are different and the QDRO may have terms that cause the QDRO money to be handled differently. Examples: Alternate payees are not subject to a 10% tax on withdrawal of QDRO money before age 59 1/2; alternate payees usually can get a distribution right away (the alternate payee, as a participant, may not be able to get in-sevice witdrawals); alternate payees often must start distributions when the participant starts; if the plan has a j&s annuity distribution option, the QDRO money can't be distributed as a j&s annuity (unless the former spouse is the named survivor beneficiary, which is unusual). Depends on what you mean by commingle, but the plan had better be able to identify the QDRO money and its related earnings.

Rollovers are not subject to in-service distribution restrictions. If the plan terms allow, they may be distributed upon request without need for any justification. But watch those plan terms!

Department of Labor Advisory Opinion 94-32A says that a charge may not be imposed "in connection with *** administration of a QDRO."

But the IRS has hinted that it does not follow a de minimus rule when a plan has nongovenrnmental participants.

Look at Treas Reg section 1.415-8, and paragraph (d) in particular.

You are getting into a matter of document interpretation and questions of intent. But for my money, you can have unvested accrued benefits the same as you can have unvested account balances. From the point of view of a plan administrator, a DRO is never incorrect. It is either qualifed or not. Whether or not it delivers what the parties want or intend is irrelevant, although it creates trouble for the administrator when a party is frustrated.

A firm called Judy Diamond (Associates?) in Washington, D.C. will confirm or obtain filings. Don't have contact information handy.

Start with the prohibited transaction rules. The theory is that the company made use of the assets while they were plan assets.

Whether something is a domestic relations order or not is a matter of state law and procedure. While it is conceivable that an unsigned oder or an order signed by a clerk is a domestic relations order, unless you are sure as a matter of applicable state law that the order is OK, don't accept it. It is good practice to require a copy of a DRO be certified by the court (or court clerk). A filing stamp, with a date or not, is not much assurance that the court has really issued the order. Mosk clerks of court will file anything that is put across the counter. Filing, by itself, has little or no legal meaning.

Speaker is wrong on both, if you have captured the full extent of the message. I'll go one further. We get correct determination letters on profit sharing plans that have J&S distribution options but no spouse consent if the participant gets a lump sum or installments! The normal form of distribution is lump sum. The spouse consent requirements are not triggered until an annuity option is elected. If the participant does not elect an annuity option(e.g. elects a lump sum or installments), no spouse consent is necessary for the distribution. But you might have to walk the reviewer through Treas Reg section 1.401(a)-20 Q&A(3)(a), because some of them are not aware of the rules. The plan stills need spouse consent for designation of a death beneficiary other than the spouse.

If you have pre-TRA 86 after tax money and the proper plan provisions you can do all sorts of wonderful things with loans, including exceed the $50,000 limit. And perhaps that can be done to some extent with post TRA-86 after tax money.