QDROphile

To ERead: You solve your problem by having a plan provision that requires the borrower to establish an intention and a reasonably certain capacity to repay the loan when due. When the participant tries to borrow (as is required under the plan's hardship rules) the administrator rejects the application because the participant is so distressed as to call in question that the loan will be repaid. This opens the door for the entire amount to be withdrawn under the hardship provisions. But be careful. Each loan has to meet the standard (which will ususally be easy if the plan gets an assignment of pay). Such an approach causes problems if you try to go with one of the big administrators who uses automated loan origination. They do not have a place in the system for a thoughtful review of a loan application - they just go by numbers in the account. You will violate the requirement for a demonstration if the loan process is automatic.

First, the focus of the test is "key employees," not HCEs. That distiction helps one reach the conclusion that if you have only key employees, you cannot have a cafeteria plan. This has been our conclusion for a one person P.C., we have not encountered a large group with only key employees. The plan is available to non-key employees even if they are HCEs, so pay close attention to the definition.

The language applies in some unusual, but real cases. We handled a matter where a county took over a library system that was conducted through a 501©(3) organization. This converted the library's retirement plan to a governmental plan, exempt from premiums.