QDROphile

No problem if there is only an error to correct in the reporting. If in fact the the total deferral is greater than the limit (because the W-2 is correct in its description of what happened in payroll), then there is a protocol for correction. Depart from it at your peril.

Are you seeking information about the applicable rules that make such arrangements unusual (because of limited value or viability) in plans, or are you expecting a blueprint for implementation? I suggest you get an understanding of the former before wasting your time on the latter. Sorry, but "I have read online" is an invitation to skepticism.

"How does the Plan Administrator control what the person does with the money after it leaves the plan?" If the plan has conditions for the loan, then the proceeds should be distributed in the same way as for hardships. The payee of the check should be the person to be satisfied. In this case, the check should have been made payable to the tax authority. The plan administrator stopped short of making sure the plan terms were carried out faithfully

How could the proceeds of the first distribution not have been used for the intended purpose? Sounds like bad administrative practices at best. Now the plan administrator is required to interpret and evaluate the circumstances. A conclusion would require a lot more than reading these posts, but one conclusion could be that the distribution was issued for those expenses, so those expenses cannot serve to justify another distribution. And the distribution practices need attention to comport better with the plan provisions.

The premium payment can reduce taxable income outside of a section 125 arrangement, but such arrangements are unusual. It the employer has an unusual arrangement, the employer should be able to tell you, but employers are often clueless, especially a few years after adoption. GMK's suggestion to check the W-2 presentation probably would resolve the questions.

Clarification about the health premium is required because the 25 percent could be a mandatory payment that is a compensation reduction rather than a payroll deduction. It is more likely an after-tax deduction as GMK describes because health coverage choices are usually offered under a section 125 arrangement. The employer may also be mistaken about the appropriate tax treatment of the deduction, so the arrangement may have to be evaluated independently based on the facts rather than from the employer's conclusory statement.

Partial answer: Under 457(f), the amount vests and is taxable on the date that the risk of fofeiture lapses, which is August 31. The IRS recently came out with guidance about extending the date for risk of forfeiture. Track that down. You may find that it is too late to elect an extension, even under the new guidance.

Whatever the plan and related policies say. The matter is strictly contractual, assuming that the plan is subject to ERISA ("not subject to DOL ERISA rules" does not mean suject to ERISA) or not a government plan. A government plan would be subject to state law.

A domestic relations order can qualify if it limits the AP's choices of form of benefit. An order will not qualify if it provides for a form of benefit that is not offered by the plan. A defined benefit plan offers a J&S annuity with respect to the spouse of the payee (generally, the participant). The statute cited by Mr. Rugby is a special rule that allows a DB plan to disallow a J&S annuity to an AP despite the statutory requirement to offer a QJSA form of benefit for reasons alluded to by Mr. Rigby. If a DB plan offers a J&S annuity beyond the statutory requirement, the order can still limit the form of benefit to the AP. A lot of orders are thoughtlessly drafted with the statutory language regurgitated by the incompetent drafter, usually the AP's lawyer. So be it; that is the AP's problem and the plan would prefer to pay the AP in a form other than a J&S annuity in any event.

See what the plan document of the non-W-2 employer says about leased employees. The W-2 employer has some plan reading to do as well.

I agree with Golfing that imposing unnecessary discretion on a fiduciary is not optimal, but it probably is allowed as described. How does the fiduciary feel about it, assuming the fiduciary understands the implications and options? With respect to California Joinder orders, I deal with the legal travesty by treating them as domestic relations orders that require a full restriction, but advise in the notice of receipt that the determination of qualification will be delayed indefinitely unless appropriate instructions are delivered to the plan. That achieves the practical goal of the Joinder order and sort of stays within compliance with section 414(p). I have never seen any further communication until someone submits a pertinent domestic relations order (or draft). Then I spit, which is what I must do any time a Joinder is encountered. Recollections of "Beckett" for the literati out there.

"Use extreme caution" does not have much meaning. How about "understand the law and follow it"? Despite the the incorrect informal position of the Department of Labor, receipt of a draft domestic relations order is no basis for restricting rights of a participant unless the written QDRO procedures expressly provide otherwise and specify exactly what happens on receipt of a draft.

You need a new policy concerning discovery of a participant divorce. The law is quite clear about requirements and limitations relating to divorce proceedings and documents. For the most part, the plan cannot interfere with participant rights and privileges. The plan is required to act in a specified manner on receipt of a domestic relations order and otherwise is inviting trouble by getting involved.

By all means, press for an explanation in greater detail. You may conclude that pressing for payment is not productive, or worse. When a business is in dire straits, being forthcoming about its predicament can be harmful, so expect some hedging.

If you do not like your fiduciary breach up front, you get another chance when the fiduciary is faced with a decision about whether/how to collect the overdue payments. The fiduciary cannot ignore management of plan assets and must take reasonable steps to maintain plan assets. If the participant has an income, it is not an automatic decision that it is not worthwhile to pursue collection.

Flyboy: Do not overlook the Uniform Commercial Code.

It appears that the plan sponsor company has financial difficulties that are serious enough to make some desperate moves, and then some. You are probably entitled at least to an installment, but the company feels like it cannot pay without jeopardiing the business. This is a dilemma. If you press for payment, the company could slip into bankruptcy and you would get nothing, ever. But that could happen whether or not you press. You could go to the Department of Labor for assistance. The DOL is interested in ESOPs that do not pay on time, but the DOL has no solution to the dilemma of financial crisis and can just as well sink the ship by intervening. If I knew that the company were acting in desperate good faith, I would sit tight and hope against hope that the fortunes turn and eventually something is paid. But there is no way to adequately assess if the company is doing the best it can.

If the terms of the plan (which include the loan policy) and the terms of the loan allow for the participant to cease payroll deduction and cause the loan to default, the fiduciary will have breached its duty with respect to issuance of the loan. A loan cannot be made without a reasonable expectation that it will be repaid. A payroll deduction arrangement is a good mechanism to assure repayment, but not if it allows the borrower to elect to render this he arrangement ineffective. If there is no impediment to a borrower's discretion to repay, there is no commercially reasonable expectation of repayment. Lenders are not supposed to be a trusting lot.

If the plan is a defined benefit plan it will probably not allow a domestic relations order to provide for distribution before the plan's earliest retirement age. However, you got a QDRO that allows a distribution at participant's termination of employment, so the plan might allow other distributions outside of what is required by statute. With respect to your CALPERS question, it is unlikely that you can use your QDRO benefit to enhance your CALPERS benefit if the benefit is a defined benefit. If you can get a lump sum distribution under the QDRO, it is possible that CALPERS might allow purchase of service credit with rolled over funds. In all likelihood you are just going to have to wait for your benefit under the QDRO. You should check to be sure you are awarded an appropriate portion of the death benefit to make sure the Grim Reaper (or an incompetent lawyer) does not deprive you of a benefit if your former spouse dies before you start benefits.

No permission needed. The statement is in the public domain.

We are getting a little off point, but severance pay is eligible for elective deferrals unless paid after separation from service. It is not that unusual to pay a severance amount on the last day of work to allow the employee the choice, although the average Joe is going to maximize current cash if it is the last income expected for a while. If the employee is stepping right into the next job, the deferral may be desired.

The fact that the employee has suggested the term/rehire fraud now prevents an innocent term/rehire, wink, wink, nod, nod.

The fact that the employee has suggested the term/rehire fraud now prevents an innocent term/rehire, wink, wink, nod, nod.

What got me started was a provision in a good form of plan document that expressly covers the circumstances to make it clear that the compensation is included/eligible. The same document excludes severance. The issue is not so much a legal one as a plan interpretation question, but the plan has to be applied according to the facts, including actual employment status. With such an express provision, the employer and employee can get the outcome that is desired and fits the subjective intent. I have never seen another plan document with such a helpful provision set out clearly.

ETA: Your thinking is correct and preferable. It is still possible to have a plan exclude the compensation through some combination of definition of compensation and employer characterization of the end of service. It is not always saying anything terribly interesting to remind about checking plan terms.