QDROphile

It is not a "mistake of fact" as the IRS has informally described how it understands that term. No comment on the correction proposal.

Wife consents to children as beneficiaries of husband. Wife trusts children will share the benefit if wife needs the support. That may be the simplest approach, but not the best. If one wants wants sophisticated planning for a result that bucks the policy embedded in the law, one should pay for it.

There is no specified legal limit but there is a practical limit based on legal requirements. The 75% limit is a plan design feature, but maybe not an optional feature depending on the source of the plan document. It happens to correspond to a safe-harbor limit determined by the IRS with respect to catch-up contributions. That is another matter, but you can take it as a sign of legitimacy if you are the skeptical type. You cannot defer 100 percent because there are other amounts that are legally required to be taken from your check, such as FICA withholding and possibly othe taxes. There are also other amounts that you would want to have priority, such as salary reduction for healthcare premiums and childchare spending accounts under the employer's cafeteria plan. The one 75% size may not fit the demands on your pay very well, but reliable administrative uniformity keeps adminitration costs down, which also benfits you. Or so Fidelity would have you believe.

It is called a cafeteria plan.

Is the leave unpaid? What is the formula for allocation of contributions? The plan has to be operated in accordance with its terms, so you might need to find something that says you can make a contribution for which there is no basis in the plan document. I don't think USERRA will do that for you. USERRA is generally about what employers are required to do; employers are not required to provide compensation (imputed or otherwise) or benefits during the military leave. The nest feathering will just cost a bit more this year. Consider it a war tax.

I agree that sponsor elective design changes, as reflected in plan amendments, are not eligible to be paid out of plan assets. Compliance amendments may be different, but what happens when there are choices among complaint options and related changes depending on choices? It can be hard to draw the line. I try to get the sponsors to suck it up and pay for the cost of amendments.

What is causing you to go through this exercise rather than elect Roth contributions instead of after-tax contributions?

Then the contracts are not compliant and no tax deferral. Issue 1099-R for the entire difference,.

Where does a summary plan description come into the picture for a premium-only section 125 plan? An SPD is required for the health plan, but that is presumend to be on track.

I don't think you get to blow off the possibilites under EPCRS that readily. See Rev. Proc. 2013-12 sections 6.09(2) and 8.04, Example 5.

Where is the 403(b) plan in all of this? RMDs are a requirement for the plan, too I think Rev. Proc. 2013-12 offers some options.

You might check to see if there is a requirement for an amount to be distributable before it can be "rolled over" internally. Such a requirement would be a limiting factor, especially with respect to amounts that are not elective deferrals.

How are distributions from pooled account plans any different from distributions from individual account plans? There is always an allocation of taxable and nontaxable amounts in a distribution. The notice addresses destinations, not sources.

I would not act based on that difference. The operative words are "a person in whom F has an interest which may affect the exercise of F's best judgment as a fiduciary." That aligns with a lot of the gut discomfort expressed above because it also describes a brother.

No, but the arrangement can essentially be accomplished by plan-to-plan transfer, probably without adverse effect on the section 410(b)(6) transition relief. I think service follows the participant to the new plan in a transfer. If you are inexperienced, someone else needs to be advising about the arrangements. Transfers are often misunderstood.

That would not be simple, would it?

See IRC section 410.

What frustrates me is that there should be PTEs for other arrangements because, as you have observed, there is no harm. That is why we have the PTEs that we have -- no evil under the prescribed circumstances. What frightens me is that there may be some PTE or other analysis or guidanance that says there is no PT sanction in other similar circumstances and I just can't find it. Consequently my clients are schmucks who end up being restricted because they have the "benefit" of my advice while everyone else is having a good time and getting discounts.

CPTE 93-33 and CPTE 97-11 There are things other than fees that provide "consideration." Fees tend to provide more vivid illustrations.

IRC section 4975©(1)(E). If the account minimum is $500,000 and the $100,000 in the self-directed plan account is necessary to achieve the minimum, the plan assets are being used for the person benefit of the participant (who is a fiduciary under the IRC even though not under ERISA) to the extent the account is used for assets that are not the plan assets. This is more obvious when the deal is a fee structure based on assets under management. The investment adviser has a fee scale that steps down as assets increase: 1.0 % for first $500,000, 0.75% for next $500,000, 0.5% for amounts in excess of $1 million. If the manager is willing to aggregate all sources, including the plan assets, then the plan assets may be contributing to acheiving the next step in the fee structure, which reduces the blended rate for all of the assets, including assets that are not in the plan (personal to the participant). If you are skeptical because there is "no harm" to getting a better price than the plan account could have achieved on its own, consider that there are two published PTEs on the subject, but limited to brokers and banks, not the average schmo. Prohibited transactions do not require harm. Perhaps your situation with the brokerage account fits into one of the PTEs.

All good points. Perhaps there is something for which they are seeking a private letter ruling, but I cannot imagine what that might be.

What you are describing is a determination letter.

prohibited transaction

The real question to ask is what the employer wants to do. If the employer wants to escape the TPA, a new plan is unnecessary. If the employer wants to distribute benefits, the the 12-month rule under the 401(k) restrictions on distributions is relevant, although perhaps not very artfully articulated.

The sole proprietor is adopting a plan and immedately merging the corporate plan into it. The new plan has exactly the same terms as the corporate plan, saving documentation. Does not have to be done that way, but you wanted a statutory reference for something that gets you there. I think you may not be able to find reliable authority for a conceptually more simple change of sponsors, but the IRS infomally accepts it.