QDROphile

That would be for the plan document to say or the plan adminster to determine by interpretation, preferably expressed in written procedures.

"For Sole Proprietors/Self Employed people who open and Individual 401k plan at multiple places" there is a prize for acting on the basis of some knowledge and jargon and too little understanding. You seem to have won it, but now you do not know what to do with it. When you ask a purveyor to sell you a product, that is what you get, few questions asked. You should have asked for help in figuring out what you needed and wanted. Sorry for the lack of compassion, but what you did is so incredible that it seems like it is not simply naive -- something you were seeking sent you on the path to trouble. You did something extraordinary and complex and now you plead simplicity.

Could you illustrate? I do not understand what you are getting at.

Do you think you have three plans or one plan with assets held with three custodians?

How did the loan get paid if loan payments were not delivered?

If you do not expect to correct via VCP, you should consider if SCP is unavailable because of egregious error. You might look at the HCE ADP and figure out what the NHCE ADP would have to be to support the HCE ADP, or 3% if 3% is higher.

Practicality is important.

No. A commercial lender will get all the security it can, and the interest rate is often influenced by the qualifity and liquidity of the security. An assignment of pay is security -- agreed by the borrower as a condition of the loan -- not a remedy that is obtained after default (garnishment). It effectively makes the payroll deduction irrevocable and enforceable by the plan, which enhances the fiduciary's expectation that the loan will be repaid and reduces the need for the fiduciary to have to wonder what collection effort is required if the loan is not repaid by voluntary or other unenforced payments. I agree that plan loans are an exercise in contradictions and a policy travesty, but the the general understanding of plan loans has been clouded by prevailing practices of the big investment providers, tolerated by the IRS and DOL.

I just got a retroactive amendment approved in VCP to allow 15-year year home loans instead of the 10-year loans provided in the plan document. I think getting a 5-year loan converted to a home loan is tough, but if the loan is initiated as a home loan there is flexibility.

If payroll deduction authorization cannot be irrevocable (no opinon expessed), would it be a breach of fiduciary duty for the plan adminstrator not to get an assignment of pay to protect against the whims of the participant?

How does the advisor express his or her thinking? "There is an issue." "I wonder if there is an issue." "I wonder if there could be an issue? Depending on the statement, the advisor might be asked for clarification or support. There is certainly an issue about priority of the loan payment relative to other deductions from gross pay that are required or authorized if the pay is insufficient to support everything and there are issues relating to the loan if the amount available is less than the debt service amount.

If you are asking if the participant is entitled to information about the alternate payee's account or actions with respect to the account, the answer is negative. If the alternate payee consents, the plan can disclose information.

If they cannot explain in detail why they assert an impropriety, or their explanation is incorrect, get a new service provider. One cannot expect advice to be correct 100 percent of the time, but starting off incorrectly within a fundamental function of the service provider is intolerable. You should let them know they are on the spot now, so they can push the question up to someone above the clerical responsibility level.

With respect to the law, no and no. However, if funds are set aside because of contract, both the tax consequences and the second question depends on how the funds are "set aside."

The $1000 minimum is a plan term, not a legal requirement. Whoever has the authority to interpret the plan will answer questions about the meaning of the terms. Refinancings can be quite tricky and are governed by rules that are not simply a matter of plan terms.

The plan document question is not that interesting an issue compared to what to do about the change in control that may have occurred in the middle of the year. Once you have that figured out, then turn to the plan configuration and documentation. Of course it is easier if you can avoid mid-year changes; you may not have that luxury.

From an experience years ago, and involving an IRS letter ruling, I recall that the one-time irrevocable election concept under 401(k) also applied to 403(b) plans as well. I have not thought about what may have happened since in the law (other than the employer must have a plan document). That might not fit where you want to go or the timing elements. The person could be made ineligible for the match and discretionary contribution without participating (recorded opting out), subject to discrimination rules, and a risk that the negotiation would be treated as a CODA. Done properly, the CODA risk should be very small.

See ERISA reg section 2550.404a-5(d)(1): ... furnish to each participant or beneficiary on or before the date on which the participant or beneficiary can first direct his or her investment, and at least annually thereafter, the following information ... Employer securities are subject to special standdards.

The underlying issue (prohibited transaction) is the maintenance and use of plan assets by the employer, a party in interest/disqualified person. Segregation from employer assets and delivery to the trust is the key event, not loss of earnings to the plan. Loss of eranings to the plan (and value to the employer of holding the funds before delivery) are relevant only to correct of a prohibited transaction, not determining if there is a PT. There would be no PT issue if the funds were delivered promptly to the trust, but sat unallocated and uninvested for seven or eight days. The timing of investment of plan assets is a fiduciary issue. At some point uninvested assets become a fiduciary concern. If the roles of employer and fiduciary are properly assigned and observed, the fiduciary has no responsibility for investing plan assets until receipt by the trust unless the fiduciary did something to delay the receipt. I express no view about how to count days between payday and delivery or how to apply the safe harbor.

You create a document that that describes and effects the spin off and then the employer who is the sponsor of the spun-off plan adopts a restatement of the same pre-spin plan document for the spun-off plan. The original effective date of the spun-off plan is still the original effective date of the pre-spin plan (or consider the original effective date of the spun-off plan as the date the renegade employer adopted the pre-spin plan). The effective date of the restatement is the effective date of the spin off. Don't forget to attend to the related trust issues, including transfer of assets if there will be a spun-off trust. This assumes that the spun-off plan is going to be exacly the same as it was before the spin off, at least for a while.

Then certain record keepers can tell you the source of the requirement or they should be scorned.

Whether or not a state law of general applicability "relates to" a plan has been a troublesome question.

I am not sure that one can transfer (as opposed to roll over) amounts from an IRA to a qualified plan. Confusion abounds in the discussions, but I think you should find some authority for a transfer. An interesting test will be to instruct the IRA custodian/trustee to transfer to the plan, with insistence that it be a transfer and absolute clarity that it will not be a rollover. I expect resistence, bewilderment, or disregard by the custodian. By disregard, I mean that the custodian will report the transaction as a rollover despite talk of transfer.

Not enough information has been given to respond correctly. An elective deferral must be made on the basis of a salary reduction agreement and must go "through payroll." Elective deferrals and after-tax contributions are the only types of "personal" contribution allowed. The owner may not distinguish well between personal and company contributions. The plan can be designed to allow the company to make make a contribution.

The VERY respected consultant is correct. The outcome is determined by the plan document and good arguments can be made for designing the plan to exclude severance pay without regard for timing.