QDROphile

Is the definition of "employer" the same under IRC section 408 as under section 401? A SIMPLE is maintained by an employer. Once you get past that question and its implications, you might want to look at the defintion of employee under IRC section 408(p)(6) (B).

I don't think so, CADMT. See Treas Reg section 1.401(a)(9)-8, Q&A--6. The benefit is still the benefit of the participant (sort of) for purposes of section 401(a)(9). Hence the administration of QDROs by Fidelity and others is not designed to comply with the law.

You have to follow their instructions for distribution. The discussion so far has presumed that the plan has not been given instructions after the plan has delivered the appropriate disclosure.

BG5150: I believe it is a bad design choice, unlike the two other design choices that I mentioned, which are more tolerable to me. The main point I was making is that interpreting TPA statements about what is and what is not OK must disinguish between what is and what is not OK under the law and what is and what is not OK under the plan. Those can be two very different things, and they often get confused. Too often, the common convention is considered to be the only option. In my experience, the 6-month suspension is often believed to be the only possible design for hardship withdrawal and not though is given to the alternative. The insistance that this is the only way annoys me greatly in an of itself, all the more so because I believe it is a pointless restriction. I was heartened by austin3515's perfectly correct and complete response and I have no quarrel that it was neutral about value.

You told them that because administrators do not like dealing with partial prepayments and there is not enough demand for partial prepayments to overcome that resistance. In most plans prepayments are not allowed, but not because there is a compliance problem. That is similar to accelaration of loans at termination. It is done out of administaritve convenience, not compelling legal concerns. I am not saying that either common practice is bad. Do you also tell participants that a hardship withdrawal will be followed by a 6 month suspension of elective deferrals? That is a common practice that I think is bad.

Depends on the plan terms and the applicable government law. If you are asking because of your familiarity with ERISA requirements for consents, ERISA does not apply as such, but the plan or other applicable law may have adopted requirements similar to ERISAs..

Notification of a TPA does not terminate a plan. If effective sponsor action was taken by 6/30 to terminate, then the plan terminated on 6/30. It sounds like the sponsor is not sophisticated enough to have taken effective action by 6/30.

You are not going to change the views of the critics of your analysis that this amounts to double taxation, so don't bother with the distraction to your inquiry. You either get it or you don't and you will either get a good economic evaluation of your options or you won't. References to double taxation will onlly confuse and distort the discussion.

A loan might be the best economic option, but I wonder about the ability to evaluate the economics if some of the advice refers to double taxation when referring to loans. Try an analysis with a lender other than the plan.

There are diferent answers depending on your interest in (i) fiduciary liability for which a fiduciary may be personlly liable, or (ii) plan qualification matters, which in the end are usually the obligation of the plan sponsor of the surviving plan.

No comment on the plan terms, which may be the cause of the problem. The Department of Labor issued a Field Assistance Bulletin on demutualization proceeds that might be of some help.

As long as there is no uncertainty or ambiguity about the plan that is identified by the QDRO, I would not disqualify. The notice of qualification should specify the new and old names, somethng like "ABC 401(k) Plan, formerly known as the AAA 401(k) plan." The courts have been very forgiving about failure to specify the correct name of the plan as long as there is relative certainy about the plan that the order intended to cover. Don't waste your time or the time of others on something that is not important. If there is some reason to doubt that the order is intended to apply to the plan, then you might need to be more demanding.

A plan can be drafted to allow less than the law allows. I doubt that the plan has such provisions applicable to the circumstances you describe. Why would anyone want to provide for proration?

But there is a foul, so the correction should be done in accordance with EPCRS, and SCP should be available.

Not necessairly. The custodial parent may have more need for child care after losing the child care capability of the spouse. For example, the noncustodial spouse may have worked part timre or may have had a non-overlapping work schedule that allowed for child care while the custodial spouse was working.

Consistencey rule.

Let's not lose the big picture here. Disclosing a payroll period match without a true up IS A BIG DEAL. How many times have I received a call from an HR manager who had a footprint on his or her buttocks from a kick from a BSD executive who figured out that he or she did not get the maximum match despite a maiximum deferral under the plan? If the disclosure is not in the SPD (and the election form and every other communication about the match) someone will get shortchanged and will be justifiably angry and possibly will have a legitimate claim. So don't even talk about the deadline for publisheing the SPD or SMM. Get out there and disclose OR do the right thing and reinstate the true-up. By the way, you should check carefully to make sure you don't have a document problem. A pay period match without a true up has to be very carefully worded in the plan document.

Turning money over to the state should be considered as a last resort when the plan is terminating and the employer is dissolving and all reasonable efforts have been made both to locate the participant and establish an IRA for the participant..

This discussion has become far too chaotic. It appears that the bond is a fidleity bond for the benefit of the plan. The insured is State Street, as trustee of the plan and legal owner of the assets of the plan; that makes the plan insured. Some fiduciary has the obligation to make sure that the plan has the appropriate bond coverage. the fiduciary might be stat stree or someone else. State Street does not have to be bonded because it is a bank or trust company. All fiduciaries and those who handle plan funds must be bonded, Evidently the plan sponsor is a fiduciary, whidh is a common bad practice. The plan sponsor is bonded. Employees of the plan sponsor are fiduciaires or handle plan funds. Those people are probably bonded, but the terms should be examined to make sure. If the plan sponsor is a fiduciary and a corporation, all of the directors are fiduciaries (or at least the Department of Labor will say so) and the bond should cover them, but check the terms. It is appropriate for State Stree to use plan funds to bond everyone as described. Anyone with questions should start over from this context, including a criticism or correction of the description.

You might take a look at the Field Assistance Bulletin concerning demutualization proceeds for some applicable principles.

Now you have to wonder if the use of plan assets to purchase protection for the employer sponsor is a permissible use of plan assets.

Expect error. Attention to this matter is rare until there is a real question. The plan terms and plan operation problaby will not match or there will be no record of application of plan terms. The regulations speak to circumstances in which the employer does not actually record hours.

What do you mean by universal coverage? See IRC section 403(b) (12), usually referred to as universal availability. Note that this is not ERISA.

Possible economies or critical mass for certain services such as fiduciary and investment management. I don't favor MEPS of truly unrelated employers, MY point was more that that they are feasible and not to be feared. The question was "Can we have a MEP?"

What requirement is there for a binding factor other than a desire to particpate?