QDROphile

The IRS buys into the idea that the termination of the A plan occurred under Employer A. When corporation A stock was acquired by Corporation B, A became a member of the Employer AB controlled group. The B plan of Employer B and Employer AB is not a successor plan to the A plan because the A plan was never maintained by Employer AB. The A plan was terminated before Corporation A became a member of Employer AB. Never mind that the wind up and liquidation of the A plan is managed by personnel of Employer B. Never mind that a plan is not terminated for tax purposes until all of its assets have been distributed.

I would not self correct. The 90-day window seems to be a built-in safeguard for election errors involving oversight. Despite the office manager's faith, I think the presumption would be that a protest after 90 days is not credible or not effective. If the plan had the timely election form showing an election of zero deferral, the conclusion might be different. The plan can always ask the IRS to approve the distribution.

The plan adminstrator (fiduciary) should be having heart palpitations. This is great proof that the plan's administrative systems are improper and it is the fiduciary's fault. The fiduaciary needs training and advice about its responsibilities and it shoud start doing its job. If the fiduciary was appointed by a fiduciary, the appointing fiduciary should become involved and evaluate the situation to see if the plan administrator is capable of performing properly and is getting the necessary religion about its responsibilities. I am slightly biased. I believe that a multiple institution arrangements are inherently irresponsible and can only be appropriately maintained with very strict fiduciary vigilence and control. That includes negotiating written arrangements with the institutions that deviate from the institution's usual forms.

If you had two 401(k) plans I would suggest you look at the nonsurviving plan as continuing, as amended, in the merged plan, rather than as an empty shell. You would still file a final Form 5500. Thereafter, you mostly forget about it. To the extent that you can see any of the plan in the merged plan, it is expressed in the terms of the merged plan, without separate effect as a separate plan. I have not thought through any differences with 403(b) plans. You correctly observe that the transaction would be a merger/transfer rather than involving distributions and rollovers.

Off the record possibility: ERISA would never stand for amounts to be taken from employees and never actually be delivered to the plan. The IRS steps away from the tax fiction that makes elective contibutions "employer" contributions to recognize the legitimacy of the ERISA view. But don't ask the IRS to say that.

If you are a lawyer, please do not use "Esq." Despite its prevalence in certain parts of the country, is is a misuse of the term, unless you are of the school of language that says there are no rules and no standards and words should not be bound by any historical meaning. Whenever I see it, I think of a seven letter word starting with "a."

Be careful. If you look at the guidance, you might find that it is OK for the employer to cover a per capita fee at different rates for employees than for former employees. If there is a $50 fee, the employer can cover $10 for the employee and zero for the former employee. That makes for an account charge of $40 to the employees and $50 to the former employees, but the fee is still the same for each participant.

The tax code considers the loan to be outstanding until "actually" distributed (offset in a distribution). If correction is not possible under EPCRS because of the circumstances, the loan may not be able to be rehabilitated to its original tax status ("undo the default"), but if the loan is still outstanding the borrower can continue to pay the loan. The payments will create basis in the account. You need to determine if the Form 1099 reported a deemed distribution or an offset distribution. You should also consider what EPCRS has to offer.

Some plans provide for the amount to be forfeited rather than appear to pay a TPA for a service that is not rendered. I would prefer to defend a forfeiture that is used for the benefit of participants in some way.

If you need a hook, it is section 414(p)(3)(A). The plan does not provide for payements to start as of some date before the requirements for distribution are satisfied. The requirements for distribution to an alternate payee include completion of the requirements for qualification of the order, including timely submission of the order for consideration by the plan.

If you believe that the order provides that the benefit will commence in 2003 and the plan is bound by those specifics, then the plan could take a position that, because of circumstances not of the plan's making, the order provides for something that the plan cannot do, and therefore the order is not qualified. That puts the burden on the individuals to figure out what should be done in today's environment and get a new order that works. However, be prepared to respond to an interpretation that requires the plan to take a more practical view of what it could do based on the past date, such as pay the sum of the missed $85 payments (with or with some interest factor?) and then stay on track with installments. All of the payments would reduce the participant's benefit because the participant was equally culpable in the delay that reates the need for some workaround solution. The participant can always challenge and offer a more fair and viable solution (ha!).

Can the plan administrator interpret the order to mean that the AP was awarded a benefit with an actuarial value that is equal to a benefit that would have paid $85 per month for life under the terms of the plan if the benefit payments stated July 1, 2003? I think it is appropriate to interpret the order with consideration of the circumstances, including the late delivery of the order. After all, the QDRO rules require that notice be given of receipt and disposition. If the order was intended to start payment in a specified amount in 2003 without fail, someone should have asked why no notice had been given by the plan. If that interpretation is unacceptable to either party, they can challenge it and provide the reasons and a proposed outcome (not that what they provide will be feasible).

April fool.

Retroactive amendment will not work for elective deferrals and certain other contributions that must comply with elective deferral standards.. See Rev. Proc. 2013-12 about improvident distributions.

There is lots to dislike about illegitimate ESOPs. The S corp ESOP concept went too far so you can look at 409(p) as an attempt at defining a no fly zone. Or not.

Other than the year of service requirement, an employee cannot be excluded based on service (or lack of service). See IRC section 410(a). Year of service for eligibility is based on 1000 hours of service. Make sure you understand the conventions for counting service if actual hours are not recorded.

You should be very careful about distinguishing some options from the rest of the 26,000 unless you are already intending to treat the favored options as designated options and are comfortable with the implications under ERISA section 404(c ).

Read Notice 2007-7 concerning consideration of hardship of beneficiaries. Purchase of residence is not included.

Old trick. Not legal. Interest must be a commerically reasonable rate. The local loan shark is not offering commercially reasonable rates. The local loan shark is not worried much about enforcement, either.

It is best practice to designate for which year a contribution is made, and the plan document may provide for the designation as described. The plan document should be followed.

Without regard for the propriety of the corrections relating to health insurance premiums, an employer can pay whatever extra bonus compensation the employer wishes to pay (except to union employees). As long as the employer is counting it as W-2 income, bonus it is for plan purposes. Just be claer the the employer is not engaging you for advice about the back story.

I understand how a plan termination would cause distributions, but I don't understand how one day the sponsor can decide mandatory distributions should occur. Mandatory distributions occur in accordance with plan terms, not willy nilly. Did the sponsor amend the plan to provide for a different schedule for mandatory dstributions, such as changing from year-end to ASAP?

Many government entities have websites that describe their benefit plans. You might have to go to the hiring page and the descriptions are typically not technical. For example, the site might inform that the employees participate in the public employees retirement system. Government plans tend not to report, so lists are not easliy compiled from reports.

The plan will say, and not all plans require a year before giving the new spouse rights by default.

Plan administrator informs participant that the PA discovered the error and advises that the correct 8% will be implemented immediately prospectively. The PA will note that the participant may wish to increase the deferral amount for some time to achieve the savings that the participant may have intended for the year. If you are describing events in 2013, see the rule under EPCRS about correction when the participant has at least 9 additional months of deferral deferral opportunity in the year.