QDROphile

The plan is not required to allow what the law allows as exceptions to the irrevocable election requirement with respect to the section 125 aspect. Certain changes must be allowed to underlying health covereage under certain circumstances.

You cannot have rollovers without distributions. Elective deferrals cannot be distrbuted before age 59 1/2 to someone who is still in service. Your inclinations are dangerous to the qualification of the plan an dangerous to the fiduciaries of the plan. You need direct personal help in implementing your ideas properly. The provider of the pre-approved document is a place to start and the amendments will probably be in forms consistent with the pre-approved plan. That is usually the company that provides record keeping services to the plan.

Governmental 457(b) plans are regulated by state and local law and plan terms. You may have to go to the people who you believe are not acting up to standard, assuming there is a standard.

I apologize for not paying attention to the forum. I was thinking about qualified plans. Different world.

My thoughts are (1) it is strange that this should be a problem and there is a plan design flaw, and (2) almost no plans will accept elective transfers from outside of the controlled group so no one should worry about misinfomred participant expectations or aspirations.

Treas. Reg. section 1.401(k)-2(a)(4). No comment on its use or if it is too late to amend the plan plan to make use of it for 2012.

Cutting through the considerable amount of strange and probably inadvisable stuff, they cannot provide for allocations to the accounts of owners earlier than corresponding allocations to accounts of the the other participants. ESOP Guy's questions are getting to the same point.

The regulations provide detail on the explanation that is required. It is not sufficient to say that the account balance will be used purchase an annuity.

Your observation is perceptive. The solution for many plans is to overlook or disregard the uncommon compensation and rely (usually unconsciously) on lack of enforcement. Another solution is to have an election that applies only to regular cash compensation, such as salary and wages, perhaps with special elections for bonuses. The plan definition of compensation remains the same for technical purposes. The solution avoids involves the related communication problem with employees. In your example, did the employee really want the deferral of $1,980 rather than $1,800, especially if if meant that there would be extraordinary reduction of take home pay to cover the extra? You will have to be sure that plan terms do not interfere with the administrative solution.

I do not care to engage in the discussion that we agree would be interesting and beyond the typical scope of this forum. My intent was to apply a counterbalance to the opinon that it is "hogwash" to think that appointment of a fiduciary does not offer considerable protection to the appointing fiduciary, and may even increase exposure -- it all depends on how it is done and the circumstances. As a specific example of difference of opinion, if a plan sponsor is so foolish as to be the plan administrator of a retirement plan, I think that engaging aTPA as a fiduciary for services does not increase potential liability to the plan sponsor for a TPA screw-up on those services compared to a non-fiduciary engagement of the TPA for the sevices.

The plan looks to itself only, including QDROs.

From Rev. Proc. 2013-12: Comments continue to be requested on special issues relating to designated Roth contributions. For example, comments are requested on whether, if a plan failed to implement a participant's election to have a designated Roth contribution made on his or her behalf, but instead a pre-tax elective deferral was made for the participant with the participant's compensation reduced accordingly, it would be an appropriate correction of the failure for the employer to ask the participant whether correction should be made by a transfer of the contribution (adjusted for Earnings) to a Roth account under the plan and inclusion of the amount so transferred in the participant's compensation in the year of the transfer (instead of either (i) a similar transfer with a corrected W-2 for the year of the failure and the participant having to complete an amended return for the year of the failure or (ii) a similar transfer and inclusion of the amount so transferred in the participant's compensation in the year of the transfer, but with the employer to make a gross-up payment to the participant to make the participant whole for any increase in the resulting income tax).

Although the comments from Mojo are just side comments, I think the statements in the second paragraph about allocation of fiduciary responsibility, appointment of fiduciaries, delegation of fiduciary responsibilities, co-fiduciary liability, and exposure of plan sponsors need a lot more depth and detail to be accurate. The first paragarph is on the mark except for the presumption in the last sentence that the plan sponsor would be the plan administrator.

Are you looking for something outside of Treas. Reg section 1.403(b)-5?

See Form 5309 for a partial list of required plan provisions unique to ESOPs.

The question arises because of the definition of "church." An organization can be a church for purposes of section 401(a) and ERISA (a "401(a) Church"), but not be a church under section 403(b)(12)(B). Example: a college. Under section 403(b), the plan of the 401(a) Church is subject to various section 401(a) requirements, as you say, "in the same manner as if such plan were described in Section 401(a) ***." If the 401(a) Church adopted a 401(k) plan that had the same essential design as the 403(b) plan of the church, we know that various section 401(a) requirements (including section 410(b)) would not apply. Why would the definition of church under section 403(b)(12)(B) effectively say that the requirements of section 403(b)(12)(A)(i) apply to the 401(a) Church if the language of section 403(b)(12)(A)(i) itself excuses the 401(a) Church by incorporating the exclusion of the 401(a) Church in "as if such plan were described in Section 401(a)"? Is this absurdity an indication that the section 401(a) exemption for churches is not included in "as if such plan were described in Section 401(a)" and section 410(b) and other section 401(a) requirements therefore apply the 401(a) Church plan? Or did the drafters of section 403(b) botch the language by not reconizing that 403(b) has a definition of church that is different from the section 401(a) definition and the result under section 403(b)(12)(A)(i) is the same as if the section 401(a) definition of church applies under section 403(b), intended or not? I appreciate your clarification, but would clarify further that you think the absurd literal result is the correct one -- that section 403(b) effectively has a definition of "church" that is the same as section 401(a)?

No change to 1099. The balance of the loan is included in income. You have to determine if the loan was distributed because of the termination of employment --sometimes called an offset distribution. You said it was a deemed distribution but people are sloppy with words and the nuances are important. If the loan was distributed, it cannot be repaid. There is no plan loan. If the loan was not distributed, then the loan remains in the plan, continues to accrue interest, and can be repaid. Payments up to the amount that was included in income increase basis (will not be taxable again, or you may call the amounts "after tax").

You have to look at what the plan says. Not all plans are designed to allow distributions to be delayed to the limit imposed by law. An intelligent desgin is to require distribution in a lump sum.

What is your point about deemed section 125 compensation relative to employer funding of HSAs?

How can the employer the employer contribute through a cafeteria plan, other than the elected salary reduction amounts? If you you look at the plan as some pages with a staple, then the employer also contributes through a cafeteria plan to the extent the employer covers part of the premium cost of the health plan. Would you consider that part of the 401(k) defintion of compensation? Nothing happens under section 125 unless it involves a choice between cash (taxable) or a nontaxable benefit. That is the point of the 401(k) rule. Elective salary reduction is added back because the individual could have received cash and should not be penalized under the 401(k) plan by choosing the cafeteria plan benefit instead.

ERISA regulation section 2530.200b-3 is central to determining service and speaks in terms of employees. See also IRC section 410(a)(3)©. Regulations under IRC section 401(a)(4) have provisions for imputing service that is not performed as an employee of the employer.

In support of david rigby's response, remember that the funds that may have been set aside for payment of the deferred compensation are assets of the employer.

I can appreciate that an ERISA lawyer might want to have a vague provision, but it will be difficult to persuade me to accept an ambiguous provision. Parroting a regulation about permissibility of payments, especially because it it not necessary to include such a statement in the plan document for purposes of section 409A in the event something compels the payment contrary to the plan terms, is incompetent if the employer does not wish to permit the payment. Including a provision that precludes the payment, including express preclusion of attempts that encompass most domestic relations orders, is incompetent if the employer does not intend to resist division of interests under domestic relations orders.

First thought (revised): The drafting is incompetent unless it was intended to create ambiguity. Ambiguity is generally not desirable and the acceleration provision was not necessary in the plan to provide ability to accelarate if the plan adminstrator felt that the law compelled assignment despite the anti-assignment provision. Futhermore, I disfavor such an anti-assignement provisions as applied to domestic relations orders for various reasons, including that I am unsure if the provision can hold up against a judicial order to assign pursuant to a domestic relations order. Therfore, I conclude that the drafting is incompetent unless it was ordered against the advice of the drafter, who made good arguments why the both of the provisons should not be included in the forms that ultimately appeared in the plan. Interpretation: I think the plan administrator can interpret the provisions either way, especially if other plan terms (not revealed) give the plan administrator the express authority to interpret. (1) The PA can give effect to the anti-assignment provision and interpret the acceleration provision to apply only in the event that it is ultimately determined by appropriate legal proceedings that assignment pursuant to a domestic relations order must be given effect despite the anti-assignment provision . The PA would reject a domestic relations order based on the anti-assignement provision, and continue resistance until after losing a long, drawn out legal battle (see "to the extent necessary to comply"). (2) The PA could instead give effect to a domestic relations order by interpreting "to the extent necessary to comply" as not requiring resistance to test the enforceabilty of the order. I would be somewhat skeptical of (1) because if (1) was truly intended, the acceleration provison concerning DROs is legally not necessary to allow the beaten-up PA to concede to legal compulsion and pay accoding to the terms of a DRO. That lends credibility to (2) because if the acceleration provision is not necessary if the anti-assignment provision loses, the explation for having the provision in the plan is that it overrides the anti-assignement provision when the PA decides it is prefereable not to test the uncertain or prevailing law on the effectiveness of the DRO despite the annti-assignment provision. There is also a middle ground. The PA can reject attempted DROs. If the proponent goes away quietly, hurray for the anti-assignment provision (which I still think is not the better choice for policy reasons). If the proponent pushes, the PA can decide to give up easily rather than waste time and money defending the anti-assignment provision based on the PA's assessment at the time of the prospects for cost and success of resistance.

OK, I will play along. If the following is the other provision in the plan, then it does not conflict; it is the same as saying that the sky is blue. It has nothing to do with the plan. §1.409A-3(j)(4) allows for the acceleration of Plan payment to the extent necessary to comply with a domestic relations order