QDROphile

An in-kind distribution is only possible if the participant is entitled to a distribution. If the distribution is because of plan termination, the termination will be consistent with the shady aspects of a ROBS transaction and may tip the scales if the arrangement is examined by the IRS. Because the distribution will be reported for income tax purposes, valuation will be in question and anything other than professional independent valuation will be frowned upon.

Is a separate election required/allowed for the bonus or does the regular election apply to it? In other wods, what was missed? Was it some independent opportunity or was it just a payroll oversight?

How about it is not an eligible rollover distribution, so the "regular" nonperiodic payment rules apply. The withholding is 10% unless the payee elects a different amount. The charity elects zero withholding.

I apologize for forgetting the most recent addition to the list (it has been there a while and I have not). Adequacy of documentation is up to the plan administrator, not the sponsor unless the sponsor is the plan administrator. While a service provider contract probalby does not cover advising about fiduciary matters, the sponsor (who is probably the incorrect contracting party rather than the plan administrator) looks to the provider for advice on such technical matters and the provider either does not think about the appropriate roles and discipline or feels compelled to answer to avoid client disappointment. For me, the participant's story, including no insurance, should be stated in writing for the plan records, The tornado should be verified to see if it fits in time and place. Connect the repairs and the participant to the residence.

Check the plan document. If it is drafted with the safe harbor hardship list, you will not find that home repair is eligible. I am unaware of any authority that interprets acquistion or preventing eviction to include repair.

Then I wonder where the question came from. Usually mortals do not create something from nothing. It is probably not feasible to pry just to satisfy curiosity. Perhaps someone had been through a termination before at another employer and remembers an application for a determination on termination, but not much more. It is still tempting to turn tables when one is asked to prove a negative. I would not dissuade a sponsor from getting a letter if the sponsor wants one.

Nice law school exam question. Taking your story and the reasonable inferences as true and complete, he is not entitled to keep the insurance proceeds for himself. The exact explanation might be that he undertook to pay the expense, depending on the insurance claims procedures and representations that are implicit or explicit in filing a claim. Or the explanation might be different and it would be a matter involving "unjust enrichment." Unfortunately, what you do if he refuses to take care of the matter properly requires legal help.

It is better to ask where a requirement is specified if someone is asserting a requirement, especially if the person who is asserting the requirement will be paid for taking care of the matter.

The simple answer is the same statute as payment of other income taxes, but the way that taxes are calculated can effectively reach back furher to otherwise closed years. See the proposed regulations for calculating the taxes under section 409A for some examples

If the standard is based on the idea that the employer is holding plan assets, then a payment grace periond is irrelevant under a system that uses payroll deduction for loan payments. The grace period relates to when the borrower must pay the loan to avoid adverse consenquences. The prohibited transaction clock starts on payday. At that point the employer holds the funds from withholding what otherwise would be paid to the employee (and the employee would pay on the loan). The employer is obligated to deliver the loan payment amount promptly rather than hold it (presumably for employer benefit). If the employe pays the plan directly, the late payment does not become plan assets and the grace period become relevant with respect to loan terms and consequences of late payment, including potential tax consenquences. I would argue that a late direct payment is not a plan assets issue -- it is simply a late payment.

Matthew wrote: "Yes, but if individuals are contributing to the coverage at all, premiums can't be pre-tax." That is based on section 125(f) because section 125 is the avenue for so-called "pre-tax" payment of premiums by employees. You report that individuals are not contributing to the premiums. Section 125 does not apply and matthew's comment does not apply. I asked about write-off. "Write-off" can mean "deduct." A town generally does not pay income taxes, so deductions are not an issue. I still don't understand what you mean by "write-off" or what you mean by "preventing an immediate (or potentially any) spend down." Since I can respond only with respect to federal income tax issues, it does not matter to me what else you mean because I cannot comment one way or another. I can only caution that towns can do only what the applicable state and local law enable towns to do.

"establish your SIMPLE IRA by October 1, 2013" ??????? Full-year particpantion in 2013 would be nice.

And what is the benefit to the town if it can "write off" the LTC coverage? Code section 125(f)(2).

The plan document should cover designation of the fiduciary. You do not want to be in the position of "considering" who might be a fiduciary by default. Best practice would not be to name the sponsor or the governing body.

An LLC is not an eligible retirement plan. An IRA can own an LLC. An IRA can own real estate. An LLC can acquire real estate interests. Real estate can be rolled over to an IRA. Nothing can be rolled over to an LLC. The transaction that gets the real estate into the LLC cannot be a rollover. It has to be a purchase or a contribution in exchange for LLC interests. I am uncertain about the ability to roll over undivided interests to IRAs for subsequent purchase by an LLC that is owned by the IRAs. Would it work to have the 401(k) plan form the LLC, acquire the real estate and then distribute and roll over the separate LLC interests to the IRAs?

"The plan would then rollover the RE to the LLC " I don't get this step. The LLC is not something one can roll over to even if the LLC is owned by an IRA. The plan could transfer the real estate to the LLC. The transfer would have to be evaluated under prohibited transaction rules.

Passing through the vote generally allows one to avoid the questions related to voting by interested fiduciaries, but not completely.

There is nothing to share. After explanation, the DOL took no adverse action when the plans allowed the participants to provide a value for interim valuation purposes, such as the annual value. The plans provided for independent professional valuation when it mattered, such as distributiions. It is not the DOL's style to provide an an explanation for any action not taken.

But now you have to deal with income tax withholding. The distribution is not rollable, so the 20% withholding does not apply. The best solution is for the the participant to waive withholding. Without an election by the participant, the withholding is 10% of the distribution. I can't find any special rules for escape from the general rule for withholding on amounts that are not rollable.

I don't see your problem, other than it will be a more complex document than may be usual for you. One way to organize the doucment is to have each subsidiary adopt the plan. Each subsidiary's adoption document would set out the eligibility and benefits terms applicable to the employees of the subsidiary in lieu of the general terms of the plan. The plan document would have terms providing for adoption by subsidiaries and the ability to modify by adopting special terms in the adoption document. You might not consider that to be one plan document, but "plan document" is not a precise image. Different eligibility and benefits can be accommodated under Form 5500, but attention should be given to the applicable discrimination rules.

A reading of plan terms that cover the circumstances. If there is a surviving spouse, the plan will provide for payment to the surviving spouse.

A lawyers's answer: Not at all. But that answer comes from a premise that a TPA should not be answering any legal or interpretive questions and that premise is never respected. Next question: What services did you contract for and what expectations did you create on the part of the plan administrator?

I think it would be very enlightening to learn why your friend is upset about the timing of receipt of distribution information. It would also be enlightening to learn what your friend learned from the distribution information that the friend should not have already known. So far it has all been about grasping at tidbits out of context. What is the story?

The auditor is technically correct, but I am not sure about the specific statement you attribute to the auditor. The "six consecutive months" does not assure compliance with eligibility rules. You might be able work with the concept and pass 410(b) with more complex provisions, but the IRS might still be concerned about 410(a). Section 410(a) has been more of a hot button lately. I suspect the auditor is only on to 410(b) at this point.

One thing you have to keep in mind is that the plan does not have to offer everything that the law allows. Discussions of what is allowable must defer to the the plan, the offical interpretation of the plan, and applicable plan policies. You might start with reading the plan. You could look at section 457(b) of the Internal Revenue Code and related regulations. I think that you will find that a home purchase is not an appropriate event for access to funds while you remain employed. That is not the rule for 401(k) plans, so do not be confused by what you may learn about 401(k) plans.