QDROphile

Peter, I agree with your conclusion but if the conclusion is correct I also note the rather uninformed and unintelligent inconsistent references in the regulation, such as to the "issuer" of the investment alternative. Who is the "issuer" of a fiduciary-managed pooled investment fund? The DOL evidently gets a lot of its understanding of retirement plan investment management from Money magazine, and then the rest of us have to make sense of the shallow regulations in a more diverse and complex world.

Look at Rev. Ruls. 2002-22 and 2004-60.

See section 403(b)(12)(A)(i) and reg section 1.403(b)-5. The answer to you question is negative. The section 403(b) regs do not themselves provide an answer. You have to look to the relevant section 401 rules.

Mojo The reference to PTE 80-26 was in support of your point. One of the principles in PTE 80-26 is that a reimbursement arrangement should be established in advance, includng relevant terms such as time.

You might be interested in PTE 80-26.

I have never seen an E&O insurance policy that allowed third parties to make a claim on the policy. I think what you mean is that a claim has to be made against the broker. The broker then goes to the insurer to claim coverage (which may include defense) so that any award against the broker is paid by the insurer rather than the broker. Asking the broker how to go about filing a claim with the broker's insurance carrier does not make sense.

This is a matter of plan terms and corporate governance, and is very fact-dependant. You cannot presume invalidity. If you want a relatively certain answer you will probably have to get an evaluation by a competent lawyer.

Perhaps you would point out that it compromises the benefit considerably if it is a practical imposition. I think most peple like regularity in their take-home pay and may not particpate to the fullest if they have to accommodate material variation in cash flow. I don't think it is a legal problem if it is adequately described and administered. It will be something that will tick off some employee at some time who does not understnad the deal. For some others, they won't take the deal or they will reduce amounts.

The law says to follow plan terms unless the plan terms are contrary to the law.

You have not given enough information about the payment terms for analysis and the assurance that the cap would comply in a new plan does not cover the omission.

There is not a lot of published authority about the rule. I think the rule is about timing of initial eligibility. If initial eligibility for any plan is the same date for both plans, the deadline for the election under each plan is the same date. An election is not required to apply to all plans and the election is not limited to an election not to participate.

It can be done only because the IRS says it can be done and the tax risk is the only practical concern. If the IRS is not going to challenge the transaction, no one else should be too concerned that it really cannot be done because the loan legally disappears in the process. A loan can be transferred, but transfers are not favored because they import protected benefits. I would be a bit more concerned with the alternative that does not hide behind some of the artificialities of the direct rollover rules that the IRS has expressly blessed. Under the alternative approach, the loan offset is a distribution of the loan to the participant (no direct rollover fictions) and the loan is extiguished by merger.

If the plan uses the "other resources" standard, the "other resources" standard applicable to hardship distributions includes ability to borrow from commercial lenders. If that standard is applied, the individul must be unable to get a mortgage loan on reasonable terms as a condition to borrowing from the plan (compare to: has not yet applied for a mortgage loan). However, you have to figure out if the hardship standards of the plan with respect to loans requires use of the statutory standard because the statute does not apply to loans. I am sure that you will find thoughtful, complete, and very well drafted provisions in the plan that explain what was intended by application of the hardship standards.

Anything is possible with agents. That is a major why we got new 403(b) regulations and can't have ERISA exempt 403(b) plans any more, despite the embarrassing Department of Labor field assistance bulletin to the contrary. The restrictions on in-service distributions before age 59 1/2 are in section 403(b) and the 403(b) regulations. The applicable exceptions are found in section 403(b) or might be found in other applicable law with reference to 403(b) rules. Section 72 does not provide any exceptions.

I agree with ESOP Guy about the practicalities. I am skeptical of arrangements that involve transfers, except diversification, and diversification would usually be better as a distribution and direct rollover rather than a transfer. Some of the consideration regarding distributions depends on one's conclusion about whether a next-year distribution provision can be amended to provide instead for distribution after five years following termination.

In the second scenario the transferred cash would have to remain subject to certain ESOP terms, such as the right to receive employer securities (unless an exemption applies). The cash might be transferred because the other plan is better suited for investment of amounts that are not employer securities pending transfer back to the ESOP for investment in employer securities in a future rebalancing or distribution in accordance with ESOP terms.

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