QDROphile

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.

"The plan sponsor is looking to us for advise...." On what basis are you going to advise if this is where you start?

The mechanics can be a lot more complex. The plan does not have to extend to the limit of wha the law allows.

With the Department of Labor, I have been successful with arguing that the valuation does not matter unless it is used for something that has consequences, primarily distribution because that determines tax liability. Other uses might be determining contribution or funding requirements or limits, the maximum loan available under a plan, the amount of fidelity bond, or taxes on prohibited transactions.

What would "non-amender" mean to you or the plan?

The sponsor or fiduciary should get advice about how to address the situation.

I thought you cannot cross-test ESOPs.

Look for plan terms that treat authorized leave of absence as in service.

A deferral arrangement is going to be subject to the FICA rules, so that should take care of the matter.

I would try to to convince somebody that a match is the wrong approach to enhancing the benefit.