QDROphile

EBIA publishes materials (Cafeteria Plans manual) that provide rather detailed guidance. Some testing is subject to uncertainty, so don't expect a simple step-by-step, fill in th blanks template. Your prior consultant amy have boiled everything down to a mechanical procedures after having made some choices. The difficulty will be with the health FSA. The dependent care FSA is more straightforward.

I agree with the responses, but this is a personal tax matter and it would be best for the plan and the em[ployer not to get involved.

If you crave certainty, amend to vest.

You zeroed in very nicely. The 401(k) plan must accommodate the protected distribution provisions of the amounts transferred into the 401(k) plan. The MPP's annuity form is protected, but I think only for amounts greater than $5000 (subject to plan terms, as always). The amounts are transferred, not rolled over, from the terminating MPP. Some plans anticipate transfers and have ready-made provisions about protecting distribution options. If your 401(k) plan does not accept transfers, it will have to be amended to accommodate the terminating plan. Amounts not greater than $1000 (or $5000, depending on terms) can be distributed from the 401(k) plan pursuant to 401(k) plan terms. I did not review the FAB to see if it prevents the indirect distribution of the small accounts after the transfer, but I do not recall that it does and it would be overreaching to interfere with 401(k) plan mandatory distributions.

FAB 2004-02 does not inform about what is allowed or required under section IRC 411 with respect to distributions. I don't think you are getting the nuances of the requirements, or perhaps you just dislike the outcome so much that you are asking for confirmation of answers given. Either way, you should seriously consider engaging professional assistance rather than trying to reach conclusions from discussions on this board. Perhaps others will try to walk you throught the maze.

How do you move the balances to IRAs? You can only do that with a distribution. If the balances are not more than $5000, then look into provisions for mandatory distribution of small balances. Finding an IRA provider won't be easy even if you resolve the distribution issues. I am not sure that I understand or agree with you comment about purchasing annuities. You don't have to cross that road until the time comes for distribution and the individual does not choose another option. Individuals do not choose annuities, especially for small balances. Somewhere there is an insurance company that will sell an individual annuity of any size, for a price.

Regulation 1.411(a)-11(e). It is a transfer, not a rollover. Distribution options are preserved.

The contribution is a non-elective employer contribution to the plan. The deferral limits do not apply, so there is no need for an increase in the limit or an exception. It is unfortunate that anyone is using terms to the effect that the employer is "paying the teacher" $32,000. That is causing the confusion and they get to get off of that bus. If they are required to start with "paying the teacher," the analysis gets much more complicated. In any event. it sounds like the plan needs amendment to allow the contribution. It would be nice if the school is a public school, too, to avoid thinking about other issues.

Personally, I would not bother to track down anything related to the plan if the plan no longer holds any funds accrued for your spouse, except to find out how much was accrued and distributed. You are interested in the amount so you can take it into account when you divide property in the divorce. However, you are motivated and relatively well informed. You can amuse yourself as you wish.

Most 401(k) plans do not require spouse consent for distribution. Plans that provide an annuity as the normal form distribution option will require spouse consent to a distribution that is not in the form of a joint and survivior annuity. A plan can be designed to require spouse consent, but most plans do not add provision that increase administrative burdens beyond what the law requires. Rollover is something that can be done with a distribution. There are no spouse consent requirements specifically associated with an election to roll over a distribution. If you are getting divorced, the property division can include an award to you of some or all of your spouse's IRA whether or not you are a designated beneficiary.

IRC section 408(p)(6). Are you asking how to apply an election to defer a of a percentge of compensation? That is really a deeper communication issue than a question of definition of compensation, and 401(k) plans have the same communiction issue.

http://www.irs.gov/retirement/article/0,,id=255504,00.html URL at IRS website. Fire ADP, for any number of reasons.

Better yet, the IRS website now has the statement staight out on its website!!! See the latest IRS Employee Plans news for a link.

Miscommunication of various sorts.

So why do I have at least two clients that have TIAA-CREF as the only provider for their 403(b) plans and the employer makes contributions and no one, not the least TIAA-CREF, questions that the plans are subject to ERISA? Among other things, requiring elective deferrals to the TIAA-CREF plan only would make it an ERISA plan. The IRS dos not care how many 403(b) plans an employer has, but all the contracts and providers must be coordinated as required by the regulations and the plans will be treated as a single plan for various purposes. What is an education sector ERISA exemption?

An employer can have two or more 403(b) plans. That is the simple answer to the question. I thought the question had a hidden agenda and the simple answer did not address the real question. How about you? Do you think an employer can have a non-ERSIA elective-deferral-only plan and match the elective deferrals?

Proposed regulation 1.409A-4 has been issued as guidance for calculating taxes under 409A. One can rely on the regulations until further notice. The calculation of the additional interest tax is a bit of a mind bender.

Not if the proposed implication is that one is an ERISA plan because of a match and one is not an ERISA Plan. If you are not trying to divide along the ERISA lines, then it really does not matter if there are one or two plans. Either way the terms of the plan(s) will have to say which provider can receive contributions and how to coordinate transfers, loans, hardship withdrals and conttibution limits among the multiple providers. Trying to manage and navigate multiple plans just adds a layer of formal complexity that seems to benefit no one. I am not touching the subject of having more than one plan to avoid audit requirements.

Sorry for the statement that was so dense that it was opaque. Once a domestic relations order is received by the plan, the plan must protect the part of the benefit that would belong to the alternate payee if the domestic relations order is eventually determined to be qualified. Even if the order is determined not to be qualified, the alternate payee must be given a reasonable time to remedy the defect and the benefit must be protected in the mean time. It is often difficult to determine how much of the benefit should be protected. Subject to provisions in the written QDRO procedures to the contrary, if a domestic relations order has not been delivered to the plan, a participant's rights should not be restricted, even if the plan suspects that a domestic relations order is more or less on the way. This is the circumstance in which the Department of Labor position is at odds with the language of the statute and the court decision on the subject. If the plan has a domestic relations order in hand when the participant would have benefits commence, the Department of Labor guidance is not wrong about protecting the benefit for the would-be alternate payee pending determination of qualification. How that actually works under a pension plan at or after retirement age is an interesting question and the DOL is unhelpful.

I don't believe you can have a non-ERISA 403(b) plan. What you can have is an ERISA 403(b) plan that the Department of Labor will not go after as an ERISA plan because the Departent of Labor is so caught up in its prevarications that it cannot take a real enforcement postion. Before the 2007 IRS regulations and the related DOL prevarications, you would have been told that if the employer matches 403(b) elective deferrals, the 403(b) plan is an ERISA plan, even if the match goes to a 401(a) plan. I don't think any developments have changed that conclusion.

Sorry, never trust the Department of Labor on a QDRO question. Schoonmaker v. Employees Savings Plan of Amoco Corp. It would help if the Department of Labor read the statute, so don't make the same mistake. Fortunately, following the Department of Labor's position probably won't get you in trouble because the participant is unlikely to be harmed by a delay in distribution and asserting a breach of fiduciary duty will not be worth the trouble. The fiduciary is in another sort of trouble if the answer is not in the writtten QDRO procedures and you are in trouble if you don't at least see what the QDRO procedures say.

QDROs are a plan obligation, not an employer obligation. Termination of employment is irrelevant, but it does make some timing issues more sensitive and difficult if the participant has the right to take a distribution in the middle of the QDRO processing.

Sophisticated advice is needed and judgments (economic and other) will be involved in a process that will involve dialogue. You will not get adequate assistance here unless what you get is a good referral.

First you have to understand what your health plan requires. Does the employer or employee choose the insurance? Are you allowed to exclude on the basis of other coverage, or are the employees allowed to opt out? Does the employer pay the full cost of coverage, or is the $462 a fixed amount that is a portion of a greater cost that the employer pays? The employer must follow the terms of the plan. The plan is more than the insurance policy and will include how the premiums are paid. It is possible the the funding is is under a cafeteria plan (section 125 plan), so the terms of that plan must be considered. Your post does not suggest that you have a cafeteria plan. If the employer is not required to cover the two employees, you still have to consider employment policy. Health benefits are part of compensation. What is the appropriate compensation for the two employees? If the employer is not compensating by providing health coverage, should that compensation be made up to the employees in some amount in some other way?

Not advisable for elective contributions because of the securities law complications (unless the company is a public company). For nonelective contributions, very serious fiduciary concerns relating to investment of account assets. I have seen it done, but it gives me the chills. At very least, one should have an independent fiduciary and that independent fiduciary will hire an advisor and it won't be cheap.