QDROphile

GMK described the distribution procedure that avoids the problems that you can have with #2. Under #2, the $50,000 is not really contributed to the plan. The plan is selling shares to the sponsor. The sale is OK, but to be exempt from the prohibited transaction proscription, the sale must close at the value of the stock at the time of the closing and most plans do not want to get a valuation opinion at the time of every distribution. The approach described by GMK allows the sale of the shares to the sponsor under the presumption that the most recent regular valuation is still valid. I don't think that the automatic buy-back arrangement is limited only to distributions to non-employees, so I invite GMK to elucidate. The authority for the arrangement is indirect, so some details are not settled.

Neither approach is necessarily preferable. The second can be particularly troublesome because of prohibited transaction issues. Are you interested in another way or are you somehow confined to the options you have suggested?

Use of earnings form the pooled assets distorts investment return allocation. Despite some earlier IRS authority to the contrary, some roviewers are currently taking a very strict approach about allocations. We never new how much distortion was permissible under the existing authority. I personally don't like the plan provision. It would never be any any of my plans. I doubt that anyone would get in trouble for disregarding it, esspecially if the ifduciary determines that it is contratry to ERISA or jeopardizes qualification.

If the arrangement is exempt from ERISA, it must still consider securities laws.

I think your statement about section 83 property is too limiting (see XTitan comment, but I did not confirm if it applied correctly to your facts). The deferral will have the effect of making the compensation based on phantom measures, such as phantom stock, but I do not think that affects what is awarded. Restricted stock can be awarded. The compliant deferral will mean that the stock that is awarded is not delivered until later in accordance with the deferral (or never deliverd if the interest is forfeited). We may be saying mostly the same thing, but I split hairs about the labels for different legal interests. For example, there is a big difference between an award (representing a legal right) and delivery (affecting with can be done with the legal right). Tax effects depend on such nuances. As an aside, in my experience the individual does not get a stock certificate representing restricted stock until the restiction lapses. In that sense, restricted stock is effectively phantom stock with respect to the owner even without deferral of compensation.

Have we lost the deadline for electing the deferral of the 401(k) part of the contribution or does that not matter to this discussion? I think the discussion also assumes that the LLC has not elected to be taxed as a corporation.

Deferred compensation is always phantom, whether or not it is stock. Deferred cash is phantom cash; the participant simply has a contractual right If it helps you to picture it, then put the the restricted stock certificate in a grantor trust. The deferral election defers the receipt of the stock (the compensation) past the award date. Your comment about receipt of restricted stock begs the question. I am confused by your comment about a section 83(b) election. If one wants further deferral, one cannot expect to thwart the deferral rules and accelerate inclusion in income or transform the "investment" gain into capital gain, You use either (i) concepts of deferral and section 409A, or (ii) section 83. Deferral under section 409A and risk of forfeiture can interact, but you can't pick and choose your phenomena. You have to coordinate and be coherent.

The hardship amount should be sent to escrow with appropriate instructions, including self-serving instructions that the amout is to be applied to the purchase. The escrow also provides a basis for taking the funds back into the plan if the deal collapses, and this deal looks uncertain.

You can defer restricted stock the same as any other compensation. In a simple scenario, suppose you have a stock bonus program. The bonuses are restricted stock and the stock vests in three years if the individual is still employed on the vesting date. If you have a deferred compensation arrangement that covers the stock bonus program, a particpant can elect to defer the the bonus. The election has to be compliant with sectioon 409A, e.g in the year before the year that is the year services are performed relating to the bonus. Suppose the participant elects to defer until the later of ten years or termintion of employment. The stock is credited to the deferrd compensation account when the bonus is declared. The phantom stock vests in three years. No income, but the value of the stock is included in FICA wages. The compensation for income tax purposes is deferred until the payment date specified under the deferred compensation plan. At the payment date, shares are issued and delivered to the participant and the value at that time is included in taxable income.

If I were the IRS I would not approve for several reasons, but the real IRS might if the individual was not an HCE. An informal call to the IRS would be helpful. Whatever happens, the plan administrator needs to get to the bottom of the problem, and one aspect of the problem appears to be that the brokerage window is broken. What happened should never have happened, but similar things happen sometimes when brokers are involved don't know enough or care enough about compliance I would start from the proposition that the provider should be fired, and then see if the provider can explain why the provider should not be fired. One reason might be that the plan administrator or the employer is a screw-up. I repeat, something is fundamentally wrong for this to have happened.

If you do not think that the current situation is consistent with the intent of the order, you can apply for a modification of the order. Your prospects depend on state law. Most of the time, the medical child support order is a matter of child support. If the appropriate support is no longer being provided, the court might order the noncustodial parent to do something else. However, the practical options may be limited.

Rollovers can be limited to persons who have satisfied conditions to participate. Acceptance of rollovers can be stopped, as long as the amendment is not discriminatory.

The plan administrator is responsible for implementing the terms of a QMCSO. The health insurer is directed by the plan administrator in the same way that the plan administrator directs a health insurer to enroll participants and benefitciaries. In the real world for many employers the health insurer covers or assists with the administrative responsibilities, so the health insurer may be playing cute, but probably has no duty to pay attention to you. The plan administrator has the duty. The plan administrator is probably the employer.

Thank you to masteff for trying to provide a constructive answer. Abstract criticism and anlaysis can be pretty easy and unhelpful.

There is guidance for making the financial need determination if the safe harbor is not used. I find it very comfortable as long as the administrator is willing to give a little thought to each application. Apart from the rub with the prototype requirements, the big houses do not want to provide any individual attention (thought?) to applications, so they insist on the safe harbor. Now we can change our word play to "big house."

Sorry, no.

In informal Q&As at the ABA tax section meeting some years ago, the IRS said that purchasing a co-owner's undivided interest in a residence qualifies. Maybe the question related to exceeding the five year limit on plan loans. I think the Q&As can be still be found on the ABA website at http://www.americanbar.org/groups/committe...e_benefits.html Edit: The url posted above looks funny. I copied and pasted, but is suspect that the three dots should be deleted.

"Prototype plans are required to supend for 6 months." If you have a prototype plan, you are not required to have a thought. I suspect no thought about the six month suspension enters into a decison to adopt a prototype plan. Food for thought for the thoughtless. With respect to the allusions to abuse, just because I need some extra funds today to pay tuition does not mean that I shoud be prevented from saving some amount out of my next pay check that could not have gone toward tuition anyway. That is punitive, not preventive.

The six month suspension option is for the thoughtless.

Depends on the attittude of employer and the plan administrator about disqualifying operational failures. I would correct the mistake. Shame on someone for having a plan design with a six month suspension.

The plan sponsor has nothing to do with account records. Account records are not provided to anyone without participant consent absent legal compulsion (e.g. subpoena).

The employer"s group health plan is "go out and find individual policies and the employer will pay or reimburse premiums up to $xxx." The more detail the worse, such as different amounts for nonemployee coverage and different eligibility. The idea of what is a "plan" is shifting and seems to going away from finding a plan, especially in the severance pay arena. Your position is not beyond question.

Not as such.

The EBIA manuals have a "short course" summary section in the beginning. EBIA is available with an RIA Checkpoint subscription.

Too late now, but a careful use of escrow might have yielded a better result.