QDROphile

The important word is "amend." Certain in-service distribution features are protected benefits and can be removed only prospectively. Prospectively means with respect to contributions and related earnings after the amendment. Pre-amendment amounts and related earnings cannot be compromised. If there are no in-service distribution terms in the plan, you can add in-servce distribution terms limited to rollovers.

Check the Department of Labor guidance about acceptable ways to allocate expenses. I don't think you are going to be able to exempt the rollover amount from all charges. You may be able to have the employer pay the rollover accounts' shares of charges that are allocated ito accounts in a reasonable way.

This may be pursuant to a law enacted under 42 USC 666(b). However, I recall that such orders are enforceable only against retirement benefits that are in pay status (don't trust me on this point). The order might be issued under the state's domestic relations law. It would be processed for qualification as any other order. It is a common misconception that domestic relations orders are issued only by courts.

You are responsible for the consequences of the distribution. If you wish to defer distribution, you may yet be able to roll the amount over to an IRA. You have 60 days from receipt to do so. However, you need to educate yourself about the rollover rules because it is likely that the amount you received is not 100% of the distribution, and you will owe taxes and possibly penalties on the amount that is not rolled over. The plan probably withheld 20% of the distribution and forwarded the amount to the IRS to be applied against your tax liability. See IRS Publications 575 and 590, available on line at the IRS website. It appears that the plan did not follow the correct procedures for distribution. You should have received advance notice, information about rollovers, and the ability to elect a direct rollover (saving you the 20% problem) before the distribution was dumped on you. The irresponsiblity of the employer in the first plan suggests that you have a tough slog ahead of you to try to get the plan/employer to recitfy the failure to follow correct procedures. There is the possibility that the plan behaved properly and you have been disregarding communications and that you missed your opportunity to elect a direct rollver.

I second the concerns of MSN. The fiduciary responsible for investments must evaluate what options are available. If the fiduciary designates in investment options and would have to designate insurance as an option, the deisgnation is a very serious concern and substantive evaluation should be conducted to make sure that the option is prudent. It is less a concern if the fiduciary does not designate investment options because the plan (by design or fiduciary decision) has opened the plan to any legal investment. The fiduciary would have very little responsibility for the investment chosen by a particpant. The fiduciary might have to worry about the relationship of the agent pushing the policies.

Examine your assumption that they have to lose benefits. In all likelihood that is a policy decison.

If the fiduciary has determined that the fund is no longer a reasonable investment option, the option should be removed. If a new fund is necessary to provide a reasonable menu, then a new fund should be added. Halfway measures are generally not a good idea. The compromise undercuts the fiduciary's decision and suggests that the fiduciary did not do a proper job.

The record keeper in not in charge unless the record keeper is a fiduciary with respect to the matter. Show some spine.

How nice for the good doctor's personal interest. Absolutely prohibited and the only way is an individual exemption.

You have given us enough information only to provide a standby answer: Physician investment idea=prohibited transaction.

Making a lot of assumptions about what an equity membership means: To the extent the membership has any personal privileges or benefits, such as use of facilities, no plan participant or fiduciary can use them. The "member" will have to sit it out and do nothing while waiting to sell the membership. The need to enforce the restriction might be a stopper -- how will that be done and who will do it? Also, I suspect that there will be periodic or extraordinary fees and expenses that must be paid from plan asets from time to time and no income generation from the asset in the interim. I am not even touching on liquidity considerations. Handling such an investment properly is just so impractical that the investment is effectively not feasible, and no fiduciary should allow it, even in a section 404© environment. When inquiries come in about investment in vacation property, the discovery of restrictions on personal use is usually enough to put an end to the idea.

I vote against as a policy.

How is this not a simply a discretionary match? It sucks the same as any other discretionary match.

There are not enough details about the terms of the QDRO and the benefit payments to conclude if 6(b) or 6© applies. I do not know about reporting details either way.

Not a record.

If the plan has terms relating to Treas. Reg. section 1.403(b)-8(b) and the contributions violated plan terms or the regulation, you might be in a situation that would cause you to look to EPCRS.

The safe harbor terms of Treas. Reg. section 1.401(k)-1(d)(3)(iv)(E) require distributions from all employer plans, including ESOP dividends. The 401(k) regulations do not enable distribution of ESOP dividends. The participant must take them if they are available. The "non safe harbor" standard in Treas. Reg. section 1.401(k)-1(d)(3)(iv)(B) also covers ESOP dividends to the extent available because it covers all resources. ESOP dividends are not expressly mentioned.

One might be influenced by the terms of the termination amendment. If there are no applicable provisions, and one the thinks that the amendment is effective to cut off elective deferrals as of the specified date, how would one justify contributions of nonelective contributions? I don't think mere delivery of contributions, e.g. matching contributions, after the specified date is a problem if the contributions are provided for before the specified date.

The 415 limit issue is rational if the benefits are significant. By limiting the electives, that allows more employer contribution. But I suspect only a few people would have a 415 limit issue, and that would be better handled by counseling than an across the board limit.

Possible answers: 1. Section 415 limits. 2. Mistaken and obsolete carry over concept from taxable employer deduction limit.

Expenses incurred in a plan year cannot be covered by amounts deferred in a subsequent plan year, subject to some very limited exceptions. See Prop. Treas. Reg. section 1.125-5(a)(1), although you will have to get acquainted with the specialized terms used in the regulation to get the meaning relevant to your situation.

See Treas. Reg. section 1.409(a)(9)-8 Q&A-6 and Q&A-7

Assuming no sham termination issues and assuming that plan terms do not speak to the situation, I would treat the second distribution as a tail to the lump sum distribution and not a separate distribution. The distribution occurred based on termination and is not an in-service distribution. The rehire is irrelevant. The distribution was set and locked before rehire. A good plan document will have provisions about tail distributions, but good plan doucments are obsolete. Sniff.

Yes, subject to a two part legal analysis: 1. So what? 2. Who cares? The response is expressed in a flip way, but the substance is serious.

Good one! You may have to hesitate a moment in that location.