QDROphile

I am so amazed at your question that I can only respond to a question that you did not ask. ERISA requires loans to be made available only to parties in interest. An alternate payee is usually not a party in interest.

The rub is the requirement to provide adequate security. The installment payment option is only available for lump sum distributions. You might do just as well with distributions in the form of installments.

Please describe the benefits of nonqualified deferred compensation to the sole shareholder of an S corporation. I fail to see how any income tax is deferred and that is the essential benefit.

Assembling a list is very difficult because circumstances vary. How can you measure the hardship relating to an auto? Does it have to be necessary to get to work, or is it a general need? Does it matter if the participant has children? How young? Is public transportation available? Should it matter where the person chooses to live? When is it better to get a new car rather than repair? If a car is being replaced, does the plan administrator have to judge the purchase?

The annuity notice rules apply. I don't know if that is included in what you mean by options. If the beneficiary has the option of deferring the start of payment, a notice about the consequences of failing to defer is required. The notice is in addition to the 402(f) notice and is a product of the PPA. The IRS has issued a model notice of sorts, but it is better to follow the proposed regulations.

Whoever made the decision about the design of the plan should have given the design feature some thought and made at least general decisons about the criteria that can be applied to particular circumstances. Laughable, to be sure. The IRS manual states (or stated, the last time I looked years ago) that the hardship criteria must be objective. That is difficult to understand at the edges, so most plans have a list either in the plan document or a formal written policy and just stick with the list. The list is usually the safe harbor list, sometimes with embellishements. Case-by-case decisons are really tough on the plan administrator, so many administrators insist on a list.

See section 408(d)(6) of the IRC.

The answer is always EPCRS, Rev. Proc. 2008-50.

Not for amounts accrued under a money purchase pension plan, including restricted transfers.

I am suggesting one way to look at the circumstances and alerting you to some elements that need to be reconciled. To the extent possible, mistakes should be corrected in line with applicable guidance.

What if the plan said something to the effect that contributions to the plan on account of elective deferrals shall be in accordance with participant elections? Would that mean the plan failed to operate in accordance with its terms and had an operational failure that would need correction under EPCRS? Make sure you take into account that there was a payroll failure. The employer underpaid the employee if the employee's pay was supposed to be determined in accordance with elections.

Could you be a bit more specific and expansive about the statement that a self-insured health plan cannot increase rates for section 125 plan participants? The statement is followed by another statement that suggests rates can be increased, but the difference is not eligible for salary reduction. There are regulations that deal with mid-year rate increases. One of the possibilities is that a rate increase would not be included in the 125 plan until the next year. There are circumstances that allow a mid-year change of salary reduction election and it is possible to have an automatic salary reduction adjustment to match the health plan rate increase. I was not aware that self-insured plans are treated any differently than third-party insurance under the regulations.

You might want to consider whether or not this is an egregious failure as you determine eligibility for SCP. I suppose theft might be more egregious. Or you could use the Steve Martin defense.

More fee revenue?

I would expect a terminated plan to be in the business of liquidating, not merging with a plan from a company outside of its control group, especially an ESOP. I think the idea is penny wise and pound foolish.

Your use of 401(k) funds to pay the exercise price would start with a distribution from the IRA, with the attendant tax consequences. The IRA cannot in any way "buy" the options or the stock, if that is what you are getting at. If you try that, the entire IRA balance will be included in your taxable income because the transaction would be a prohibited transaction that destroys the IRA.

You have to be careful about any consideration, or the appearance of consideration, as an acceleration or further deferral. If you don't have consderation, are you still caught in the constructive receipt rule? A colloquial explanation of the constructive receipt rule is that one cannot turn one's back on income. Section 409A does not supplant the constructive receipt rules. Would the service recipient have income from forgiveness of debt?

Once you figure out your counting problem, you should turn you attention to compliance with the ERISA rules that require plan assets to be held in trust. What you describe does not appear to comply.

POP is just slang. Slang is not precise and often does not have an accepted meaning. Don't use it and there is nothing scary about it. Sloppy use of language is often associated with sloppy learning and sloppy thinking. If someone is relying on slang to communicate something important, or to sell you something, you need clarification. Hold on to your hat: "pre-tax" is also slang and the use of the term is behind a lot of misunderstanding.

Read that answer very carefully. Make sure you read the regulation to determine scope.

Single employer, no severance from employment, no distribution, no rollover. If the participant is entitled to an in-service distribution, that could be rolled over depending on plan terms for accepting rollovers. Plan to plan transfer is possible if plan terms provide for it.

Reasonable plans terms for disability and termination of employment prevail with respect to plan benefits. There are many examples of union employees being treated as employed for other purposes, especially with respect reemployment rights, but the artificial status should not affect plan rights or benefits. Be careful about status when actual reemployment is anticipated. SSA disability tends to be pretty serious.

Procedures need to be reformed so the withdrawal is deliverd to escrow. If the sale fails, the escrow agent returns the funds to the plan. Maybe not perfect, but solidly defensible.

GMK has the answer, but don't expect the plan administrator to do what the law requires. The Department of Labor has so fouled the environment that the only thing administrators think to do is hold alll the funds.

Can you generalize beyond the special rules in the regulations for elective deferrals? If you can, then the special rule about income on the last day of the year is simply a special privilege for partners that allows disregard of the election timing requirements.