QDROphile

The answer may not be apparent in the 415 amendment because of the choice made about the option described in the 415 regulations. See other posts on the subject.

What aggregation rules are you concerned about?

The factual determinations in the arbitration may help. The use of informal correction is subject to a lot of judgment and not all errors are elgible, to the extent we have indefinite informal guidance from the IRS.

What is the "catch-all" exception? The plan has to follow the law or suffer the consequences. An arbitration can order an employer to do something, but it cannot change the the tax consequences of circumstances. In order to comply with the order, and employer might have to provide the economic equivalent of the impossible literal terms of the order and incur unanticipated (by the arbitration) cost to comply. The arbitration may have included some factual determinations that the employer could work with to give effect to salary reduction elections that are delivered after the beginning of the year and be tax-compliant.

The ESOP and the sponsor should get competent professional advice about options and requirements. Most people believe that intallment payments of the purchase price for shares under a statutory put option must be secured by tangible assets or thrid-party credit support.

Reg. section 1.415©-2©, Items not includible in compensation. Subparagrah (1). Depends on plan terms. Amounts paid after termination of employment are addressed separately under paragraph (e).

Given that the IRS has stated that 457(f) arrangements are subject to 409A and the the principles of 409A will be reflected in the 457 regulations, it is risky to use a coventant not to compete, not to mention scumbag behavior that that was part of the reason we got section 409A. But scumbags can probably still take some refuge in audit and policy roulette.

Or you can be part of the population that wants to engage in improper transactions, as the original post suggests.

First, this is a matter for the plan administrator, not the employer or sponsor. The employer might be the plan administrator if it is not well advised. Second, the agency order might be a domestic relations order, so it might need to be treated with the appropriate formalities, and the order might be revised to cover all the qualification requirements and be effective as a QDRO. Hint: The definition of domestic relations order is not limited to court orders. The agency might not be savvy enough to work with all of its available tools, but the plan had better be receptive to appropriate extraordinary approaches.

Go back to rcline's advice and take it seriously. Maybe your plan overlooks the point, but the 415 regulations speak to it.

Incomplete answer if you want the "best" fix, but you will find what you need in Rev. Proc. 2008-50.

See section 72(t)(3)(A) of the tax code. No cheap exit if you are starting in an IRA.

"top hat" and "qualified" do not go together. Sorry, fat finger premature send, and rereading of original post before resuming indicates that the point would not have any new ideas.

If your question relates to what your rights are now, it appears that your account has no stock in it and you may "withdraw all or any part of the excess of 25% of [your] Adjusted Account Balance (as defined below) comprised of stock ***." You may withdraw 25% of zero. It is tough to get a good answer to a question like yours in this forum. You could apply for withdrawal. If withdrawl is denied, the plan's claims procedures probably require that you be given an explanation for the denial, with reference to the relevant plan terms. You will need to follow the formalities of the claims procedure, which probably means you have to submit your claim in writing. The procedures are explained in your summary plan description or a separate document that you can get from the plan administrator. The plan administrator should give you an informal explanation of what you can do if you ask, but is not legally required to do so, and the explanation might not be reliable.

It looks to me like the LLC is a disregarded entity, which would mean that for purposes of the ESOP the employee is an employee of the bank. No problem with participation.

So how is it that the bank is the sole member of the LLC and there is no affiliation or control?

You don't need to deal with any of the joinder garbage unless the plan adminstrator or the lawyers are mentally disabled.

An unaffiliated employer cannot participate in an ESOP. An LLC employee cannot participate in an ESOP unless the LLC is a disregared entity and a corporation is the sole member. Two strikes. In this game, one strike and you are out.

Assume that an employee's gross pay amount is $1000 per month. Looking only at the insurance benefits (forget FICA and income tax withholding and other payroll amounts), assume the employee "pays" $100 per month for the benefit. That means the employee actually receives $900 per month in dollars. What happens if the employee does not take insurance benefits? Does the employee receive $900 per month or $1000 per month in dollars?

Section 125 is not involved unless the employees have a choice between receiving dollors in take home pay or some benefit like health coverage. You did not exactly say that and it is the critical fact in your question. Otherwise, your broker might not be wrong about certain things, although even in the best light I would question what is meant by "enroll." Everyone needs to be enrolled, and family members who are covered need to be identified.

IRC section 408(m), prohibited transaction rules under IRC section 4975 and ERISA section 406, regulations under ERISA section 404©, ERISA section 404(b). You might also consider issues related to receipt of unrelated business income.

Going back to your original post, I misread the message. I thought the plan provided for matching catch-up contributions. Let's get that out of the way first. The IRS preamble to the regulations says that a plan cannot provide that it will not match catch-up contributions. However, the regulations don't say that, and one could get around the proscription anyway, so we can drop the subject if we want to limit the discussion to legal matters. Policy is another matter. With my misunderstanding out of the way, the problem is the pay period by pay period match (as correctly discerned by Tom Poje), but I have not seen this particular phenomenon, the employer would have no liability for instituting a pay period by pay periond match. However, the fiduciary might have some liability for not properly explaining to participants the dumb ass nature of how the system works, the potential for getting screwed, and the approach that can be taken to avoid being screwed. It would be a a stretch, but the failure might also be parlayed into a violation of the rule aginst impediments to catch-up contributions. Check the SPD and other communications about elections. If there is not some warning about the unobvious problem and the potential for missing the maximum match by a reasonable elective deferral schedule, the fiduciary should be concerned. This arrangement is particularly sinister. An even deferral schedule is a typical the solution to the usual version of problem. But shame on the employer even if there is no liability. A true up is the best practice. Why set up an employee benefit and then make it tricky?

So did Lenny Bruce.

First describe in detail how the payroll period match design has an adverse effect on matching catch-up contributions. The premise of the question is not clear and is suspect.

austin 3515 You get it. Since the $1000 will show as W-2 compensation, the starting point for examination is that the $1000 is part of regular compensation, subject to a negative election of benefits. You may have to convince someone that the $1000 is intended by the employer as a health fringe benefit, subject to an election to receive cash. You also have marshalled your support for that argument.