QDROphile

Depends on the terms of the salary reduction agreement. Was the agreement to reduce salary for the year or a certain amount per pay period? If the agreement was to reduce a certain amount per pay period, the employer has no right to reduce the employee's pay by a greater amount for the purpose. Also remember that contracts can include implicit terms, including terms that can be inferred from regular adminstrative practices. The agreement had better be pretty clear that the "make-up" amounts can be taken from the few remaining pay periods in the year if that is what is contemplated. The employer should give a lot to thought about whether the amount is worth the risk of violating one of the most fundamental rules under section 125.

The trustee can purchase the shares by complying with the PT exemption for purchases and sales of employer securities. The ususual rub is the need for a contemporaneous valuation. The cost of the valuation increases the effective purchase price, although the trust does not have to bear the cost of the appraisal. The trustee also has to determine that the purchase is in the best interests of participants. Covering for the employer is not necessarily in the best interests of the participants.

And then the lawyer would sue the plan document provider?

Yes. The facts and the document/services bundle might get in the way.

The IRS has ruled that a commission is essentially part of the stock price, so it cannot be paid outside of the plan. Investment management fees are different, but you have to watch the detials of how the fee works to see if commissions can be identified. If amounts are added to the plan to cover the commision amounts paid by the plan, the additions would be contributions. I am amazed at stories of brokers who provide correct information about plan administration technical details.

Just for fun, read 18 USC 1954 and trust that the feds will use appropriate discretion.

Your interpretation is not necessarily the correct application of a Roth deferral election. I would guess that most plans apply the amount elected the same way as regular deferrals with respect to FICA -- the employee portion is taken from other compensation. Check the plan document or communications about withholding. I am sure whoever decided to add the feature considered all of the implications and communicated clearly to participants about the effects of the elections.

First, align the plan with the law and disregard the information about a forthcoming order. A plan is not required to act until it receives a domestic relations order. The plan terms and written QDRO procedures should be consistent often they are not because the plan has adopted a policy that is aligned with the Department of Labor informal position. That may solve the problem if the order does not arrive before distribution. Next, be diligent in anticipation of receipt of the order and process it immediately if the order arrives before distribution. If the order arrives too late for reasonable processing or correction of any qualification defects, the order is disqualified because it would require the plan to do something that the plan is not designed to do -- hold up the termination process. Best practice is to notify the person who advised of the expected QDRO that the plan waits for no order. That avoids any criticism of deception and it allows the individuals to gear the property division to what will be available when the division is determined.

A rollover is to an IRA, not an LLC in which the IRA invests. Perhaps the disregarded entity rules allow cutting corners on observing the formalities relating to the distinction, but I would prefer a two-step process, and a plan administrator executing a direct rollover would be more comfortable with sending funds to a designated IRA rather than an LLC.

"Get real." I have great sympathy for those who are real enough worry too much about compliance issues. A plan administrator does not have to look behind a domestic relations order that looks good on its face, especially if the concern relates to local court procedures. Courts can take care of themeselves, and if a plan qualifies an order that comes out of some state court irregularity, it is up to the participant or alternate payee to object, explain to the plan, and, take corrective action. The plan should accommodate contests, but is not the arbiter of state court matters.

Probably. Ask for a more detailed explanation and a full description of the corrective actions to be taken.

"It might help if you actually read ERISA." I was reading the posted comment that said the loan was from TIAA-CREF (not the annuity contract) and was secured by the participant's interest. In my first post, I started with the statement that I was not looking at the source documents. I do not start with the presumption that someone is mistaken, but I may question a curiousity. So I was reading what there was to read, including the portion of ERISA relevant to the precise point of a discussion in progress. Your observations about what probably was really the nature of the arrangement were helpful. Your failure to read closely the dialog without a presumption that everyone else is an idiot produced your misplaced criticism, which did nothing to enhance your useful comments. So now that we have the attention of somebody who knows something, and we go back to the original question after some unnecessarily painful education and discipline, does the plan fiduciary have any responsibility with respect to compliance with the loan rules, specifically the interest rate?

And this is allowed under the anti-assignment provisions of ERISA because ... ? I never try to explain, and I try to avoid having to to comprehend, how TIAA-CREF works.

Without seeing the words on the page, if this is an ERISA Plan, the fiduciary appears to be doing one of two things, (i) determining that the rate set by TIAA-CREF is a correct rate (and how does the fiduciary justify that without knowing more about how the rate is set?), or (ii) engaging TIAA-CREF to set the rate. Since (ii) would be engaging TIAA-CREF to be a fiduciary and TIAA-CREF would not accept that engagement, I wold not rely that explanation. This is one of those rough spots in the 403(b) environment where the unexamined and undisciplined past practices provide discomfort in the new light. Loan interest rates in any environment are troublesome, since most of the the arrangments are unconscious. Your problem is that you understand and you care, which makes you especially unsuited for 403(b) plan work.

Not the issue you requested, but at some point be sure to notify the plan that you are not responsible for advising the plan about securities law compliance. If you have no idea why this suggestion, all the more reason to make clear the limitation on the scope of your engagement. There are securtities law issues with multiple employer 401(k) plans. You are probably protected if your engagement agreement specifically identifies what you do and excludes everything else relating to plan design and administration.

"No way" is the answer that law intends and requires, ever since the 1980s. More recently, the courts have been concluding that a domestic relations order cannot intrude on the survivor annuity. Maybe a different answer under a governmental plan.

I would require a more apt description of the imputed service for Bank C employees. The service credit can be given, but I don't think service for an affiliate describes the Bank C pre-aqusition service.

An appropriate answer depends on plan design. In a simple plan design, the change in status would have no effect with respect to the plan contributions, but the total compenstation picure and accounting might change. If you have an exotic design, you will need to consult an expert who can evaluate all of the facts and circumstances -- just another cost of being sophisticated, or whatever one might want to call it. In any event, a keen understanding of plan terms is necessary.

Most loans apply prepayments as reduction of principal that effectively shorten the term of the loan, not as getting ahead on scheduled payments. Scheduled payments continue on schedule. Don't forget that you have a loan contract, even in these days of improper paperless plan loans.

The IRS disagrees that LLC interests can be qualifying employer and has published its position. I cannot remember the form of publication, and the actual analysis was whether or not LLC employees could participate in an ESOP.

I have not found any definitive guidance about how to draw the line. I think regular employment one day per week is sufficient to avoid "retirement" for purposes of the rule, especially if there are no other relationships involved (e.g. family or partnership) to suggest that the employment was not bona fide. Also, it would help if the employees were participating in benefit accrual and other aspects of emplyment perquisites. The idea is not to abuse the rule by improper postponement of taxation. If the plan has terms aobut retirement or the employer has specific policies about retirement (e.g. one can be retired [wahtever else that menas] and still work one day per week) and these employees are considered retired under the policies, then I might be concerned.

It would be a very interesting legal conflict if the participant has a right to roll over a distribution but the rollover would be a prohibited transaction. The participant has a right to roll over the distribution. You can finish the logical progression. But you need to watch any transactions in connection with the distribution, such as sale of shares. BTW, most ESOPs do not provide for in-service distributions except to satisfy diversification requirements.

Not if they are not providing services.

IRC 410(b)(3)©

Try again. A plan is not owned.