IRA

Can a 457(b) plan have a rolling risk of forfeiture?

Why are you running an ADP test on a 403(b) plan?

Does 410(b)(6)(C have any application to the universal availability rule?

Rcline, Correct. Nothing prevents a DB plan administrator from using plan assets to pay to process a QDRO, provided that the plan does not prohibit such use of plan assets and the expense is reasonable and necessary for the administration of the plan and the fiduciary is not otherwise breaching its fiduciary duties or engaging in a non-exempt PT by using the plan assets to pay the plan expenses. But 411(d)(6) prevents a reduction in accrued benefits. The use of plan assets to pay plan expenses is no exception to 411(d)(6).

Does an employer contribution to an HSA automatically make the HDHP subject to COBRA? Assume the HSA is not subject to ERISA because the employer follows the DOL guidance to avoid ERISA. I think it does, but I am hoping somebody is aware of some guidance that says otherwise.

I am not sure now that conditioning the opt out on not going to the Exchange would violate the anti-retaliation rules. Does anyone else have thoughts on that?

If employer offers the employee affordable coverage that provides minimum value, then the employee is not eligible for the subsidy -- no "b" penalty. If the employee reduced hours below 30 and is not full time (assume no stability period), then no "b" penalty. The above should not "b" a problem. The problem that could arise is what happens if the employee reduces hours and thus reduces pay, is still in a stability period as full time, but the coverage is not affordable. This implicates what safe harbor the employer is using to measure affordability. That could "b" a problem. Allowing an "opt out" conditioned on not obtaining subsidies would most likely violate the ACA anti-retaliation rules.

Our DB plan is less than 80% funded. We want to amend it to increase benefits. But we can't because of 436. Can we just adopt a new plan to provide the additional benefits we want to provide? Or would the adoption of the new plan be combined with the old plan for purposes of 436?

Should the controlling health plan be the wrap plan or the major medical plan that is wrapped into the wrap plan (along with other health plans such as vision and dental)?

Peter, If the nothing DRO is not a QDRO, the spouse would continue to be the spouse until the date of divorce. The "nothing" DRO would say the spouse is not a spouse (or former spouse) before the divorce is finalized. In other words, the spouse gets nothing, not even spousal survivor benefits.

Thanks for the responses. To $0.02, the cases are clear that spousal status is determined as of the annuity starting date.

Thanks for all the responses. Just to further the conversation, here are some additional thoughts. First, I agree you can have a QDRO without a divorce being final. Second, I agree that a state court can provide that the spouse will take none of the pension. Third, for BG5150, this is a DB plan and the plan does not allow a participant to elect a form of distribution prior to retirement, so your statement that the spouse can sign off on the beneficiary designation really relates to the spouse waiving the QJSA before the participant has a chance to elect any other form of distribution. My issue is the statute says a QDRO must "create or recognize the existence of an alternate payee's right to, or assigns to...." Does that encompass recognizing the existence of no right to benefits? The person who has seen QDROs that award zero probably didn't have an issue because once the divorce is final everything is OK. I thought there was a case on this, but maybe not. Finally, as to BG5150, good catch. I mentioned beneficiary designation because I was tying to keep it simple, but there are other things going on here. For QDROphile, the statute says for all purposes of 401(a)(11) and 417, so that covers it.

The general idea behind a QDRO or state law DRO/QDRO or even garnishment in general is the third party should not be required to pay more than what it has on account for the participant/garnishee. That would be like trying to get a bank to pay you more than what is in your husband's bank account. If your husband doesn't have money in the plan, then there is nothing for the plan to pay. The plan can't steal the money from someone else's account. Just make sure that you get 100% of what is in the plan for your ex-husband and 100% of what will be in there for your husband until you are paid in full. Other than that, you have to get the money from the ex-husband some way else.

Can a DRO that says a participant's spouse will receive no benefits (and will not be considered a former spouse or surviving spouse) be a QDRO, assuming all the other requirements are met (e.g., name of alternate payee, address, name of plan, etc.)? The idea is to allow the participant to name a different beneficiary before the divorce is final.

Client had a DB plan with 5-year cliff vesting. A participant terminated in 2012 and took a distribution. The client froze the DB Plan effective 12/31/13. It started a 401(k) plan with a match on January 1, 2014. The participant who terminated in 2012 was rehired in 2014. Does the client have to credit the participant with eligibility service under the 401(k) plan on the date of rehire? I think the answer is yes for two and 1/2 reasons. First, no 5-year break and thus service not lost. Second, the participant was not a participant in the 401(k) plan, and the rule of parity only applies to participants. Since the terminated individual was not a participant in the 401(k) plan, the rule of parity does not apply for purposes of crediting service under the 401(k) plan. The second and one-half reason is that even if you consider the DB participation as being a participant for purposes of applying the rule of parity to the 401(k) plan, the participant was vested and thus the rule of parity does not apply. Change the facts a little. What if the employee did not participate in the DB plan and terminated in 2008 after being with the company for over five years and working over 1,000 hours in each of those years. In that case the individual would not have been a participant. Does that mean the years credited before the 401(k) plan have to be counted for eligibility puropses even though the employee was gone for more than 5 years?

What it the 403(b) plan gets hit with an audit while the 1023 is pending? Would the reviewer leave the audit open pending the outcome of the 1023 filing? Then, if the 1023 filing is rejected, does that mean the 403(b) plan has to go audit cap? Also, what if the employer adopts the 403(b) before filing the Form 1023? Can they take advantage of the 27-month retroactive exemption under the 1023? If they don't file in 27 months, they will have to go VCP for prior contributions. But if they get audited before filing the 1023, would the IRS take the position that the employer is not eligible because it has not filed a Form 1023, or would the IRS hold the audit open to see if the Form 1023 gets filed in time? Of course the employer could avoid this issue by filing the 1023 as soon as possible. My best guess, though it is only a guess, is the reviewer would hold the audit open to see if the employer files the 1023. Once it is filed, the reviewer would follow the audit guidelines and check to make sure the representations on the 1023 are accurate. Then the reviewer would hopefully close the audit before the 1023 review is completed. That way the audit would not be open when the 1023 gets rejected; I least I hope that would be the result. Audit CAP would be horrible.

Thanks. I missed that.

If you think double dipping is allowed, go ahead and do it. Then when you file your returns, let the IRS know - make it abundantly clear - that you double dipped and see what the IRS says. You might end up owing underpayment penalties, but who knows, maybe the IRS will agree with you.

Our client has 10/1 - 09/30 fiscal year. Their insurance policies renew 10/1, but they want to operate the FSA on a calendar year. Can we write the plan so that the coverage period for pre-tax health insurance will be 10/1 - 09/30 but the coverage period for the FSA will be the calendar year?

Section 414(p)(6)(B) does by its terms require a plan to establish QDRO procedures. The 403(b) regulations say that a 403(b) plan does not violate the 403(b) distribution restrictions "merely as a result of a distribution made pursuant to a qualified domestic relations order under section 414(p)." This suggests that the 403(b) regulations incorporate all of section 414(p), including the requirement to adopt the QDRO procedures. The issue is not 401(a)(13); the issue is the distribution restrictions under 403(b). Thus, although 414(p) does not apply to governmental plans, it seems to apply to all 403(b) plans. Is there any guidance that indicates otherwise? This has now become academic however because the client has gone from "do we need it" to agreeing that they "should have it 'as a matter of self-preservation.'" As GMK pointed out that is good advice you gave.

Are non-ERISA 403(b) plans (e.g., governmental 403(b) plans) required to have QDRO policies? I believe they do because the 403(b) regs say "under section 414(p)," which I take to incorporate all of the 414(p) requirements. Assume state law is silent on the issue.

I wonder how often they audit you after rejecting your application, and how quickly they give you notice of the audit.

If your application is denied, would you be "Under Examination," and thus not eligible to correct with VCP?

That is what I figured, except in doing it you can't make anyone wait more than 18 months so you may need to "grandfather" some employees.

Can you change entry dates for matching contributions from first day of month to semi-annual? The plan has one-year of service/age 21 eligibility.