J Simmons

Sieve--are these carryover tactics from your KGB days?

Yes, just like if you had a 401k plan.

For one of the 404c investment options totbe designated as a QDIA (and provide QDIA protection for the fiduciaries), there is not an extra requirement that the prospectuses be provided at any time other than when required of any 404c investment option. So your thinking appears to be correct.

Yeah, WTF?

Yes. Yes, unless the CBA required that the benefits be held by the ER in a trust. Also, if you have other EEs, not covered by the CBA, might have to be included as well.

There's at least one federal court decision that has held that the EEs in such a situation would be losing coverage when the set period of time ends, but not by reason of their termination of employment--and therefore those EEs might not be entitled to COBRA continuation rights at that time.

Yes.

The income taxation of 457f benefits is the first year in which the right to (eventual) payment is no longer IRC § § 457(f)(1)(A) and (3)(B) So it really doesn't matter whether paid all at once or spread out.

Historically, there have been other 'huge rips' in other 'social contracts'. I think there are many more voters that do not have and do not understand Roth benefits than those that would be affected by Congress now going sideways on Roth taxation.

If they don't pay taxes on the premiums for LTD coverage, and then become disabled and receive LTD benefits, they will pay income taxes on those benefits. This is so at any age. LTD benefits--as an income replacement benefit for those who cannot continue working--frequently end at age 65, presumed age at which they would retire otherwise. If your group LTD policy provides does not provide benefits beyond age 65, I wonder why you'd be paying premiums for those employees over age 65 and yet working. If the group LTD policy would provide benefits beyond age 65, such as for 1 or 2 years after becoming disabled at a post-65 age, then the premiums for such coverage could either be taxable or tax-free to the employee. However, if tax-free to the over-65 employee and he or she becomes disabled and begins drawing LTD benefits, then those LTD benefits will be taxable income that person.

If the employee has been taxed on the LTD premiums when paid by the employer, why are any of the employees on LTD paying taxes on the LTD benefits paid to them, regardless of age?

Yes. The spouse did Whoa, not so fast. That's where the plan language and plan administrator's interpretation comes into play. The spouse has two interests under the plan. One is to a qualified preretirement survivor annuity or qualified joint and survivor annuity. (The spouse clearly consented to the waiver of these forms of survivorship annuities from what you originally posted.) The other is as the employee-designated death beneficiary. It was not necessary that the spouse waive that designation as death beneficiary in order for the survivorship annuities not to apply, clearing the way for the lump sum distribution that had been elected but not paid by the time of the employee's death. So the question is whether the waiver that the spouse did sign not only applies to the survivorship annuities, but perhaps also to the death benefit payable in whatever form. That's where the plan language and the plan administrator's interpretation will have to come into play.

That is my understanding also, but I have read in a few places that plans where participation is voluntary, no contribution is made by the employer, & the employer does not actively sponsor, are not subject to ERISA reporting & disclosure requirements. I m having trouble reconciling for the employer. Thanks I misunderstood or misread your original post. You might qualify for the 29 CFR § 2510.3-1(j) exception. There is a bit more to it, but you might qualify.

I think that's close to the crux of the OP's question: did the spouse (the death beneficiary) waive that death benefit by consenting to a payout to EE just before the EE died--making the benefits payable to the EE's estate rather than to the spouse? I think that will depend on an application of what this plan's documents specifically provide, and the plan administrator's interpretation of those. Depending on that language, the plan administrator might consider waiver of survivorship rights to waive the spouse's rights as a death beneficiary as well.

It applies for the proposition that what the plan documents say is the critical determinant.

To her, as part of a taxable distribution. Since she is then both the obligated debtor and the note holder, the loan is essentially canceled out. She makes no more payments on the loan.

You need to consult a knowledgeable ERISA Attorney in your area as soon as possible. The outcome depends on plan language, per Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, decided by the U.S. Supreme Court on 1/26/2009.

About 50% done at this point.

The decision to distribute incident to plan termination the note in-kind to her should be (per the plan document) up to the employer, not the borrowing participant. She might find that 2009 tax rates would be lower than those in 2010. So the ER doing the in-kind distribution in 2009 rather than waiting until 2010 for her to default might actually be to her advantage--and the ER gets out of having to do admin for any of 2010.

I see them both ways. I think your norm is more accurately dividing the assets accrued to date of divorce, from a domestic relations point of view. That's what the benefit would be if the employee quit employment as of the date of divorce. However, later enhancements to pre-divorce accruals have been allowed by state divorce courts. For example, if the employee vests further in pre-divorce accruals by reason of post-divorce service, the ex-spouse is allowed the further vesting in Idaho (my state) per a state supreme court ruling.

I think the vesting due to partial termination only applies to those that the employer initiated the termination of employment. Rev Rul 2007-43.As for the time frame, the IRS position seems to be that the 'Applicable Period' is at a minimum a 12 month plan period, but could be longer. This quote is another from Rev Rul 2007-43:

Incident to the termination, you could simply distribute that part of the EE's benefits that are represented by the unpaid balance of the note (i.e., the creditor end of the note currently being the Plan) by transferring the promissory note from the plan to him. It would be an in-kind distribution. He'll be taxable on the balance of unpaid principal and interest at that time, and you would so report it on the Form 1099-R issued to him for the year. The note could not be rolled by him into an IRA. So you might ask him if he wants to pay the entire note off prior to his benefits distribution, so that he could then roll over that part of his benefits too.

I think you have an ERISA plan because the STD program cannot be considered just a payroll practice of continued wages as the EE [corrected] is not bearing all of the cost.

Thanks, Everett.

There's at least one court decision out there that would suggest that when the former EE then loses his coverage on 10/1 rather than 8/1 (the normal practice of the first day of the month after employment ends), the 10/1 loss of coverage would not be incident to the termination of employment. Ergo, no COBRA coverage. If your health plan is third-party insured, you might want to check with the third-party insurer to make sure that it will not take the position that COBRA does not apply--if the ER and this former EE are wanting COBRA to apply. Also, considering that this former EE might be eligible for the COBRA subsidy, even the coverage for August and September might be more costly for the ER and former EE than if the former EE could go onto subsidized COBRA immediately.