J Simmons

403b plans of public schools are also exempt from ERISA, even if they have ER contributions.

Some of what you are asking was recently discussed at length in this thread

Larry, do you know if the inspection request (as distinguished from a document copy request) must be made in writing? Just curious--as it would be wise, I think, to allow the inspection within 10 days of an oral request just as it is to provide the documents within 30 days of an oral request, though technically required to be made in writing.

One additional comment. There can be 2 (or even more) QDROs against your benefits in the plan, but if the orders attempt to give more to the alternate payee children than you have in total vested benefits in that plan, the first QDRO determined to meet the federal rules will prevail over the second one. By the way, Mr Rogers, your situation is the first I've ran across where there are two QDROs aiming at plan benefits of one employee where the alternate payees are both children of different mothers, rather than ex-spouses.

QDROs, vacating them, modifying them, replacing them, etc. all begins in the state divorce courts (and state appellate processes). Due process means that at least reasonable attempts to notify you (service of process personally, or if that fails, the court may allow it by publication in a newspaper) must be made by those seeking the orders or modifications (or appeals). Each state's procedures vary somewhat from those of other states. Whatever orders issue out of that court system and are presented to the administrators of the plan must then be reviewed on behalf of the plan to determine if it meets certain federal law requirements. You should be notified by the plan administrator when it receives such an order, and begins its review process. For possible pro bono assistance (low-cost or free), you might start here However, you might be tripping over dollars to save dimes by not hiring qualified divorce and QDRO lawyers to assist you. Good luck.

The only 403b's I deal with are employee-contribution only. So I won't comment about the age and service eligibility part of your post. As for books, I've heard some go on about the Kristi Cook and Ellie Lowder book on 403b's. You can find out more about that book and others on 403b's here

Under Treas Reg 1.403(b)-3(b)(3) is where plan document is discussed. It talks in terms of a 403b contract needing to be part of a plan in order for contributions to be excluded from the EE's taxable income. See Treas Reg 1.403(b)-3(a). Since these regulations do not take effect until 1/1/2009, it is logical then that only post-2008 contributions to a 403b contract require that it be subject to a 403b plan of an employer to be excluded. Also check out Rev Proc 2007-71, section 8. It seems to exempt from any attempt to include 403b contracts as part of an ER's plan those 403b contracts that have not received new contributions since the end of 2004. However, also look at section 3.01 as the first sentence seems to assume that an employer is required by the regulations to adopt a 403b plan.

GMK, You are correct. IRS Temp Reg § 35.3405-1T, Q&A F-6.

Larry, They would yet be medical "expenses" then if insurance pays those expenses for the employee. All that would be necessary is that the employee have ever had medical expenses. Is that how you'd see it? If not, then is it the fact that the employee has to pay the loan back (bear the expense) that would differentiate the loan from the insurance situation. So then it would only be a hardship when and as the loan payments come due. That would be when the financial need comes into play. Could paying premiums for medical insurance be a hardship for which there might be a financial need? As an exception to the general rule against in-service distributions of 401k benefits before age 59 1/2, I would be very hesitant to give a broadening interpretation rather than a narrow one.

Are these terminated EEs given the promissory note as part of the total districtuion? If so, I think they are actual distributions because the loan is in the process forgiven. For example, the promissory note ought to actually be delivered to the EE. Or, are these terminated EEs defaulting on loans that are part of their undistributed benefits? If so, I think they are deemed distributions.

Whoa! Take a look at 1.401(a)(4)-5 about how timing of an amendment itself can be discriminatory. At a point in time when the only grandfathered folks would be HCEs you'd close the door to any nonHCEs being allowed to set up brokerage accounts. Get opinion of ERISA counsel, in writing, before going there. Better solution in my opinion than #1. While you can impose costs on terminated EEs that are picked up for current EEs, you might have a BRF issue here. Still like #2 best of the three.

Don't know about a de minimis exception. The new Proposed Treas Regs would let the ER keep the experience gains. You need to follow what your plan doc says about dealing with experience gains, particularly if the plan is subject to ERISA--it's a fiduciary duty to apply the plan as written. Also, if the plan is subject to ERISA, there is the fiduciary rule about discharging duties for the sole benefit of the participants and beneficiaries, but also 'defraying reasonable expenses of administering the plan'. So perhaps you could in a de minimis situation balance those in favor of avoiding extra admin costs that would be greater than the amount of experience gains in question. Look at ERISA § 404.

I seem to recollect that you only have to honor a document request that is made in writing and sent to the plan administrator. Since you have only 30 days before daily penalties can kick in for not providing documents, it would seem however better just to provide them promptly when asked.

Even if the terms are not commercially reasonable, are not the proceeds of the unreasonable loan yet a resource? I would think 1.401(k)-1(d)(3)(iv)©(5) would relieve the EE of having to apply for an unreasonable loan and yet have an immediate and heavy financial need, but with loan proceeds in hand, that looks to me like an alternate resource that belies immediate and heavy financial need. After all, once the unreasonable loan was made, the proceeds became assets of the EE--and as such an alternate means of relieving the hardship.

Does your plan offer 'dependents-only' coverage configuration without the employee also being covered? That would be unusual. If the only way that the dependents can be covered is in a family configuration that also includes the employee, then so be it--the employee gains coverage mid-year incidental to the dependents getting coverage.

Without election by the former EE for no or different tax withholding (Form W-4P or substitute), wouldn't 10% be required by default?

Probably confusion with the old key employee definition.

Will there be any re-design of the plan incident to the EGTRRA restatement? If so, you'll need to carve the fees for re-design out of the total restatement cost, and treat the carved out fees as settlor function expenses, not payable by the plan. Otherwise, the costs are to keep the plan updated so that it continues to be tax advantaged. Those costs may be paid by the plan.

My understanding is that the individual cannot have been a 5% or greater owner, directly or indirectly, at any time during the 5 years before reaching age 70 1/2 in order for continuing employment to delay the RBD beyond April 1 after the year in which he/she reaches age 70 1/2.

Look on pages 43955-57 of the Federal Register here (pages 19-21 of the pdf file that comes up). Prop Treas Reg 1.125-2 is one law you need to be concerned about. It is just a proposed regulation, but it does a fair job of capturing and setting forth in a cohesive format prior guidance from the IRS. Plan officials are also legally obligated to operate the cafeteria plan as written, if ERISA applies as it does to plans of most non-governmental, non-church employers (i.e., to private employers). So you need to look at what your plan document says about mid-year changes. ERISA section 404(a)(1)(D). You can check that statute out here

Go here, then under 'Select the Year of Publication' click on 1961, and then scroll down to Rev Rul 61-146. You'll similarly want to look up and read Rev Rul 75-241 and 85-44, to see how later pronouncements from the IRS added limits to the application of Rev Rul 61-146. For the Proposed Treas Reg 1.125-1(m), go here and go to the 16th and 17th pages of the .pdf that comes up, i.e. pages 43952-53 of the Federal Register. It is reading that helps cure insomnia!

Reading Rev Ruling 61-146 and new Propsed Treas Regs 1.125-1(m) will answer many of your follow-up questions.

You will likely lose ERISA preemption of state insurance regulation because it will be a multiple employer welfare arrangement (MEWA) if the non-hospital owned groups are allowed to participate. This means you might have to go through the process of registering the MEWA with the state insurance department as though it is a 'health insurer'. That would depend on what the documents signed by those other groups with the MEWA provide for them to pay. The COBRA continuants themselves could not be charged more than 102% of the cost of coverage. You also need experienced counsel looking into the self-funding and MEWA issues, and the agreements between the MEWA and each group.

Yes, but only if you have a written policy explaining the extra charges applicable to SDBs (charges applicable to specific plan accounts) will be charged and then you only so charge the SDBs for such charges incurred after the written policy is adopted and communicated to the participants and beneficiaries.

DB and Money Purchase Pension Plans may not allow in-service distributions prior to reaching the plan's normal retirement age. A profit sharing plan may permit EEs to withdraw benefits from employer profit sharing contributions that have been in the plan at least 2 years, and 401k benefits once the employee reaches age 59 1/2 years. The term 'transfer' is a term of art in the realm of qualified retirement plans. What you seem to be referring to is known as 'rollover' because it involves each employee having an individual decision in the matter. That being said, it is the later of the plan's normal retirement age or 10th anniversary of participation. Participation date is the entry date after satisfying any minimum age and service conditions, while vesting counts from date of hire. They do not equate unless plan eligibility and entry is immediately upon hire (i.e., no minimum age, minimum service or delayed entry date required). If the plan does not impose the 'later of normal retirement age or 10th anniversary of participation', then the employee that is yet in-service upon reaching the plan's stated normal retirement age may withdraw benefits (and if he chooses, roll them over into an IRA or other qualified retirement plan that allows). He may do so regardless of the hours he works.