davef

Is anyone using Form 5500-SF for 412(i) plans? If so, what asset figures are you putting on Line 7 (considering that in prior years 412(i) plans didn't need to complete Sch. H or I)? Thanks for any help.

Would a mid-year amendment to a Safe Harbor plan's definition of Compensation (e.g., exclude bonuses) be permitted? Or would it violate the "plan year requirement" under Reg. Sec. 1.401(k)-3(e)? Could it be considered a reduction in the s-h match, which is permitted under 1.401(k)-3(g)?

The provider would be managing the investment allocation model selected by the advisor for the participant and would be paid through a sub-advisory agreement with the advisor's B/D. Under that agreement, a fee would be charged to the participant, of which a portion is paid to the provider and the rest is paid to the B/D (and ultimately to the advisor). So, assuming only university employees are covered, and assuming that their plan document (hopefully one exists) does not commit them to ERISA rules, I'm sensing from the responses above that the plan would not be covered by ERISA. Correct?

The university is a state university (University of (State) 403(b) Plan). As far as I know, only university employees are eligible -- but it's probably worth verifying this. The issue came up in regards to a financial advisor (registered rep) who is working with a provider to help participants with their investment choices under the plan. The advisor would be getting a share of the compensation received from the provider. I was getting third-hand information that this was an ERISA-covered plan, which got me concerned about possible fiduciary and prohibited transaction issues. I'm trying to make the point that this plan probably isn't covered by ERISA, and therefore the ERISA fiduciary/prohibited transaction rules don't come into play.

Hopefully this is an easy question. Are there any circumstances where a state university 403(b) plan WOULD be subject to ERISA Title 1? The plan has employer contributions, but I'm assuming this is irrelevant because the plan would be considered a governmental plan under ERISA.

The reason I asked was because I didn't have a copy of the Gray Book or the question. The answer by itself would not necessarily lead one to conclude that the question related to a former spouse under a QDRO. What was the original question?

Thanks. Was the question phrased in terms of a current or former spouse?

Any easy way to see IRS's response from 2001?

jpod, you make a good point about the ON BEHALF OF language. And I'm tending to agree that its purpose to to prevent "end around" type arrangements that are intended to skirt the restricted benefits rules. I don't think that an AP could be viewed as taking a benefit "on behalf of" the participant, since that would imply the AP is acting as sort of an "agent" for the participant, which certainly is not the case.

Absent any subterfuge mentioned by Andy the Actuary, I'd still have a hard time explaining to an AP that we were denying him/her a lump sum based on the principles in 415 or 401(a)(9), considering the benefit restrictions are under the 401(a)(4) nondiscrimination regs. If the AP says "Show me where the rules say I can't get a lump sum", I'd be hard pressed to come up with a definitive citation.

I'm not sure I agree that the AP can't get something the participant can't get. A QDRO can't "require a plan to provide any type or form of benefit, or any option, not otherwise provided by the plan." But I don't see anything that ties an AP's form of payment to the participant's form of payment. If the plan's restricted benefits provisions apply only to HCEs and former HCEs, that could be interpreted to say that all other with rights under the plan can receive any form of payment allowed under the plan, including a lump sum.

If an HCE is subject to the restricted benefits provisions under Reg. Sec. 1.401(a)(4)-5(b), and then gets divorced, is the alternate payee under a QDRO also subject to the restrictions? Or can the AP get a lump sum payment, if permitted under the plan? The regs seem to say that the restrictions only apply to the HCE.

I think you need to look at the 401(k) regs first. If you follow the definitions of "eligible employee" (who is the person making the cash or deferred election -- see Reg. Sec. 1.401(k)-1(a)(2)) and the definition of "employee" (see Reg. Sec. 1.410(b)-9), I believe you get to the result that only persons performing services for the employer can make deferrals under a 401(k) plan. Most disabled people don't meet this criteria. I also recall that the IRS has taken this position of a number of occasions.

I realize the IRS is looking for comments on this topic, but I was wondering if others have come up with their own correction methodology where an employee elects to make a Roth deferral but the employer fails to deposit the dollars into a Roth account (i.e., the employee's paycheck was unreduced for any Roth deferral) In the case I'm dealing with, there also would have been an associated match. We are considering the following approach, with the intent of keeping within the principles of EPCRS to put the person in the same position they would have been had the error not occurred: 1. The employer increases the employee's pay by the amount of the missed Roth deferral and then deducts it from the paycheck as a Roth contribution and deposits it into the plan. All applicable taxes are withheld. 2. The employer makes a make-up matching contribution to the person's match account. 3. The employer contributes an appropriate amount of earnings to both the Roth account and the match account. 4. For ADP/ACP testing and 415 purposes, both the Roth deferral and match would be considered made in the year in which the error occurred. Any issues I've overlooked?

I would think that, if there is a legitimate issue as to who the correct beneficiary should be, the employer (as the administrator of the plan) would want to make sure that the benefit was paid to the right person. I understand your interest in getting to the bottom of this, but I think that the employer also has an obligation to try and get it right. In situations where more than one person believes they are entitled to money (such as with life insurance proceeds), these can be resolved through an interpleader action. If you Google "interpleader" you'll get a better idea of what is involved. Hopes this gets you pointed in the right direction.