Erik Read

Can anyone provide cites or tax code reference that shows that distributions to a spouse via a DRO, rolled into a "Traditional IRA" not a "Conduit IRA" can be rolled back into another qualified plan as long as the "TIRA" never had other assets? Next - is there a cite that says it cannot be done? Suggestions? We have a client who will be recieving a distribution from her now ex-husband but would like to roll it into her existing 401(k) - can this be done via a QDRO distribution?

Next time you call the "service line" ask them if there is a contact or address for mailing Firm Complaints to. They ought to direct you to a "Supervisor" or "Compliance Manager". Good luck - sounds like a terrible experience.

If the $75 isn't paid from the plan, then it's not included or excluded from the $5k. If the distribution is $5k then amortize $5k. If the loan was for $5k and you subtracted the $75 before the check went to the participant, then amortize $5k.

Touchy situation. Depends on how many payments are currently due. I suppose you could argue mistake-in-fact, deduct the payments, credit the participant, and then be sure that payroll deductions are started again immediatly. If you were to do that, you would want to document the entire process for a future audit. Anyone have other suggestions for this situation?

Good points. Again - not suggesting that's the best way or only way, but that some documents I've seen have stated that as the correction. I agree that it does not address gain/loss and that is a concern. I haven't heard the arguement that the ops failure creates the Distributable Event - haven't thought of it that way, do any other firms out there share in that thought? Are there any PLR's that have addressed that? Thanks R. Butler - this is turning out to be a good topic!

Can be. Take a look at the overall expense ratios of the "sub-acounts" in the VA, perhaps your agent could put you into "B" shares with oppenheimer, which instead of a front-end load, have a load for withdrawals if taken within the first several years.

I disagree with UNA M. I think you need to look to the document, sometimes they are silent, but once in a while someone has a draft with a line item discussing excess deferral's. Aside from that I have always questioned if there isn't a distributable event, how you can justify the return to the participant? I've seen it done with a "negative" election on the following payroll - depends again on if the document is silent or not. Good Luck.

Did he continue to make payments during the black out period, and are payments still being made? If not you may have other issues to contend with. I would suggest explaining the mistake to the new service provider - they eliminate the loan, and if the participant still wants the loan, he takes a new one from the new provider. That would be the easiest way to avoid trouble - IMO

I work with one consultant/advisor who has gone to fund families on behalf of all his clients and negotiated the Break Points on a "relationship" basis. For example lets say and fund has a very high minimum investment for the "institutional" share class, our guy get's letters of intent from his clients, then negotiates a relationship basis with the fund family, as long as he is the "broker" of record on those accounts, they're eligible for the share class and/or break points. Just another tool to use, that takes the plan out of the picture, and puts some of the responsability back in the hands of the investment manager. Keeping in mind, his clients are smaller, trustee directed plans and not your large 401(k) with participant direction, so he does have control to be sure the assets flow to those funds.

I would say it depends on if he passed the physical, and if not, if he can contest the results to show that the falure was due to the disability - then - he's hired!

Following in logic - if they're divorced (no mention of other heirs)and their was an equity split in the DRO. Then individual dies with no named heir and the assets then become those of the estate (most documents have laguage to such) - would the ex-spouse be entitled to the estate or would it pass to the State of residence?

Another prime example of why Self-Directed Brokerage accounts shouldn't be used in qualified plans. If the language of the document specifies that the SBA is not entitled to share in gains of the trust and will be considered seperate, it should also have a reference to the distribution value. The participant is entiled to his anniversary balance for assets outside the SBA, but only the amount at the time of distribution for the SBA - it's his account, his problem. The only exception that I could see would be if upon termination his access to trade that account was turned off, so he had no control of the assets in that account, then you may have an issue. This ought to be an interesting string of opinions

Aside from moral issues with the ee's I don't see a problem with stopping the deposits. If the document specifies that the match is descretionary, then it is not required. However, the notice may be construed as a "board res" stating the match for the current plan year, and at the end of the year, the sponsor may need to make the contribution to the account. There's nothing in what you give us as facts to say the match needs to be deposited monthly either - so he can stop that, and make a single deposit by tax deadline for corporation and still get the deduction, or alternativly - the corp has 12 months after plan year end to fund the match. Good Luck.

A few things may have happened - your company may have actually had the stock appraised rather than carring it at "book" value for the last several years. They may have also had something happen at the corporate level that as an employee you didn't see, but as a share holder you are seeing the after math. Recourse - ask for a copy of the "annual report" you may be charged for "coping fees" to recieve it, you can also request copies of the annual filing form from either your employer or the IRS. This will show you historical prices. I would tend to believe something happened and the employer had the stock appraised at fair market value, causing the large swing in price, if they've been using book in the past. There may not be anything you can do. Good Luck

If the employer is wanting to "pre-fund" the PS and Match amounts because of cash flows, one alternative is to have them set aside the $'s they would have put into the plan and use that to fund the contribution once it has been calculated. That will avoid potential cash shortages, and not create any admin nightmares for the recordkeeper and administrators. Keep in mind - the account would be a corporate account - not a plan account, and they cannot make the mistake of putting deferral dollars there at any point in time! Good Luck!

Seems odd that you would budget for more than the formula with a Money Purchase Pension Plan - usually only hear of increase's or decreases with Profit Sharing Plans in the budgetting process. I think don't think you can use two allocation formula's in the same year for a MPPP. I've never seen it done. Unless you could get creative with the formula and show something like first 1000 hours at 6% last 1000 hours at 8%... not sure that would fly either. The other issue I would have is with regard to the amendment, does the company plan on amending the formula again in the following years or is this a one time rate increase?

Very good questions. When you left in February (2000?) were you activly participating in the 401(k)? If so - your aren't eligible for a deductible contribution to an IRA, but you can open an IRA. If your wife is not an "active" participant in a plan then she is eligible, your deduction is prorated based on compensation and the State you live in. Check with your CPA or use the IRA deduction calculator in your Tax Software to see what you can do. Hope that helps.

Just a thought - I know when working with software programs you had to be very specific as to the type of contribution and which field you entered which $ amount into for cross testing plans. Some have a simple screen that show's total contribution - if you include all source's it assumes that is the "contribution" and does not consider each source. We had to input the specific $'s in a detail level field to get the response we were looking for on cross-testing. Maybe that will help.

Brett - depending on the size of the Plan, I know that when I was with Franklin-Templeton's ValuSelect product we took over a Davis Bacon plan. You might contact them and see what they say. Aside from them - try CNA Trust out of Costa Mesa they work with most types of plans and have bundled style services. Good Luck

Okay - sure CODA (Cash or Deferred Arangement) would work just fine in this case, I think you could word the document to accept deferrals on the bonus, and the bonus is 100% up to the employer - no formula involved. Only issue then is that the employee's may want the cash to take home rather than put away for retirement.

Okay - sounds like we're getting somewhere now. So - he never received notice (that we know of), and he didn't have knowledge of access with the previous vendor, so he wouldn't be able to track his account daily if it were still in the original investments. Calculation should be - the better of the original investment, or the highest yeilding investment after the transfer, annualized and credited to his account for the period in question. That ought to suffice for your friend, the rest of the issues are between his employere and the recordkeepers.

Are we talking apples and oranges here? The original questions states that the "funds" were not "mapped" correctly, not that the participants were shorted assets. My question would be, are we talking about gains/loses for fund performance, or did the recordkeeper actually allocate assets incorrectly? I agree that if a participant was shorted assets in the original allocation they should be made whole. If the issue is that the funds were miss mapped, so participants didn't recieve correct gains for a period of time, that can be corrected with a reallocation and adjusting the balance for those participants. I don't see an issues with fixing those accounts, it shouldn't have an effect on the other participants. In this case the recordkeeper wouldn't be move money from one to another - they would "refund" the difference in gains/loses. Any one see my point in all this? I hope so.

Are you asking if the "Plan" can make a loan to the individual or if the "participant" can take a loan himself, and then re-loan that money to the individual? There is a big difference.

You are not alone. I see your ramifications, and since I didn't post the question on the FMLA, I don't want to step on toes - but, I would suspect we're wondering if an ee were to go on leave under the FMLA, the document would have to account for that time, and depending on the State may or may not be able to exclude that from attendance in the formula. Is that correct?

I Agree! I think if the fiduciary - named or not, is participating in, or worse yet, initiating the inquiry, we have a problem, and I would file for the PTE. I'm not sure that I agree the "plan" isn't involved in the transaction. I think under an audit, someone would link the plan into the situation as an intersted party at the least in the LOI for the breakpoints.