Harwood

http://www.dol.gov/ebsa/regs/fedreg/proposed/2004004551.pdf

You better check the definition of Compensation before proceeding any further.

J&S no longer applies if it was a rollover to a new plan [an elective rollover where the money could have been distributed in cash]. Was this an elective rollover or involuntary transfer?

I prefer NOT to set up a separate account if there is going to be an immediate distribution to the Alternate Payee.

http://benefitslink.com/modperl/qa.cgi?db=qa_estate_ira&id=3

ERISA Outline Book 2004: page 15.542. Chapter 15 Section VI, Part B.6.f.(2)(d) The "Problem Resolution Table" starting at page 15.601 [both 2001 and 2004 editions] is most useful.

ERISA Outline Book: "many administrators have used code P, 8, or E so that the distribution appears to be one that is exempt from the penalty. We emphasize, however, that there is no authorization on Form 1099-R to do this, and the IRS has not provided any guidance to this effect."

If memory serves, this is one of those burning topics that the correction Rev. Proc. never deals with.

It is allowed. We recommend that it not be higher than $1,000.

In a Corbel adoption agreement, there is a question: "will voting rights in Employer Stock as Designated Investment Alternatives be passed through to Participants?" [Answer must be yes if the plan wants to comply with ERISA 404©].

From the ERISA Outline Book: "The plan may want to place a hold on a participant's right to direct investments when the plan receives a QDRO, or possibly when the plan is notified of a pending QDRO. The concern is when the participant's exercise of control over investments could negatively affect the value of the alternate payee's interest. In Schoonmaker v. Amoco Corp. Employee Savings Plan, 987 F.2d 410 (7th Cir. 1993)), the court held that a plan may not place such a hold unless the plan's written QDRO procedures provide for it."

Joinders do not constitute a QDRO because they never have the minimum requirements to be a QDRO [such as a clear-cut award amount to the Alternate Payee]. My very simplistic view is that joinders are a formal, over-the-top way of meeting the requirements of California Family Code Section 755(b) - providing a written notice that someone is claiming to own part of the Participant's balance. The Sponsor and Trustee need to halt distributions from the Participant's balance until the matter is resolved via a QDRO. We tell clients that a failure to file a Notice of Appearance within 30 days from receipt may subject the Plan to a default judgment and preclude objection to the terms of the order. Code 755(b) link: http://www.leginfo.ca.gov/cgi-bin/displayc...00&file=750-755

Between requiring payroll deductions to repay loans and having termination of employment making the loan due and payable, aren't all terminees and alternate payees locked out of applying for a loan?

ERISA Outline Book [2004] definition of Earned Income, Part A.8.a. and Part E. touches on the subject, with no firm answer.

Let's not forget Katherine's first post - withholding can be higher but the money is ultimately taxed at the same rate, regardless of the withholding.

I go fund-by-fund, transaction-by-transaction, and do an exact calculation, tracking the Alternate Payee's gain/loss within the Participant's account. Then, to ensure that I didn't make a major error, I apply my reasonableness test to see if the Alternate Payee's current balance is within the ballpark. The value of the Alternate Payee's award at the time of the split is 1. I take the Participant's balance at the time of the account split and add half of contributions that have come in since the split. 2. I divide 1 by 2 and multiply that times the dollar gain/loss in the participant's account from the split date through today, when we are actually splitting the account. The result is usually within a de minimis amount difference from the exact calculation. [This formula assumes that contributions come in on a relatively even chronological basis]

Most states, understandably, require written authorization before you can make "voluntary" deductions from a person's paycheck. This link discusses some of the issues: http://www.reish.com/practice_areas/EmpBen...irsguidance.cfm

In Publication 15, look at "Supplemental Wages" Supplemental wages are compensation paid in addition to employee’s regular wages. They include, but are not limited to, bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. How you withhold on supplemental payments depends on whether the supplemental payment is identified as a separate payment from regular wages. Etc.

I agree that forfeiture should be permanent and not reinstated. But for what purposes are you ignoring pre-break service? Vesting? Eligibility?

If the plan favors Highly Compensated Individuals, all or part of the reimbursements to HCIs is subject to Federal Income Tax Withholding. See IRS Publication 15-B and IRC 105(h)

The latest "Audits of Employee Benefit Plans" goes through March 1, 2003. Perhaps some CPA has access to an AICPA update on this issue [the news about the change to the 2003 5500 requirements was announced around January 2004]. http://www.corbel.com/news/technicalupdates.asp?ID=243&T=P has a little bit on the subject

There certainly does not need to be 100% testing at the Participant level. However, it seems entirely appropriate to see that, for the plan as a whole, the deferrals for each and every paydate were received by the Trust on a timely basis.

From Publication 15, Circular E, Employer's Tax Guide: "Cafeteria plan benefits under section 125. If employee chooses cash, subject to all employment taxes." You can't report employment taxes [FICA] on a 1099

Isn't the policy considered to "forming part of the plan," no matter where it is? 2550.408(b)-1(d) (2) For participant loans granted or renewed on or after the last day of the first plan year beginning on or after January 1, 1989, the participant loan program which is contained in the plan or in a written document forming part of the plan includes, . . .

Since the military leave suspension-of-payments provision is optional [something I learned today], it looks like the 12-month regular LOA suspension provision is optional as well. The Plan would declare its rules in their loan policy section on "the events constituting default . . ."