jpod

QDROphile, I respectfully disagree. Heretofore there was no regulatory definition of SRF for purposes of 457(f). 409A does not fill the gap. If one assumes a different and presumably more liberal definition of SRF for 457(f) than for 409A, it was possible to fully comply with both Sections of the Code even though the arrangement used a definition of SRF that did not buy you out of 409A(i.e., the only consequence of not having a 409A SRF is that your arrangement must comply with 409A, which can be as simple as pie). The Notice tells the world that IRS intends to publish regs. under 457f that will adopt the same definition of SRF as is used in the 409A regs.

I think what Qdrophile is hinting at is that you should look at IRS Notice 2007-62.

I think you're making a big professional mistake if you don't reconsider Bill Presson's comments and communicate same to your client, and quickly.

Doesn't the Notice state that the application will be filed on "Date X?" If so, won't you have a problem if you miss that date, even if you're still within the 24 days?

Yes, 100% comfortable. Do you have any S-8s for phantom stock plans handy which you can cite to us? Granted, there are S-8s out there covering omnibus plans that contain both registerable interests and non-registerable interests, but I would hardly characterize that as doing an S-8 for a free phantom stock plan "just in case."

The SEC staff would consider an interest in a NQDC Plan a security subject to registration only if it was elective. How is that pertinent to the facts stated by StephenJ7976?

Based on your response, I don't understand why you are trying to figure out how 701 should apply. You don't need to register anything or an exemption from registration.

I don't know what people are doing, but IMHO anyone who does it now or even did it in the past should have his/her head examined.

Sorry, but I'm not following you. Is there an offer to sell restricted stock, phantom stock or phantom units? (I am assuming that there is no consideration changing hands, other than the employee's services.)

Why would phantom stock, phantom units or restricted stock involve the "offer of a security" for which registration or an exemption is necessary?

My take on these mistakes (which are not uncommon), is that the employee is entitled to a spending account balance equal to the amount which should have been taken out of his or her pay, at the time(s) it should have been taken out of pay. The employer needs to allocate the money to the employee's account, and cannot make the employee supplying the funds a condition of doing so. That's step 1. Step 2 is how the employee makes the employer whole. This can be done pre-tax through deductions from future paychecks. or post-tax by having the employee write a check to the employer, or by having the employer waive the employee's repayment obligation. However, how step 2 is handled has no bearing on step 1.

To avoid any pt issues (including the independent appraiser/"adequate consideration" requirement), why can't you terminate the plan and distribute the shares in kind, sell them back to the corporation, then roll over the cash to an IRA or another plan during the 60-day rollover period? However, I am not ignoring or diminishing the signficiance of any of the other issues in this chain.

One of the first questions a good auditor might ask is "why do only 30 employees out of 120 eligible elect to participate in a safe harbor plan?" Sounds fishy to me. Is the notice being distributed to everyone to whom it should be distributed?

If the plan is truly eligible to file an EZ, it is not subject to DOL penalties (because it is not subject to Title I of ERISA for the year covered by the EZ).

QDROphile: Please explain further. Why is it a "sham" and "bogus" if the IRS says it's ok (and I agree that they think it's ok). Are you saying it is not a correct application of the law? You may be right about that, but what are the downsides of taking advantage of something permitted by the responsible administrative agency?

Leevana: We're on the same page. I wasn't so much commenting on your response as I was attempting to stress the point that the plan document controls (subject to my caveat about risk management), because I was sensing that the OP's question was prompted by some push back from employees.

Call the court. If the court entered a QDRO for you, eventually you can get it. If there was some snafu or other problem and you can't get it from the court, here are some ideas. 1. Have you tried discussing it with your ex-husband? If not, is that worth a try? 2. Were you represented by a lawyer? If so, contact him/her. 3. Contact the employer of your ex-husband that sponsored the plan to which the QDRO relates. Try by telephone and ask to be transferred to human resources or the personnel department (or the employee benefits department if it is a large company). If that doesn't work, send the employer a letter by certified mail/return receipt requested. 4. If you have the name and location of the employer, but have no luck with #1, #2 or #3, contact the regional office of the U. S. Dept. of Labor's Employee Benefits Security Administration, and see if they will contact the employer, or at least give you some ideas which I cannot think of at this moment. You can find the telephone number of your regional office by going to www.dol.gov/ebsa.

The ER, through the terms of the written document, can absolutely define what is reimbursable (or not reimbursable), as long as anything reimbursable qualifies as a medical expense under the IRC and meets all other requirements of the Section 125 regulations. The fact that there is employee money involved is irrelevant. With that said, from a risk management perspective, if the ER is going to exclude certain expenses from eligibility it better highlight exactly what those exclusions are in bold print on the election form. In my view, merely stating these exclusions in a separate SPD and not on the same piece of paper used as the election form is asking for trouble.

Give us more facts, like - 1. How much does the client believe was stolen? 2. How much can the client prove was stolen by this employee? 3. Is the client prepared to go to the police/FBI over this? 4. Is the answer to Q2 a large enough to justify filing a civil suit against the employee? If so, why not file the suit TODAY (figuratively speaking)? Once the employee is sued, or at least shown a copy of a formal complaint which the employer is getting ready to file, he or she may be ready to negotiate over the disposition of the 401k money, which can be handled pursuant to the voluntary assignment procedures described by SRP.

Concerning point 3, look at the Notice.

A few observations. 1. Income inclusion date is the vesting date, not the date of payment. Therefore, under the plan as written, the 2-1/2 month deadline for payment may get you out of 409A, but why do you wish to leave open the possibility that vesting and payment will not be simultaneous, or almost simultaneous? 2. I agree with your observation about the need to make the revised plan 409A-compliant, unless there is something about the new deal that continues the SRF of forfeiture for purposes of Section 409A (e.g., will there be a material increase in potential benefits - other than earnings - as consideration for the additional deferral?). 3. Assuming you have not continued the SRF for purposes of Section 409A, won't the IRS say that you haven't continued the SRF for 457(f) either? (See Notice 2007-62.)

Has the participant made a written request/demand that could arguably trigger the ERISA claims review procedures? If so, the Plan Administrator should follow those procedures. I'm not saying the claim isn't bogus, I am just suggesting that you address and deny the claim in accordance with the procedures

Steelerfan: How dare you? I, for one, am not fat. Often bloated, but not fat.

My comments don't apply to notifying participants, because I would NEVER UNDER ANY CIRCUMSTANCES go to the participants, except if the DOL forced me to do that.

Butler: Always useful to hear about real cases. Please clarify: Do you mean you'd be more concerned about legal exposure resulting from notifying the Feds or from not notifying the Feds?