KIP KRAUS

QDROphile Maybe I’m not getting all of what you are intending to say here, so forgive me if I misinterpreted anything you said, but I think that any definitions of participant or rules related to distributions should be in the plan document. The cart comes before the horse. The plan document first and QDRO qualifying procedures follow the plan document provisions.

MWeddell I guess it’s just a matter of semantics. All I’m saying is that an AP cannot have the same advantages as an employee who is working for the company who is sponsoring the 410(k) plan, and a QDRO cannot require a plan to give the AP those advantages. Most APs have never been employee/participants in the plan that they have been assigned AP status. Therefore they cannot by QDRO be given the plan advantages as an employee/participant. I don’t know if this clears up my position, be it wrong or right, but I hope so.

My last word on this. To my knowledge there is no regulation that requires a plan to allow a non-actively employed participant(a former employee participant of the plan) a loan or hardship withdrawal. Therefore, if the plan does not allow loans or hardship withdrawals to these types of participants then, in my opinion the plan cannot be forced by QDRO or otherwise to allow a non-actively employed AP to recieve these options regardless of whether his/her former spouse is actively employed or not. The AP's status in the plan, in my opinion has nothing to do with the former spouses, it stands alone, and the AP cannot have the same status as employees in the plan. '

Don't know what a fertility monitor is unless it is used to determine when you are ovulating. If that is the purpose, I wouldn't allow it as a reimbursable medical expense. The thermometer wouldn't be reimbursed either.

Well Christine, I’m just thinking out loud on this one, but here goes. If the employee rejects COBRA and takes the part-time coverage I definitely feel that the original COBRA QE is done and over with after the 60-day election period. From that point on I wouldn’t be concerned about the definition of alternate coverage. If another QE occurs while the employee is covered under the part-time benefit plan then the COBRA election, in my opinion would be for the part-time coverage. Having said, however, I would be concerned if the part-time benefits were so much less in terms of what is covered, not so much deductibles and co-pays, but what hospital/medical & surgical benefits are covered. Even then, I wouldn’t be overly concerned, because if the employee needed the higher coverage at the original QE, he/she should have selected it. If your employment status changes, you get what you get.

MWeddell I’m not sure I understand your second point relative to a carefully drafted QDRO giving the AP the right to a hardship withdrawal. If the plan document does not allow hardship withdrawals to non-active plan participants a QDRO cannot force such an issue on the plan, right?

I would check the plan document. Most plans I’ve been involved with do not allow hardship withdrawals to non-active employee participants. The alternative, if allowed by the plan document is to have the alternate payee take a total distribution and use what ever amount is needed for the hardship and roll the remaining amount over to an IRA. I believe that the net tax effect will be the same as taking a hardship withdrawal assuming that the AP is not age 591/2 or has medical expenses in excess of the IRS adjusted gross income percentage.

Christine: You come up with some good ones. It’s my interpretation that being dissatisfied with a particular medical in and of itself is not a QE. Dissatisfaction with s particular plan is addressed at open enrollment of the employee or spouse. This may not be your particular situation, but what if an employee gets pregnant and decides that her husband’s plan pays more for maternity? This could be considered dissatisfaction with a particular plan. Would this be a QE? I wouldn’t think so.

Rick: We did every thing you mentioned. I feel pretty sure we are on the right track at this point.

Generally the only time COBRA can be extended is if a person is totally disabled as established by Social Security. You could check with the state insurance department to see if they require continuation of coverage more favorable than COBRA, but I don’t believe they do. Your other option would be to convert your COBRA coverage to an individual policy through the insurer that is providing COBRA.

Excellent response KJohnson. sidneysheldon: I don’t know what the laws are in the state that you live in, but I would ask my attorney why he/she says you are only entitled to 50% of what’s left. Most of the QDROs I’ve seen in New York state base calculations on an account balance as of a certain date and then ask for a % or dollar amount based on contributions and earnings to the 401(k) plan during the years of marriage. The result may very well be 50%, but you may be able to get a % of the totals of all his account balances in his rolled over IRAs as of a certain date. I hope I’m making sense?????????????

mwyatt: Thanks. No there were no assets or participants at 7/31/00. I plan to file one 5500 for the final plan year an plan year ended 7/31/00. Thanks.

Christine: I agree that Section 152 could define someone as a dependent. However, a welfare plan document and/or an insurance contract definition of dependent would take precedence over Section 152 with regard to COBRA eligibility, would it not?

Christine: Not to be argumentative, but isn’t that essentially what we have here, an ineligible person in the plan in error? Not the employer’s error, but the employee’s error by wrog assumption? If so, I would still argue that the common law spouse is not eligible for COBRA.

Sorry folks, I meant to say multiple employer in my original post. However, I didn't know employers were allowed to do this. Now, a question for KJohnson. If you can't get an opinion letter is the arrangement eligible for tax favored treatment under Section 401(k)?

Wrong b2kates. I think you may be confusing loan sign-off with beneficiary sign-off.

We canceled a DC plan on 06/30/99, which had a plan year of 8/1 thru 7/31. We are just now filing the 5500 for the plan year end 7/31/00. Plan assets were distributed by 7/31/00. Can we file the normal plan year-end 5500 and final 5500 as a combined filing or do we have to file the normal year-end plan and then do a final filing? I can’t see doing it twice and I sure don’t want to pay to have final audit done separately

I’m not sure you can set up a multiemployer 401(k) plan for employers who are not part of a controlled group of corporations.

I’m not an attorney but I don’t think it makes any difference whether or not the son is the biological son of the participant’s spouse. In my opinion a legal spouse must sign off on a beneficiary designation.

contact the insurer and ask about a conversion policy.

Christine: Even if the employee was acting in good faith, does that necessarily give the common law spouse eligibility status under the employer’s plan? If not, then there would be no status as a QB under COBRA. If the employer had found out that someone ineligible for coverage was in the plan and terminated that person’s coverage would that trigger a QE for COBRA? I would say no, because a non-eligible person having been covered and found out has no status under the employer’s plan and therefore no status as a QB. Just my thoughts.

I would kind of like to know the answer to Jeanine’s question too. How did the common law spouse get benefits in the first place? And if a common law spouse is not eligible for benefits under the plan then COBRA wouldn’t apply, because he/she should have never been covered any way. Sounds like the employee may have intentionaly mislead the employer in order to get benefits for the common law spouse.

Christine: Don’t know of any sites for my opinion, but here it is. Since COBRA essentially says the QB is entitled to the same coverage as he/she had at the QE I would say that in your scenario a case could be made for allowing the QB to elect to continue the same plan at the actual COBRA rates charged for that plan. Unless the benefits for part-timers are considerably less than those provided to full-timers I would think most QBs would elect the part-time benefits over COBRA simply from the premium cost perspective. Thus, I am also suggesting that the employer would not be obligated to subsidize the COBRA premiums, because the subsidy provided under the part-time plan is part of that separate ERISA plan. I don’t know if this makes sense to anyone else out there, but I like it.

Mary, You have an odd situation. I’ve seen your posts on various other message threads. If your former employer is subject to COBRA then continuing your coverage for two months beyond termination does not alleviate his responsibility to offer you COBRA coverage. You need to call the employer immediately and the insurer. The longer you wait, the worse it will get.

With regard to the 60-day period, I believe the regs state that the 60 days starts either on the date of the QE or the date of the notice. I agree that it makes sense to allow mailing time before you start the 60-day period. Employers who worry about a day or two, in opinion are being unreasonable and it could get them in more trouble than it is worth. Lori, the thing about having the employee refuse coverage for the entire family and then having the family consent seems to be a waist of paper to me. I go along with Penn that if they don’t reply what really can you do? In addition, it is my understanding that even if they initially refuse coverage and they decide to elect coverage later (within the 60-day period) they can do so, and their written refusal has no effect.