Kirk Maldonado

That's the one.

This issue was discussed a few weeks ago. You should be able to find it if you do a search.

Don't worry; they will contact you. However, in some cases, it may take them a while to get to you.

Have you looked at the regs?

I have a client that did something even stupider. They have a wonderful investment available under their retirement plan, but only senior executives can invest their funds in it. This investment has historically provided much better returns than any of the other investments under the plan. Can anybody top that?

I agree that if the employee can't elect to receive cash, then you don't need to comply with Section 125 plan, regardless of whether the money goes into a qualified plan or a 403(B) annuity.

I stand corrected.

KFLETT: Have you tried reading Section 125? It's always a good place to start.

Archimage: I recommend that you meet the people there before you take a job with them. It might not be a pretty sight!

I think that assignments are limited to 10% of the participant's benefit.

I don't think that the fact that it does not involve a tax-qualified retirement plan is determinative.

Free t-shirts that have picturess of the naked pizza party on them right underneath the company logo.

Because the ESOP regulations focus upon the number of shares, not the dollar value. However, the IRS has informally taken the position with respect to the repayment of partially vested distributions that the amount that is restored is the dollar value; not the number of shares. While not entirely on point, it does support your position. Until there is authoritative guidance, I think that either position should be permissible.

KJohnson is correct with regard to in-service distributions after attainment of normal retirement age.

I don't think you can have an in-service distribution from a money purchase pension plan at any age.

I never said anything about equal shares. I only said that allocations from the suspense account must be in terms of the number of shares, not in dollar amounts, based on the following authorities. Treasury Regulation Section 54.4975-11 provides in relevant part as follows: As of the end of each plan year, the ESOP must consistently allocate to the participants' accounts non-monetary units representing participants' interests in assets withdrawn from the suspense account. Treasury Regulation Section 54.4975-7 provides in relevant part as follows: For each plan year during the duration of the loan, the number of securities released must equal the number of encumbered securities held immediately before release for the current plan year multiplied by a fraction * * * If collateral includes more than one class of securities, the number of securities of each class to be released for a plan year must be determined by applying the same fraction to each class.

I think that this issue surfaced in connection with the model rabbi trust developed by the IRS, and the IRS finally got comfortable with the fact that the shares are treated as outstanding. However, that was about 10 years ago, so my memory may be somewhat inaccurate.

If the DRO requires a payment in excess of the amount currently in the participant's account I would recommend the plan reject it because it requires payment of a benefit not provided by the plan (i.e., a benefit in excess of the account balance).

I'm not so sure that I concur in QDROphile's interpretation of the regulation. It expressly mentions plan not yet in existence and the duration of the person's employment with the company. Here is the relevant language: A cash or deferred election does not include a one-time irrevocable election upon an employee's commencement of employment with the employer or upon the employee's first becoming eligible under any plan of the employer, to have contributions equal to a specified amount or percentage of the employee's compensation (including no amount of compensation) made by the employer on the employee's behalf to the plan and to any other plan of the employer (including plans not yet established) for the duration of the employee's employment with the employer, or in the case of a defined benefit plan to receive accruals or other benefits (including no benefits) under such plans.

I disagree with QDROphile. Allocations from the suspense account of a leveraged ESOP are made in terms of number of shares, not basis or even fair market value. Thus, the returning veteran gets the same number of shares that he or she would have received had the participant not gone on the military leave, regardless of whether the stock has appreciated or depreciated during the interim.

Appleby: Do you take the position that the last of the refinanced loan can be more than five years after the date of the original loan?

I can tell you that it is almost always much cheaper to get advice ahead of time. The cost of getting advice to avoid problems is usually a pittance compared to what it costs to fix problems after they have surfaced. I had a client about 15 years ago that decided to do some ERISA work in-house to save a few hundred bucks. Quite predictably, they screwed it up. They ended up with a lengthy governmental investigation and paying a huge fine, and incurring significant accountant's and attorney's fees. I don't know the total bill, but it had to have been over $100,000.

2muchstress: Representing the plan on this matter is not a bad thing; it just means more revenue for the attorney. Paying clients who need assistance are what keep attorneys employed. I'm sure that the attorney added enough caveats to his letter so that he isn't on the hook in case the government comes after the plan.

The DOL has taken the position in recent guidance (I don't have the cite handy) that the plan can't reimburse the employer for expenses that the employer previously paid. I seem to recall that the plan required that the employer pay those expenses. You might get a different result if the plan were silent on this point. Also, not everyone always agrees with the DOL's positions.

Katherine: You know me too well.