Outstanding Joinders in a Terminating Plan

[Guest Mary Ann Kurtz]

Hope someone out there can help. Our company is closing and the 401(k) plan has been terminated. Unresponsive accounts have been rolled over to an IRA with the exception of a handful of accounts blocked due to pending domestic relations orders. We are a California company and several of the blocked accounts are due to Joinders submitted. While there is a shelf life of 18 months on a DRO, there does not seem to be an expiration date for Joinders. Some of our Joinders were submitted years ago and no further action has been taken. The prevailing opinion is that there is no expiration on a Joinder. Any ideas on how we can proceed? Thanks.

[mbozek]

Hope someone out there can help. Our company is closing and the 401(k) plan has been terminated. Unresponsive accounts have been rolled over to an IRA with the exception of a handful of accounts blocked due to pending domestic relations orders. We are a California company and several of the blocked accounts are due to Joinders submitted. While there is a shelf life of 18 months on a DRO, there does not seem to be an expiration date for Joinders. Some of our Joinders were submitted years ago and no further action has been taken. The prevailing opinion is that there is no expiration on a Joinder. Any ideas on how we can proceed? Thanks.

I dont understand what is your concern with CA joinder preventing distribution of the benefits from a terminated plan. According to the the Senate Finance Committee report for REA after 18 months the amount segregted in the plan pursuant to a DRO is to be paid to the participant. There is no exception for joinders under the QDRO rules. However, the alternate payee can bring an action in state court to recover the amounts paid to the participant. I dont see how the plan can be forced to retain funds after termination when the plan provisions require that the assets be distributed to the participants. There is no harm to the alternate payee who can bring a suit under state law against the participant to recover the funds.

Edit: Have you ever had the application of CA joinder to ERISA plans reviewed by counsel? Under CA family law section 2337(10(d)(1) joinder is not necessary for plans subject to ERISA because of the availability of a QDRO to devide the plan benefits.