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My guess is the lawyers who know more about QDROs will leave comments at some point but here is my take. What do we know at this point? You have a participant who is terminated. You don't have a DRO or a QDRO. There might be one coming but you don't know that for sure. What does the law and plan document say? You clearly have a distributable event for this guy that would entitle him to 100% of the funds in the account. Is there something in the plan document, QDRO procedure or law that says something different? I have seen plans with QDRO procedures that say if the plan get notified there might be a future DRO to put a hold on the account for 90 or 180 days. After that wait the hold is up and the plan goes on using normal procedures. Does the plan or procedure have any such rule? If so, follow that rule and part of the document/procedure. If not, on what basis are you not paying this person 100% of the money in his account? A well written document or QDRO procedure ought to guide you through this so let us know what if anything they say. There is a good chance it answers your question. But at some point the document says this guy is entitled to be paid 100% of the benefit in the plan for him unless someone can point to something that says otherwise. That is how I would look into this. As for your final question: No I don't think this guy can arbitrarily say just pay me 50% and wait for the ex-spouse to show up with a QDRO to pay the other 50%. He is entitled to 100% of the money since he is termed or something in the plan documents is saying you can put a hold until a QDRO is produced or some time limit is hit.

A financial advisor has reached out to me about a 403b plan at TIAA. The plan has an employer contribution, and TIAA acknowledges that it is an ERISA plan... but they then say that because all the investments are in annuities that the plan sponsor does not control the investments, so the plan sponsor can't decide to move the plan in one fell swoop to another platform - it would have to be up to each participant because they control their own accounts. Is this just TIAA being TIAA, or do they have a leg to stand on here? Thanks.

I am the Practice Leader for 403(b) for our firm. I like FTW. The documents work well for my clients and I think the Support people are the best (and the fastest) I have ever worked with. I can get answers to questions and advice about how to implement something in a document in less than 24 hours. PNJ

ESOP gave gave you a great answer; the other responses have also pretty much hit the target EXCEPT for the comment about now that you have started dealing with a DRO with Hancock you somehow are stuck. No you are not, and you need to tell Hancock there is no QDRO. The spouse's problem is with HER LAWYER; she (and her lawyer) needed to perfect her right to 1/2 of his retirement money. There is a very specific legal process for that (it's called a QDRO) and they did not do that. Barring that, there is NO QDRO; he is not married; he can get all his money and then she will have to sue him for her share. The lawyer who wrote this: "Respondent will direct the Plan Administrator to divide the funds equally between the Respondent and the Petitioner, that being 50% to each party, however distributed" clearly did not know what he was doing and probably is guilty at a minimum of malfeasance and more likely malpractice. But that's NOT the plan's issue. A marital settlement document cannot authorize the participant to tell the PA to do something that is not legally permitted.

Pardon me while I bark first. Your ignorance about QDRO law and procedures probably prevented the practical solution that I offer below. Your should refer QDRO questions out to someone capable of advising about QDRO administration. That said, your standard of understanding and competence is about average in the industry, so don't take it too hard. What should have happened is the participant should never have shown the papers to the plan. The order (and it is a domestic relations order) applies only to the participant and has nothing to do with the plan. It orders the participant to pay half of the distribution to the former spouse. This may be stupid or pretty sneaky on the part of the former spouse; it changes the tax consequences and I pass on that issue. The direction has nothing to do with the plan. But the participant DID give the order to the plan, so next what should have happened is the plan (or its adviser) should have recognized that the plan was not implicated and bent the strict processing procedure and conclude that it has not received a domestic relations order and therefore it should process a distribution to the participant in normal course. The plan should not accommodate the participant's request to split the distribution check in any way -- the plan needs to completely disregard the order to keep itself clear. The entire distribution is to the participant -- just as the order says. You probably cannot now restore Humpty Dumpty. You have started processing the order as a domestic relations order. You may have to continue, especially since you jerked John Hancock's chain. If you understood QDRO processing, there is still a way to get the participant a distribution of half of the account right away, even while processing the domestic relations order that is not going to be qualified. I will refer you to section 414(p)(7) to give you ideas, but I am not going to spell it out. You need a shock to your system to make you understand that you are not competent to deal with QDROs and you should seek professional help that you or the plan pays for to extricate yourself from this mess. Or not. You can just let the participant dangle while you process the domestic relations order under usual procedures. The participant brought it on himself by not participating in the divorce.

Um, is there a potential incentive behind this "encouragement"? As CuseFan implies, any similar plan provision might be in the best interest of the advisor, not necessarily in the best interest of the participant.

yes, you can have a general in-service withdrawal feature before age 59.5 for vested funds that are not 401(k), safe harbor, QNEC, etc. - but it doesn't mean you should.

1) No. 2) NA. 3)Yes, but remember that non-resident aliens are excludable. Foreign ownership can be a big problem; sometimes there are multiple US companies owned by the foreign parent but the US companies don't know they are related because the parent keeps it secret. We have had the problem. One big mess because the US companies are in a controlled group and none of the US advisors know it. We found out when the parent decided that it wanted to merge the two US firms; boy were the presidents of those firms surprised!

@RatherBeGolfing - No, WE don't want to create a MEP and would never have even thought of it. We may get pushed into it whether we like it or not, and I'd rather find out a little more about it sooner rather than later. If creating a MEP automatically pushes them into having to hire an independent auditor for say, 2018, if this was done by December 31st, then we know the sponsor won't want to do it, and that will be the end of it, at least temporarily. Sometimes I think you guys must live in some idyllic world where hot and cold running minions keep you from getting into situations where you are over your heads. I am not embarrassed to admit that I don't know everything all by myself and that's why I ask questions on here, even at the risk of looking foolish or less than expert. Sometimes we get called upon to do things that are beyond our scope just by virtue of working in very small enterprises where there are no minions below us or experts above us to make these things go away......