MoJo

PMJI: I would say that the court cannot (ever!) order the PLAN to do this, but whether or not the court could order the PARTICIPANT to do so is another matter. I think it is defensible that a court cannot order a participant to do or not do something which is an ERISA protected right - but a court can order someone to "pay" someone else, and send them to jail (contempt) until they do so - which may be an incentive....

Pam: In the scenario you describe (abandoned plans or "removed" fiduciaries) I agree with you - but with "routine" admin, can you explain why the 3(16) is more efficient than non-fiduciary outsourcing of that stuff? We do distributions (all kinds) mandatory cash-out processing, DRO review and "Q"DRO-ing, loans, and a whole lot of other stuff without being a fiduciary, and without obtain a plan sponsor/fiduciary signature on anything (except the initial authorization to do so) - unless there is an issue. We try (mostly successfully) to not let those mistakes happen that next year will need correcting. I'm not knocking your business model - but I have yet to see a 3(16) tell me why a "fiduciary" is necessary for the 95% of the stuff we do as a non-fiduciary.

The reason from my perspective is often attorneys draft DROs that say "half of all benefits accrued between the date of marriage and the date of the split/divorce" (adjusted for earnings) - instead of just giving us a number. Just saw one of those that went back to the 1970's (profit sharing) through a date in 2016. We "reject" and defer to the plan sponsor for direction.

Dare I say it - "co-fiduciary" liability. Many 3(38)s and 3(21)s are certainly legit and can add value in an areas many plan sponsors are not experts on - but with respect to 3(21)'s - one forgets to infomr the plan sponsor that instead of "transferring" your liability to the 3(16), you are assuming the responsibility of prudent selection and monitoring - without the "control. And in many cases, service providers can provide the same services as a 3(16) without being a fiduciary (albeit with plan fiduciary input) at the same or lower cost. We do QDROs, loans, hardships, in-service, termination distributions, provide document services, offer an "in-house" 3(21) and an external 3(38) and a variety of things. We don't "sign" the Form 5500 - but we provide clients with everything they need to review, verify and "push the button."

Amen to the thoughts on California's joinders in domestic relations court. They are the definition of "PITA" from the service providers perspective. With respect to non-ERISA plans -we find, surprisingly enough, that most include DRO provisions, and some state laws (I don't know how many, because we haven't looked at them all) require such provisions in governmentals. As a related side - interestingly enough, a state court judge in a domestic relations case almost always has jurisdiction over those that hold "marital assets" which would include retirement plan benefits - and can always consider them in fashioning a property split. The thing of it is, that state court judge cannot compel the "qualified plan" (under the provisions of Code Section 401(a)(13) and related sections and regs) to pay benefits to one other than the participant (i.e. the alternate payee) without a QDRO. Elsewhere there is a thread where we've had a "discussion" on what the court could or could not do with respect to the actions of a "service provider" separate and distinct from the plan. In many cases, we are a "pure" bundled recordkeeper and don't hold the assets (which are held in a trust with an unaffiliated trustee/trust company) and California in particular seems to think they can enjoin us from processing distributions. The problem is, the court does has jurisdiction over us (we operate in 49 states including California) and can "order" us to do or not do - but what would happen if a plan fiduciary "directs" us in a way contrary to the Court's order? That isn't a problem with a non-ERISA plan - and frankly, we haven't been a party to a divorce action involving one of those. I expect, absent a fiduciary in those cases, we wold abide by the court's orders. When we get served by California, we politely reply that their order impacts us, but not the plan - and that maybe the attorney wants to amend to include the trustee or the employer.... And then we abide by the order and wait till the DRO is issued. Fortunately, we haven't (yet) found ourselves between a rock (the court order) and a hard place (a contrary fiduciary direction).

Peter: You pretty much nailed it. I work for such an "insurer" (among other things) who continually is working with employers with allegedly non-ERISA 403(b) "arrangements." First and foremost - in virtually all the cases I've seen recently, they ARE ERISA PLANS - but the employer won't admit it. This becomes an issue when the plan changes vendors and we get a glimpse at what they are and have been doing. We do DRO services - but ONLY as a ministerial service subject to acceptance by the employer of our guidelines. Acceptance of the guidelines is control that basically makes the arrangement ERISA covered. Some actually sign the documents not realizing the consequences (and basically it's because they did the same at their prior vendor), and some refuse - which results in the "stand-off." The most recent case involved an employer who (after we pretty well documented that they are an ERISA plan - and their attorney agreed) refused to sign our guidelines and then said they will "accept" any DRO signed by a judge and filed as a QDRO (without review) and that certainly doesn't have any consequences. Sometime I wonder why I sales people court these types of business....

Interesting observation - and one I hadn't thought about before. The truth of the matter is that in my "team" of 10 people, we have 252 combined years of experience with the youngest rapidly approaching 40 and the oldest (not me) well into RMD land but for being employed. Six of us are past the half century mark and three have notched another decade on top of that (with another not far behind). Within the broader organization (about 600 people in the retirement services division), the youngsters tend to be concentrated in the call center - which is a job to exit as rapidly as possible. Unfortunately, about equal numbers leave the company as remain, and of those who remain, many don't stay in the retirement services side of the business. I only hope enough remain to continue to service me through my retirement!

I feel old. I hit that milepost last year.... Two things about getting older: 1) It beats the alternative; and 2) (as my mother used to say) - "it ain't for sissies."

I would agree with ERISAAPPLE that if you can agree on a number, then get a new DRO to supersede the old one. One way to figure out what your balance was at the time (or close to it) of your divorce is to check the court records - many time in a divorce, each party must make "full disclosure" of all assets and liabilities (and sometimes opposing counsel requests - through "discovery" copies of statements that prove the balances). I know this from "experience...." Typically those records are not public - but a party ought to be able to see the court files and that may be a starting point for negotiations. Beyond that, the "plan" should have records - but frankly, if there was a change in service providers in the interim, it can be difficult to obtain past records.

I too have submitted MANY retroactive amendment requests to the IRS - but NEVER act on those amendments until approved. It may be disallowed and that creates a much, much bigger issue. The problem isn't what you "know" but rather what you don't - and whether or not the IRS decides to take a closer look at the plan as part of the review (which they don't do often, but do do on occasion). Couple that with the increase time it takes to get a response, and you potentially have contributions going into a plan that you will not necessarily be able to get back out, or to reallocate if necessary. Especially considering that there is a list of "permissible" retroactive amendments (within the remedial amendment period), the implication (very clearly) is that if it isn't on the list, it's not allowed unless and until the IRS grants relief....

The reason I wouldn't do what you say is that it is CLEAR that ONLY a very specific subset of amendments can be made retroactive WITHOUT a VCP filing and approval from the IRS. My team and I know what retroactive amendments are allowed absent a VCP filing, and we would be committing malpractice to advise a client to do something CLEARLY not allowed. Personally, I would not risk my licenses to practice law on such a basic error, and neither would my team members (which include 5 other ERISA attorneys, a former IRS agent and a former DOL senior investigator). Sorry ERISAAPLE - things have to be done correctly or you run consequences. Clients have consequences (a disqualification event, a fiduciary breach by not following the terms of the plan (your retroactive amendment not being authorized unless and until the iRS says so), and I could go on. The fix is so simple - and the VCP really is a slam dunk - just do it right and don't worry about it. I would also proffer that regardless of the current relationship with the union, "doing it right" will be better than winging it....

Ditto, but in a slightly different order. Our policy would be to do a "prospective only" amendment to stop the bleeding and be good going forward, Then prep and file the VCP with a retroactive amendment to cure the period before the prospective amendment. Then wait.... I agree it should be a slam dunk....

I agree but "dove-tail" isn't the word I would use. Some plan documents may indicate that the benefit formula for collectively bargained employees is that which is contained in the CBA, as same may be modified from time to time. Such an approach does solve the problem the OP indicated - but it does cause additional headaches - in that who monitors the plan for changes in the CBA? How specifically do you reference the CBA (union, date signed, etc. - which becomes important especially if you have more than one union - or another union comes into being).What if changes to the CBA cause a benefit formula to be violative of some provision of the Code or ERISA inadvertently? My "preference" is for "one" document to be self contained to eliminate a potential conflicts - but you still have a monitoring requirement to maintain labor harmony.

First, any such contributions can NEVER be plan assets unless the plan itself defines them as contributions requires (or authorized to be made. Second, nothing - and I MEAN NOTHING in the NLRA can bind, in any way shape or form ERISA fiduciaries to anything (unless it's a Taft-Hartley plan). the NLRA governs the relationship between employers and employees, NOT the operation of ERISA covered plans. While in many cases the individuals who represent the employer are the same ones who are fiduciaries of the plan, they do not have to be - and even if they are, the respective legislation (the NLRA or ERISA) ONLY governs what their obligations are when wearing the appropriate hate. You seem not able to grasp the concept that when an EMPLOYER is obligated to do something under the NLRA, there is NOTHING that obligates plan fiduciaries to disregard their obligation under ERISA to abide by the terms of the written PLAN documents. The employer and the plan are distinct and separate entities for enforcement of distinct and separate pieces of federal legislation. As discussed ad nauseum above - the ONLY mechanism the NLRA provides is against the EMPLOYER and not the plan - and the courts or the NLRB (or the DOL) may be able to force the employer to amend the plan - but until and unless the employer complies - the plan document governs the plan operation and non-authorized contributions cannot be made to it. The fix is easy. VCP it and seek a retroactive amendment and make the participants whole. No other way to do it.

The difference, APPLE, is that the violation of the NLRA is a violation by the EMPLOYER, and not by the plan. The NLRA can hoild the EMPLOYER accountable for the failure, but not the plan. The fiduciaries of the plan are OBLIGATED to adhere to the terms of the plan - not the terms of the NLRA, and unless you can point to a provision in the NLRA that says ERISA plan fiduciaries can be held accountable for ignoring NLRA provisions and a CBA, I will continue to advise my clients who are fiduciaries to pay EXCLUSIVE attention to the terms of the plan. Been doing so for over 30 years now.....

'ZACTLY! The point is, the CBA does not operate to change the terms of the plan as written!

You are TOTALLY are off base on this. The CBA OBLIGATES the EMPLOYER to do that which is necessary to accomplish what benefits are required under the CBA. The CBA DOES NOT change the plan - only the employer does. While OBLIGATED to do so, if the employer does NOT do so, they are in violation of the CBA - but the plan says what the plan says. The CBA does NOT amend the plan - only the employer can do that. They are OBLIGATED to do so, but people fail to do that which they are OBLIGATED to do all the time. That's why we have courts.... The union can enforce the terms of the CBA through the NLRB or court and MAYBE can get a court to "order" the employer to change the plan, but until and unless the plan is actually amended, the plan terms govern the terms of the plan operation, and the plan fiduciaries have to abide by the terms of the plan - and not the CBA. Clearly violating the terms of the CBA would cause liability to the employer (on many fronts), but a court is NOT empowered to mandate that the CBA change the terms of the plan. A court can order "specific performance" (essentially the opposite of "restraining order") to amend the plan - which is exceedingly rare, and can use it's powers of contempt to enforce that order, or a court can award "damages" but the court cannot mandate that the plan (which is it's own entity separate from that of the employer) do something it's terms do not allow it to do. FIX IT. It isn't hard - and frankly, we seek retroactive amendments fairly often through the VCP program. NEVER will we violate the terms of the plan as written though - REGARDLESS of what non-plan documents have mandated the employer to do.

I've seen people "try" this - but, you then have labor provisions cluttering up a plan document, and plan provisions cluttering up the labor provisions. As a lawyer - I would never recommend that, as it is a recipe for disaster. What happens when you need to make a regulatory amendment to the plan that doesn't affect the labor contract? If the two are one, you need union approval. What if you have non-union people in the plan? What about a regulatory audit of the plan - which now would implicate the CBA "as a plan document" and maybe inconsistent, non-compliant, or otherwise troublesome. What if you change the CBA i a way that inadvertently affects the plan or it's operation? And then, why would you want the NLRB looking over your plan provisions? You already have the IRS and EBSA doing so.... Why would you want the IRS and EBSA looking over your CBA provisions? Generally a bad idea (IMHO)....

I disagree completely. The CBA and the NLRA is enforceable against the employer - NOT against the plan. The employer has an issue - and SHOULD HAVE amended the plan to account for the provisions of the CBA, but the CBA does not work to amend the plan, and the NLRA can only penalize the employer for failing to abide by the terms of the CBA. Like I said originally, it is fixable.... But it must be fixed - the CBA doesn't "fix it" automatically. And no, I wouldn't go to the union and say we can't make the contribution. I would go to the union and say the plan inadvertently wasn't amended, we are doing so, seeking a VCP remedy to retroactively do so, and will make all CBA required contributions with earnings adjustments. And frankly, I have done so before.... As for as a good attorney finding a way to do so without a VCP, I doubt it. The fix requires an RETROACTIVE amendment - and there is but one way to do that - and that's through a VCP filing - PERIOD.

I was thinking that the OP needs to understand the separation agreement/divorce decree - as that defines the OBLIGATION with respect to the parties to split (or not) retirement plan assets. A QDRO is the vehicle through which the appropriate provision of the separation agreement/divorce decree is enforced against the plan. Absent a QDRO, the divorce decree is still enforceable between the parties - just not the plan. The DRO is a tool to actually put that provision in effect directly with the plan. And yes, I've seen divorce decrees that enforce a provision on the participant to pay over a certain sum when received. Usually it is defined as some form of "alimony" or whatever the jurisdiction defines it as - such as "participant shall pay to ex-spouse 1/3 of the amount of any pension payments received in the month of receipt...." (my ex-father in-law had such a provision in his divorce decree (basically because both parties attorney's had no clue how to deal with a DB plan).)

I would disagree with ERISAAPPLE. The plan document governs the plan. The CBA governs the relationship between employer and employee. The CBA may call for benefits to be provided, but it is a contractual obligation of the employer's to figure out how to accomplish it. If the plan does not reference the benefits promised in the CBA in such a way that it becomes part of the plan documents, the employer is in breach of the CBA, but the plan document should still govern the plan. It is fixable, however....

Forget the neighborhood. I want to avoid the other two who want to share a hotel room with me!

What does the separation agreement/decree of divorce say?

Well, most of the "better" ERISA attorneys I know don't draft plan documents anymore. They review and edit the documents provided by their service provider. When an attorney "insists" that their document is better, it's time pass on that client. BTW, we charge $1,000 annually extra for an "outside" document.... The 1st volume submitter (when a client transitions in) is free, and then for restatements, the faster they respond to the plan information questionnaire we send out, the cheaper the restatement fee.

What's legal and what's possible are two different things. When I went "in house" it didn't take me long to reverse my opinions on what can/should be done from when I practiced law.