MoJo

No. We're not refusing to do something the plan "can" do. We are refusing to do something that is not part of our services offered to the plan. Should the plan sponsor wish to manually handle this situation (which, I would contend is "administratively not feasible" - a sound reason for denining the "Q" on the DRO), so be it. And I'd be happy to go to court to explain to a judge what can and can not be done. But in a daily valued environment, handling anything manually is not a reality.

*IF* the DRO provides for a completely deferred benefit in a DC plan (zero rights to the AP to direct investment, take distributions, etc.) unless and until the participant become fully vested - that is indeed a different scenario - but frankly one I would think would consistent "malpractice" on the part of the AP's attorney. Leaving the divorces spouse/participant in charge of the account until a future date is not something I would ever advice a DR client (I used to practice law and handled divorces....) There is a reason they are getting divorced.

Interesting - because we've never seen anyone challenge our process - and I would expect clients (plan sponsors) wouldn't want to be bothered by this either), so we'll take the risk of losing a client for the one or two or so of these we see a year.

What you propose is "one" account into which both the participant and AP money exists, with "sub-accounts" identifying which is allocated to the participant and which is allocated to the AP. Who controls the investments in the account? How do you allocate subsequent employer contributions? What if the AP is entitled to and wants a distribution of some or all of the balance to their benefit. In any event, if you establish a "separate account" entirely for the AP (normal process for us), then you still have the problem of tying vesting for the AP to the census information *only* being provided by the employer for the participant. It's a manual process to then update the AP vesting when the participant vesting increases, and as well a manual process to forfeit the unvested portion of the AP's account/sub-account should the participant terminate. All in, *not* a service we can/want/will provide, and hence "administratively not feasible." And yes, our "standard" QDRO policy (required if we administer) indicates AP's can only take from the vested portion of the participant's account.

I don't know what others have experienced, but we see what I consider an inordinate number of DRO's already signed by the judge and filed - with NO draft submitted - and then routinely find problems with them requiring rework. In addition, we commonly see scenarios where a DRO is "qualified" where the benefit to the AP is a formula, and either because the participant and AP can't do the math or the volatile marked makes drastic changes in hard dollars between agreement and processing objections are raised. Our policy is to not process a QDRO unless both parties are in agreement at the time of processing (we are a non-discretionary directed service provider and our agreements with clients provide for such - a provision the plan sponsor can override, but usually is loathe to do), so if one objects, they go back to their attorneys or the court - which then causes a delay and more changes to the actual amount to be paid to the AP. By the way, we process about 70 DROs a month providing that service to about only 500 or so of our clients...

Clearly this is doable BUT it is 100% manual (I know of no system that can automate the process) and we, as a service provider, will NOT do it. There is too much risk and we couldn't charge enough in fees (and to whom) to make it worth it. Our standard response is "administratively not feasible = not qualified."

We see this "fairly" often - especially in contentious divorces where after the "amount" is calculated, one party or the other (or both) object, sending them back to court for a modification), although as QDROPhile points out, if payment has been made, changes cannot change what has already happened - although a changed DRO can change what happens in the future (DC plans) and a "secondary" amount (an increased payment to the AP) does happen on occassion.

*IF* that is in fact the case, then yes, we know the answer. But I can assure you that most people (clients and even my co-workers) don't know the difference....

I hate to complicate the matter, but I think the answer is "it depends." An ERISA expense account held within the plan can only be used for the reasonable plan expenses for that plan. However, a few years ago, the DOL issued some guidance that indicated it was OK to hold an ERISA budget account OUTSIDE of the plan assets. That is, in essence, that the service provider is providing a credit to the plan sponsor for it's use to offset plan expenses out of the service providers own pocket (with funds derived from the fees it charges, or revenue sharing it receives for that plan). Now, I disagree with the DOL on this one - because frankly, if the money the service provider is using to pay plan expenses came to the service provider either "directly or indirectly" from/through the placement of plan assets, then I think those funds are/should be plan assets as well. But I digress - because the DOL said the opposite. To that extent, if the ERISA bucket is NOT a plan asset, then I suppose, theoretically, they can be used by the plan sponsor for a different plan's expenses. The service provider I work for does have ERISA accounts that are NOT plan assets - but we do, by contract, restrict their use only to paying expenses of the plan that generated those funds - but....

Well RBG, I can almost guarantee you that there will be a lot more self-corrections of loan issues - whether the option officially exists or not. We had a handful of loan VCPs in progress (not yet filed) when this came out and half of them are now rethinking the issue.... I'd never recommend playing the audit lottery - but many seem willing to do so on some issues....

Yup. We are starting to see them more and more - especially out of California. AND - they are directed to us as a service provider to the plan - and not to the plan itself (and I would argue that that is smart - there is some doubt as to whether a court can enjoin a plan except through a DRO. That raises an interesting question - if the plan fiduciaries DIRECT that a distribution take place (and they aren't restrained) but we can't do it, what happens (other than we get fired...)?

Hair splitting, maybe - but the "precise" lawyer in me comes out sometimes. Besides, you'd be surprised how many times we get requests to pay creditors directly from a plan.... Or to pay "heirs" directly when not named as bene's and not state process adhered to.... We currently have a "trust" named as beneficiary, and the trustee (without disclaiming) wants us to pay the surviving spouse directly (for trust tax reasons). Uh, NO! Happy New Year to you as well....

Yes, creditors have first claim to the assets of the ESTATE - but not to plan assets unless and until they become assets of the estate (i.e. a distribution has occurred). We never distribute assets without the incorporate state law based documentation (whatever that maybe, and it's a PITA to keep checking on the state of state law in the various states (we have participants in all 50). With the jurisdictions I am particularly familiar with (where I'm licensed...), you can't get the small state status without an affirmative declaration that there are no creditors of the estate - or that they have been paid. Absent that, a "full" estate administration is required (although, where the estate is insolvent, I've refused to open an estate - let the creditors do it - at their expense).

The check is made out to the claimant - with no further designation (although that is a topic for further discussion)

We do this all the time. The "analysis" is that an "estate" is a creature of state law - usually created by probating the will or a formal administration of the assets of the decedent (and liabilities). In some states, there is a "small estate" process that requires a simple filing with the probate court that dispenses with a formal administration, and directs holders of the assets to pay them per the filing. Others, don't require any filing, but allow claimants on the assets to do so by affidavit (which in theory protects the holders of those assets who distribute them to the claimant). It is in fact the "estate" (although it may not be called that) operating through the claimants who sign the affidavit (or the simple filing in court) and we pay per the terms of the plan to those who "represent" the estate - or some portion of it. Happens all the time with abandoned plans where participants has since died and we need to pay the bene's....

I have seen (and did) what ESOP Guy has done - but I think the issue is more of whether or not an operational error occurred in that money went into the plan on the basis of that which is not "compensation." Money taken (even through payroll) that is fraudulently obtained is not "pay for work performed" and hence should not count for allocation purposes. The fact that it was done means an error occurred - that should be correctable. It would be interesting to see someone (not me) file a VCP based on not following the plan's definition of compensation..... Keep in mind that the embezzled money may still be "taxable" to the theif - but that doesn't make it "comp" for plan purposes.

The list of things I'm sick of at this time of year is extensive and ever growing... but a challenge never gets old!

Ditto! and then some. (but it really doesn't seem to be the Holiday season since Tom Poje hasn't reposted his "Christmas song/pictures match" challenge...)

FGC: I think people tend to overthink hings like how long the VCP filing takes. Yes, you can "supplement" with other errors/issues - but we do a complete (as complete as possible) audit to uncover other issues that should be included. The "one" rule we hold virtually inviolate is to "not poke the bear" once the filing has been made. Our experience has been that when awoken, the "bear" is in a bad mood and that hasn't bode well for the outcome. The IRS has been made to "starve" for ideological reasons. Those that remain tend to be believe they are overworked (and underpaid), and when left alone, when their internal "metrics" indicate they are falling behind, a lot happens in a short time and we get the compliance letter sought. I hate to say that, but that has been our experience....

I've got one pending since 12/15 - 2016!

I think the point here is that if assets existed that weren't disclosed, the DR court DOES have authority to re-open the case. Generally, only "disclosed" assets are disposed of in the divorce and any undisclosed assets are subject to claims by both parties. What *may* have happened is that a "number" was disclosed as the balance in the PS plan - and what needs to be known is did that "number" include those assets transferred from the MPPP. If it did, it was already disclosed and considered. If it didn't, it's an open issue - and having an ERISA expert (attorney or otherwise) explain the difference between the PS balance that is PS money and the PS balance that is MPPP money might not be a bad idea (it's a concept that "lay people" don't always understand).

I use Splashtop - allows me to "remote in" using 256 bit encryption. There is a "personal" version that limits the number of computers and doesn't allow file transfers that is very reasonable and a business version that still seems reasonable and has some added features.

Ditto QDROphile and Belgarath. Recordkeeping and investing are totally different concepts. And for the record, every recordkeeper I've been associated with uses "omnibus" trading accounts commingling all sources for all plans into "one" account as far as the investment provider is concerned. From an investment provider's perspective, they only saw ONE account in the name of the recordkeeper and had no clue how many different plans, the number of participants involved, or the "sources" of the money involved. Indeed, if they are mutual funds, one recordkeeper I worked for bundled ALL client accounts (retirement plans, individuals with brokerage accounts, and "other") into a single trading account with mutual funds (they called it their "mutual fund marketplace"). Even with CIT's, everything was omnibus - except only "qualified" money was involved (and Roth is still "qualified" money when held in a plan).

I think It's a problem - although the facts as presented aren't entirely clear. This is an issue if the plans themseleves are paying the fees. If the employer pays *all* of the fees, no problem. Let's start with the premise that one "ERISA" plan cannot subsidize another. Here it appears the H&W plan is "subsidizing" the retirement plan. Now I get "relationship pricing" but the cleaner approach is to "discount" each plan and not make one plan carry the weight of the other. This would be a "clearer case" (In my mind - because I'm exclusively on the retirement plan side) if the retirement plan provider offered a client a discount on other services bought from them. Clearly, I would think, the retirement plan would be arguably overcharged to "subsidize" the other services. If bundling certain service results in a cost reduction (i.e., only one client servicing team needed regardless of the number of services included - rather than separate teams for separate services at separate providers), then the discount should be spread appropriately.

a "bad" fiduciary....