MoJo

Just out of curiosity, do you see such loans more as a pooled asset or as a segregated asset? I work for an insurance company based service provider, and we really haven't seen a "segregated" asset loan from our pooled account plans in a long, long time (but then again, we no longer offer "pooled" loans in new "contracts" - so that business is dwindling)....

Uh, I guess that's why I said "if "all" participant's assets" are used to fund the loan - then, by definition, it is a pooled asset. If it's considered a "participant directed" asset, it is no longer part of the "pooled fund."

I was going to say, if "all" participant assets are used to fund the loan (as they are in pooled account loan), the "all" participant should share in the earnings from that loan. After all, such a loan is nothing more than an investment the trust makes....

Which is why I said at the beginning: "Not meaning to be a smart-alec, but "what does the plan say?""

The problem is, the bene may NOT be the sister. If the bene designation is "void" it could be "void" completely, or may be construed as to "treat" the named (ex-)spouse as having pre-deceased. This may be a case where the participant is deemed to have died without a valid bene designation form, and then the plan's death distribution provisions could kick in. It could be the estate....

Not meaning to be a smart-alec, but "what does the plan say?" The document we use specifically voids any bene form naming a spouse upon divorce. It used to be a state by state issue (some state laws effectively do the same), but then you get into issues of pre-emption and the like, so we drafted the plan to so provide, and put big bold warning on the actual form (website) to indicate that that is what will happen.

Pardon my jumping in here - fascinating thread and a variety of positions.... I think the answer to the question posited above is "if you KNOW or SHOULD HAVE KNOWN that you were facilitating your client's fraud, you have liability - EVEN IF you explained to them that what they were doing was incorrect. Merely completing the form with data you KNOW or SHOULD HAVE KNOWN to be incorrect causes you to incur liability." Now, keep in mind, if there is an honest disagreement, or a reasonable basis for doing what they are doing, an appropriate CYA may protect you - but if it clearly is not appropriate, then your facilitation of that act can be problematic. PLUS, it'll ruin your reputation for being a "professional" at what you do. Personally, I'd address it delicately with the client. A discussion around "pay is "comp" for plan purposes ONLY IF it's for work performed. "Hours" means hours ACTUALLY WORKED (or in some limited circumstances, that which you should have worked and been paid for), and the like. Depending on the circumstances, I'd even say to the client, "your accountant said..." and have a discussion about the merits of maintaining the plan as a tax qualified plan. If all else fails, I'd probably fire the client (and I know, business is business, but you won't get many new clients if you let an existing client do something really really wrong. Let me posit an extension of the hypothetical: Suppose you do nothing and the client get's audited and this is discovered, plan disqualified. Client talks to accoutnant, accountant say "I TOLD THE TPA - experts in the field, and they did NOTHING." You think people might be looking to you for "malpractice" as "experts" in the field who knew something was amiss and didn't bring it to their attention? By the way, under any scenario, the accountant is toast....

I agree it's a bit much discretion, hence the discussions to remove it (it is, in fact, programmed to be produced by Relius, our vendor - but no one knows where teh language came from). The California cases have caused us some concern - not because of the injunction (we get that/do that all the time) but rather, by being named a party (a defendant) we are concerned that we may compelled by the court to do other things. We do NOT file an answer (and believe it inappropirate to do so, as the court has no power over the plan or our operations (ERISA pre-empt) unless and until a DRO is issued - but the court DOES have jurisidiction over the entity (we do business in the state) and that causes some concern. So far, no issues.

The intricacies of joining one is a matter of "Rules of Civil Procedure" and those are state based. I'm not licensed to practice in CA and have no clue what their rules provide. In places where I have practiced, it is legit to join as a party one who has possession of "marital assets" to be able to restrict asset disbursement during the divorce proceeding. In the past, the plan itself has been named (and I've worked for service providers that also provided trust services to the plan) but we were successful in being dismissed as a aparty under ERISA preemption issues. Hitting the service provider (non-fiduciary) with being named as a defendant and then being enjoined from disbursing assets is a new one to me (relatively), but in the 8 months I've been with my current employer, I've seen a number of cases out of CA that do so. I do know that for some CA domestic relations courts (the ones where my employer has been served) it is a perfunctory process using fill in the blank forms that essentially identify us as a service provider having "control" (not discretion) over plan assets, and it immediately enjoins us from processing any distribution or alienation of the participant balance without further order of the court. In essence, we don't need discretion to be prevented from "pushing a button" or writing a check." The injunction is not against the plan or it's assets, it's against us (as service provider) from doing anything that could impair the marital asset, until it's ultimate disposition can be determined I couldn't tell you what would happen if a plan fiduciary directed that plan assets be distributed - it hasn't happened, but I can tell you that in order not be held in contempt of court, we would notify the court, and figure out the rest later.

Yes.... We have a QDRO procedure provided by us that is used by our clients (plan sponsors) that says the plan FIDUCIARY *may* impose a 90 hold on participant withdrawal right with reasonable knowledge that a DRO *may* be issued. I believe the language originally came from our document vendor. No one is aware of the 90 days ever being imposed, and we have been discussing the pros and cons of having such "permissive" language in the procedure - especially since if implemented, 1) you could/would have an angry participant; 2) you would have to police it to see that it was timely removed; and 3) if you remove it and DRO subsequently appears (after the account was cleaned out), you would have an angry alternate payee. Three strikes. It may be removed going forward - even though the document makes this a plan FIDUCIARY responsibility (of which we are not). Plan FIDUCIARIES have this nasty tendency to point fingers at service providers (especially if you provide them with a document that says such things can be done). To be honest, we see two scenarios 99.9% of the time. Most, the plan sponsor is totally unaware of the pending divorce till the (bitter) end. Some (but a growing number - especially for California participants) name the service provider (not the plan - because except for a DRO, the plan can pretty much ignore the court under ERISA preemption) as parties to the divorce action and then are automatically enjoined from distributing participant balances pending further order of the court.

In my mind, contributions (from whatever source) between 12/1/05 and 9/1/16 are part of the benefit accrued - and therefore the difference between ending and starting date (presumably the dates of marriage) is the start. Gains and losses after the end date are another issue....

I've had some interesting discussions over the years (decades) about this. IF the participant/borrower is employed and capable of paying back the loan, would not the fiduciary be *required* to enforce the terms of the loan (arguably obtaining a judgement and then garnishing the wages of the defaulting participant)? I can't say I've ever seen it done for a participant loan (but have seen it done when loans were unallocated plan loans). One could even argue that it might be more prudent for the plan fiduciary to sell the plan loan to debt collector. Whatever the discounted amount received may in fact be the most prudent course of action. Just food for thought, and not necessarily advocating for such an approach....

It took me a while to figure that out - but what I did was adjust the filters with the drop downs at the top of the listing for what I wanted (I usually look for "everything" - not just "unread" over a specified time period (I go back a few days - "since my last visit depends on hitting a browser tab (and I keep BL open all day)), then save as a new activity stream (with a new name (mine is "New Stuff"). Then it's available as part of the drop down under "Activity," then "My activity streams"

Thanks to the internet, we know this is not true. Not sure I fully grasp your point. I think the point of the expert's comment is not that the only thing that all those monkeys would produce is Shakespeare. They would produce, eventually, every episode of Two Broke Girls and I Love Lucy, the entirety of Lord of the Rings AND Harry Potter, every single comment posted by a troll this year (both the unexpurgated version and the one edited to replace some of the more egregious words or phrases with typographical symbols), every term paper you or I ever wrote, etc. And let us not forget the United States Tax Code (both the 1954 version and the 1986 version). Uh.... It'd only take one monkey with one typewriter to produce my term papers. In fact, it did....

and more productive.....

Uh.... 1) recommending a valuation service itself is fraught with risk; and 2) you get what you pay for.... BTW, have you told how risky a ROBS "scheme" is?

TIAA does this routinely (and yes, it's in their 403(b) product). Other insurance company products from the past still do that. The one I work for has some "ancient" contracts out there where the loans are in fact "policy loans" but new contracts (the past 20 years?) haven't don that. But they do still crop up. Is Valic still doing this?

Which would be a classic example of a "Bigly" cultural error if there ever was one.....

I even agree we should refuse to accept that as a word. It just seemed appropriate in the context of my comment....

Ultimately, I do think we are on the same page. The problem is, in the interest of "sales" small businesses (and even large ones) fail to understand that it is "profit" that determines lifestyle - not revenue. A client may bring a lot of revenue to to a service provider, but if it takes 10X times the effort to obtain 2X the revenue, you are losing "bigly." Setting expectations is key. I have been harping on giving clients "what they need" and not "what they want." You are successful if you get clients to "want" what you are telling them they "need." Then you have developed a true working relationship and have become the proverbial "trusted adviser" to them.

Man, you read my mind. There is a big difference in high touch personal service and routine run-of-the-mill operations of large corporations. Just an observation. To my clients, their stress is my problem; regardless of who failed to do what. Welcome to entrepreneurship; you eat what you kill Let me clarify.... This is not being crass, but merely pointing out that many clients love being in contact with someone who actually knows what they're doing and not giving them a lot of run around. We have many 'heavy-hitters' here who I'm sure provide the highest level of expertise and service. It's a combined passion of what you do and providing reliable services for a fee. It's a different game from the 9 to 5 when you're starting your own practice. Good Luck Yes, but. Being a high touch and responsible service provider is one thing. Taking on business you have no business taking on is another. Most businesses fail because, well, at least in part because they don't say no to business that 1) they can't serve (because of expertise, capacity, and the like); 2) the client WILL NEVER BE SATISFIED no matter how much you do for them; and 3) client's that "retaliate" by being slow pays or no pays when they just don't like what you are telling them. A lot of that is hard to tell up front - BUT, having a plan to avoid them is better than not having a plan.

1) No. But, from a marketing perspective, credentials are better than no credentials. 2) Clients. You can have state of the art everything, but without clients, it's all for naught. Step one should have been to define your market and develop a marketing plan to get clients, then build the infrastructure to adequately (and efficiently) service them. 3) Don't be afraid to say "no" to clients that are going to be time sucks and not pay for the value of the services your provide. 4) n/a (to me - I let others do the hard work...)

Yea, but..... Come next April 10th, that will be an issue even for good "brokers." The stats still indicate way too much run-off (each situation is different), but....

And if there is a termination with asset run-off, there will be lots of bickering internally when an aging workforce no longer has sufficient resources to retire and productivity slips and health care costs SKYROCKET.... At some point, those of us in the retirement plan industry need to remember that the assets we help participants accumulate are for ... retirement.

While what Lou suggests *may* be the cleanest, keep in mind that 1) upon termination, there will be a run off of assets, and 2) the "start-up" plans will be less attractive to service providers, possibly limiting choice of service providers and increasing costs. I always suggest spinning off each half to separate plans assumed by the new entities (unless, of course, there are "issues" that would carry over).