MoJo

Mike said: "Sigh. Yes, there is." It would be helpful is you explained/provide a cite....

With respect to your Point "4" above: "Past performance is not a guarantee of future performance." Retirement plan investing is LONG TERM, and the past 2 years are but a blip in the time horizon. Plus, when the market is low, you are "dollar cost averaging" into cheaper shares/units which, when the market rebounds will magnify the upside.

1. Transition Period Actually, the plans never need to merge. The "transition" rule simply provides relief from having to count *all* employees of the controlled group for coverage testing of each of the plans - until the end of the transition period (subject to being able to pass coverage individually on the day before the merger took place). If the plans can pass coverage after the end of the transition period, or can pass coverage on an aggregated basis after the end of the transition period, they can remain "un-merged." Nothing in the Code ever requires plans to merge - it just has various testing implications depending on who is covered by each of the plans, and what the (testable) benefits are in each plan. 2. VCP First, see above. The plans may be able to remain separate (or be tested on an aggregate basis) and still be viable. Second, your concern of tainting the clean plan is valid. Consider instead of merging the plans (if necessary), simply freezing the dirty plan while seeking the IRS's blessing of the VCP filing, and letting all the employees participate in the other ("clean") plan - amended however the employer sees fit. When (and if) the IRS rules on the VCP application, the "dirty" plan can be cleaned up and merged into the other plan.

jpod: The one thing I am certain about when it comes to domestic relations law is that the parties defy logic or rationality in what they do, and how the "divorce" progresses....

jpod: Just curious as to why you asked the questions? A DRO doesn't need a "divorce" to be effective - it just has to be a valid order of a state domestic relations court (which can issue a DRO in a "legal separation" or for child support payments, or for a variety of reasons that don't necessarily end in divorce.... I've seen DR courts in Ohio do all sorts of things with retirement plan benefits in "legal separation" cases where one party is "divesting assets" in anticipation of a nursing home stay and triggering Medicaid payments.... No divorce.

Courts can change their orders, but can't order a plan to do anything against it's terms, ERISA or the Code, and I would question whether they can "undo" a transaction that has occurred. That said, if the court still has jurisdiction over the matter, the court can now issue a "new" DRO that if it complies with the requirements to be a "Q"DRO assigns the AP's interest in their new plan benefits to the original participant.

401K_AZ - but the rule is one of when the assets are "segregated" from the assets of the plan sponsor (i.e. out of the control of the plan sponsor). Clearly, the most "complete" segregation is when the assets hit the "trust account" but that is still a matter of interpretation as to when it occurs. A check written and handed to someone to process is *out of the control* of the plan sponsor (the check being a negotiable instrument that if not good gives rise to both civil and criminal liability). A check placed in the mail is the same. I understand that some of these practices are just dumb (the client who mailed checks to Vanguard was clearly capable of doing things electronically, but just "never change"). Why is the rule dependent on the efficiency of the service provider when the rules clearly indicate that the issue is one of segregation - which can occur before the trustee processes the contribution?

jpod: I disagree to some extent about your interpretation of the rule, especially the part about the contribution "not being a plan asset until" deposited, if you comply with the "rule." I've always thought the position was the assets are a "plan asset" AS SOON AS it can be reasonably be segregated from sponsor assets, and the rule only gave you a pass against enforcement of the PT that would occur if the assets were not conveyed up until the 7th day. Sort of like "prosecutorial discretion" in agreeing to not go after you in the circumstance that it took as long as 7 days, but the assets *for all other purposes* (i.e. fiduciary purposes) were still plan assets. As far as these plans not being "deep pockets, I'll see if I can find the article talking about lawsuits against plans under $10 million in assets (many of which will be less than 100 participants). I agree that Schlicter may not be interested, but I know of many, many trial lawyers would be very interested in a $100k payday - and some have even approached me as a subject matter expert to assist them (and I politely declined, being a "inside person" in the industry). As with many things, it starts with the large plans, and when the recipe is perfected, it is scaled down market.

I've been following this thread and "agree" with the comments made about the safe harbor nature of the "7 day rule" and the possible fiduciary concerns on the related, but different issue of allocating and investing the contributions, when GMK raised an issue in my mind, anyway. The DOL has given small plans a "safe harbor" for segregation of contributions from sponsor assets and designating them as "plan assets" - and those employers have the "7 day rule" with which to do so. BUT, if it is "possible" to actually do so within 2-3 days, would not a "plaintiff's attorney" have a case that it would be "prudent" to do so, and then also accelerate the timing of actually investing those funds as provided for in the plan (usually as participant directed)? I don't mean to muddy the waters, but if I can think of it, so can "real" attorneys who actually go to court, and considering I read a week or so ago that more and more "small plans" are being hit with lawsuits, would it not be a best practice to "establish" a practice of consistency - still applying the "as soon a possible" approach of the DOL's actual rule on the issue? Just to put meat on the issue, I am aware of a plan that got nailed by the DOL for a "fiduciary breach" of delays in contributions AND investments, even though it was a "small plan" (under 100 participants) and MAILED (SNAIL MAIL) a check TO VANGUARD (why they agreed to take checks is beyond me) - with postmarks within the 7 days (effectively segregating "plan assets" from corporate one), but not getting to the "trust" and invested until usually a week later.

While I agree with David, generally, 1) the PLAN still needs counsel to determine the effect and effectiveness of the disclaimer should it arrive; and 2) these forums provide an opportunity for learning, so context (estate tax, income tax and the like can be helpful in understanding).

First, various states have statues or other law that allow a "beneficiary/heir" to disclaim property, and the rules to do so vary. Under federal law, there are also rules that govern the tax consequences of doing so (as doing so might entail a taxable "gift" to others). Second, federal estate tax law pulls in certain retirement benefits into the estate for tax purposes. Doesn't matter if it's distributed to another or flows through the estate. Same may be true for certain types of life insurance, etc. Third, keep in mind there is a difference between an estate tax and an income tax. The estate may pay taxes on assets "owned" at time of death (including retirement plan assets), and then there may be an income tax consequence on the distribution of retirement plan assets as well. I believe (based on limited experience in the field) that the estate is a "pass through" entity for the income tax consequences of the distribution, should the distribution go to the estate. Finally, as pointed out above, there are lots of reasons to disclaim. Personal tax situation. Compassion for other heirs (siblings, half siblings, nieces and nephews). There may be some agreement for him to do so as well. Perfectly legitimate, and I am aware of no case law that says ERISA preempts and a beneficiary can't disclaim - if he or she does so according to the applicable laws/rules. P.S. it's "attorney time!" Always best to get an attorney involved in a situation like this.

There is actually "a law" that requires responses to Census inquiries - both the "every 10 year" variety, and various other interim surveys. Congress empowered the Commerce Department to compel responses as 1) the Constitution mandates the every 10 year census for representative apportionment, and the others for "data collection" for policy purposes.....

I would suggest looking first at the POA. A properly drafted POA *makes* the agent the equivalent of the individual for those purposes spelled out in the POA, and the plan (usually) will have to honor the directions of the agent *as*if*they*were*the*participant. When in doubt, contact ERISA counsel....

It depends on the jurisdiction you are in, but if you are not a party to the lawsuit, then you have every right to be paid not only for the work but for any copies produced. Usually, it is sufficient to make the records available in your office for inspection by counsel - and if that doesn't work, consult your own counsel who can advise you more appropriately.

It depends on who you murder, and whether or not the missed amendment has any material impact on *my* benefits in the plan.... [snark!]

Austin: I guess if you think adhering to standards for the common good - and accepting consequences for failing to do so - is funny, then I'm a riot. But I find the obverse to be quite disconcerting.....

Yes, Austin, I've done ALL of those things - and I ACCEPT the consequences of that behavior. I don't moan and groan about how those things should not be "illegal" - there are reasons why they are (and I'm glad they are because if they weren't, there would be chaos and injury). Same is true for not amending a plan..... It happens - but there are consequences. If there weren't, there would be chaos on injury. BTW, the lack of sophistication of the plan sponsor isn't really an excuse. They are sufficiently sophisticated to be an employer and to sponsor a plan. Keeping it up to date ranks right down there with making sure payroll is on-time (and if it isn't, there is a DOL consequence) and that taxes withheld are deposited on-time (and if it isn't, there is an IRS consequence). We tend to get into the belief that businesses can't follow rules and woe is them for having to comply (which includes labor laws, OSHA, environmental laws, tax laws, zoning laws, insurance requirements and lots of other things that we actually ALL appreciate because they protect us from abuse at the hands of those who think they can do anything). But by and large they do comply, and if they can't they shouldn't be in business - or at least shouldn't be sponsoring a plan.

First, that's what keeps them tough, and hard working. Second, failure to amend on time by definition means they aren't "law abiding." Third, I like the tax advantages of qualified plans (and have used them extensively). I don't want anyone to provide any ammunition to those in Washington who quite regularly talk about ways to reduce those tax benefits (and raise tax revenues). Finally, I'm a pussy cat compared to the IRS - who these days are pussy cats compared to the DOL. I make my living trying to keep my clients out of the jaws of either or both.....

Compare the penalty amount to the tax consequences of disqualification..... For a small plan that the owner has the largest interest in, the VCP filing fee is a bargain. And potentially a wake up call....

Perfection is a tough standard, but it must be a goal, nonetheless. There are ways to fix late amenders - and the IRS even has offered a discount for those who missed the most recent deadline. I guess I would question whether John Doe Manufacturing with 10 employees had the right service provider/advisors in place in establishing and maintaining a plan and whether they were paying attention - which portends other issues that may be significant. I work for a bundled shop - and even though we started the PPA restatement COMMUNICATIONS to our clients 18 months ago, and hit them up with many communications including phone calls and in-person visits, we still had 56 who never responded to the request for information to complete the restatement, and 110 who never returned signed documents. Being "asleep at the wheel" is not a fiduciary best practice.....

First, Austin, you have way, way too much time on your hands - to be able to look up the statute of limitations for those crimes.... Second, while I agree with you *in theory* - as a practical matter the errors that can occur in a plan can compound profoundly over an extended period of time (and indeed, may not even be detectible until long after and individual separates from service and starts taking benefits). I think Congress and the IRS have implemented this lack of a "statute of limitation" because of the lasting effects of problems that may arise in the future as a result. indeed, many of the "statutes" of limitations for retirement plans and for other types of things (lawyer malpractice, for one), don't even start to run until there is a cessation of the relationship (participant actually takes benefits out of the plan, or the relationship between a lawyer and client is terminated). I like to tell people there is no such thing as a free lunch in retirement plans. the tax advantage of qualified plans are HUUUUUUGGGGGGEEEEEEE - and that tax advantage comes with strings attached - you have to play by the rules - ALL of the rules.

"I have seen too many times where RE in a plan ends badly." My two cents worth: I have RARELY seen any time where RE in a plan ends well.... Appraisals, RE tax, UBIT, liability insurance (or just liability...), management (someone has to collect rents, pay bills) and the like complicate ownership. Add to that there may be built in tax advantages to owning real estate that get lost due to holding the real estate in a plan (cap gains can get turned into ordinary income, depreciation is lost as a current deduction in a plan, etc...).

If it's a valid order of a court having jurisdiction over the matter, it doesn't have an expiration an date. It's "effect" is continuing in nature. Now, administratively, one would have to question whether there were intervening events that have caused the order to be revoked. You could check the court's docket (usually available on-line), or - 2 Cents said, if the parties are in agreement, what do you have to lose (although, personally, I'd still do some - at least minimal - due diligence.

Zorro: In my experience, it is always prudent to "see" the POA to verify the authority given. I wouldn't rely on the signature being "notarized" - that just confirms the identity of the signer - not the authority. hr for me: In refinancing, since your husband was a signer of the documents, a verification of his being alive was important as he had an obligation to pay the note (as did you). One can't borrow money if they are dead (although their estate can, but that is a different story). That issue had nothing really to do with the POA (or it's validity) but rather with insuring that the obligor was alive and could pay back the borrowed money (or at least was alive at the time of signing - so they would have a claim on his estate if he later died). POAs are strange things - and the way they are drafted can make a big difference (general or limited, indefinite or for a period of time, regular or "durable") and the specific authority given (medical, financial, etc.). When in doubt, DEMAND the POA and consult a lawyer to see if it covers the transaction at hand.

Equity trust will handle weird assets (they mostly do IRAs, but also will do qualified plans) and Schwab has been known to allow SOME non-publicly traded vehicles in their brokerage window (limited partnerships, etc., but not "hard assets and actual real estate). But.... "Notoriously Bad Idea" is an understatement.... Bring up the "f" word ("fiduciary") - especially with respect to the non-docs but also with respect to each of the docs (as potential fiduciaries) and the problems their colleagues can cause the plan with weird assets....