Effen

None that I am aware of. Also, I know in PA, plan documents are not even required so some municipalities just operate from ordinances. Plus, a lot of the ERISA rules do not apply to governmental plans, so be careful when trying to pound the round peg into the square hole.

Agreed. This is not a sign of fraud in any way. Central States has 360,000 participants so they found < 1% were deceased. They received $36 B in SFA. Yes, $127M is a big number but it is only .35% of what they received. Also, not like that money goes into anyone's pocket - other than truckers and other pensioners who use it to live on. PBGC has changed their procedures and now do their own data scrubs before the SFA filing is reviewed. Previously, funds needed to show documentation that they scrubbed the data, but now, PBGC does it for them.

"The DRO was drafted ... and was submitted to the PA. ... It was approved and sent to both parties and his ex's attorney along with the procedures." "she ...send it to the Judge exactly how it had been (originally) approved. The Judge's signature was stamped on it and it was filed" So, the original DRO you mentioned in your 3rd sentence was ultimately submitted to the judge for approval, ignoring the changes the participant wanted, and the court approved it. However, the court approved QDRO has never been sent back to the PA because the AP won't sign it. Is that correct? "We just don't know why her and her attorney hold all the power over his pension and if there are any clauses in ERISA or any other laws that might disqualify her from getting her share because of her not doing what she was supposed to do." Others may chime in with more legalistic responses, but as I have said before, the answer s/b in the QDRO procedures. The PA is not required wait indefinitely for the final QDRO to appear and they have no right to hold back the participant's portion. In other words, her failure to sign should not be impacting his ability to receive his portion of the benefit. You may find this DOL material helpful https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf especially Section 2 which discusses the PA's responsibilities. Section 2-11 states, "during any period in which the issue of whether a domestic relations order is a QDRO is being determined (by a plan administrator, by a court 19 of competent jurisdiction, or otherwise), ERISA requires that the plan administrator separately account for the amounts that would be payable to an alternate payee under the terms of the order during such period if the order had been determined to be qualified. These amounts are referred to as “segregated amounts.” During the period in which the status of a domestic relations order is being determined, the plan administrator must take steps to ensure that amounts that would have been payable to the alternate payee, if the order were a QDRO, are not distributed to the participant or any other person. The plan administrator’s duty to separately account for and to preserve the segregated amounts is limited in time. ERISA provides that the plan administrator must preserve the segregated amounts for not longer than the end of an “18-month period.” This “18-month period” does not begin until the first date (after the plan receives the order) that the order would require payment to the alternate payee. It is the view of the Department that, in order to ensure the availability of a full 18-month protection period, the 18 months cannot begin before the plan receives a domestic relations order. Rather, the “18-month period” will begin on the first date on which a payment would be required to be made under an order following receipt by the plan. See Questions 2-12 and 2-13, which discuss how benefits should be treated when determinations on qualified status are made either before or after the beginning of the “18-month period.” [ERISA §§ 206(d)(3)(H), 404(a); IRC § 414(p)(7)] Seems to me that the PA has a DRO, but they have not "qualified" it because it isn't properly signed. Therefore, they should segregate payments for 18 months - paying the participant his share and holding the APs portion. I would expect they would notify both parties this was happening, (but you said they already provided their QDRO procedures so if it is in there, maybe they wouldn't need to notify again). If no final DRO appears within the 18 months, they should release the AP's portion to the participant. Has the participant made a formal request to commence his payments? If the AP is holding them up, ask them what authority they have to withhold his entire retirement benefit?

I am confused. Are you saying a QDRO exists - court approved and PA approved, but now your SO doesn't like the wording and wants to change it. If a QDRO already exists, it will be very difficult to change as you might be finding out. Not sure why the PA is holding up payment. Either there is a QDRO or there isn't. If there is, the PA should follow the terms of the QDRO and pay the appropriate benefits. . However, if no QDRO exists, then there is no QDRO and the PA should pay the participant the full benefit. Or what?

I don't think there is a "right" answer to this as the law never contemplated buy-ins. We have continued to use the segment rates, but it has always generated a $0 MRC so haven't really had to think too hard. We would probably think harder if the plan had a VRP premium. Since the PBGC has no risk if a plan is 100% in a buy-in doesn't seem right that the sponsor would be required to pay a VRP. I guess if that ever happened, we would probably have a conversation with the PBGC.

Thank you, interesting story. What is your role in all of this? From the Plan Administrator's (PA) perspective - they only review the DRO as provided and determine if it is "Qualified". Being "Qualified" has nothing to do with the separation agreement, or divorce decree, or what is said in court. It only relates to - is the split determinable and does it increase the plan's liability. I specifically tell my clients NOT to read the divorce decree or get involved of any of the "he said, she said", or probably now, "they said". None of that stuff matters in determining if a DRO is a QDRO. The Plan should have a QDRO Procedure that is available to the member. Something the member might want to request and read. It sounds like the attorney submitted a draft to the PA for preliminary approval, but the PA said it needed additional information. So they have a DRO, but not a QDRO. The QDRO procedures will define what will happen, but typically, if nothing new comes in for the PA to approve, they will move forward and just ignore it. The Participant will receive full payments until a new DRO is submitted. At that point, the APs only option will be a shared interest QDRO on a future payment stream. Get the QDRO Procedure - you answer should be there.

Good luck. Let us know how it works out.

There is a lot of information here, and I am not an expert on teachers plans, but hopefully someone else will jump in. I am also assuming these are related to a defined benefit plan (monthly lifetime benefit) and not a defined contribution plan (pool of money) Teachers plans are generally operated by the state and therefore some of the QDRO rules apply differently. That said, to answer you basic question of "can a QDRO be amended post-divorce?", Yes, but it would be very rare. In order for the QDRO to exist, both parties had to agree to the current wording. Therefore, in order to change it, both parties would need to agree that the wording was now incorrect for some reason, they would need to agree to get the attorneys involved, then they would need to go back to court and get a judge to agree. So I won't say it isn't possible, but I have never seen it done. I am also not clear what you would want to change. You mention naming children as beneficiaries, but that would likely not be possible even if you could change it. QDROs can only allocate the benefit the plan was obligated to pay. Generally, pension plans only pay lifetime benefits to the employee and their spouse.

https://www.irs.gov/pub/irs-drop/n-23-73.pdf Thanks Slider - This is the link.

Thanks Lois, but I think those are just the updated 430 tables. I don't believe the 417(e) table has been released yet.

Generally, 99.9% of the time, once the participant commences payment, nothing can be changed related to the form of payment. Sometimes the payment of the benefit is split via QDRO, but the form remains unchanged. The spouse that he was married to at the time of benefit commencement is still the beneficiary.

Nothing yet.

That is odd that they have concerns. That is a standard provision in almost every plan (except the 80 is typically 40). No idea why they would have a problem with it, but also no problem if you want to remove it. Now that the plan is terminated, I don't know why the sponsor would care anymore about retirees returning to work, but if it is a union shop, the union might have a concern.

Our understanding is different. The example seems to indicate that you can always change to full yield curve, although I admit, it doesn't mention the lookback Example 1 – Plan liabilities are valued using the corporate bond yield curve for the 2016 plan year, the segment rates for the 2017 plan year, and the corporate bond yield curve for the 2018 plan year. The change from interest rates under the corporate bond yield curve for the 2016 plan year to the segment rates for the 2017 plan year is made through a revocation of an election to use the corporate bond yield curve, which requires the approval of the IRS, in accordance with § 430(h)(2)(D)(ii) and § 1.430(h)(2)-1(e). The change from segment rates to the corporate bond yield curve for the 2018 plan year is an election to use the corporate bond yield curve, which does not require the approval of the IRS, in accordance with § 430(h)(2)(D)(ii) and § 1.430(h)(2)-1(e).

I don't think a 204(h) notice would be required. They all terminated employment, so no plan change to report.

If all of the active employees terminated as a result of the sale, it is obviously a partial plan termination and every impacted participant would be 100% vested.

$3.4 M @ 62 w/ 10 Years of Participation and Ave Comp > $265K (2023 limits) Lots of variables as you said.

"Finnegan" - but yes, he will be missed. Great actuary and a great giver to the profession.

I will jump in on the side that the $15,000 does not need to be adjusted. At the time it was paid, it represented a lifetime annuity of $15,000 per month. The fact that interest rates have changed and mortality tables have changed, and the individual lived another 15 years, doesn't change that. Then again, I stayed at a Hilton last night.

I assume you meant 285K as the 1st comp in your average as it produces $24,444.44. Part of the problem with your example, is the $ limit is not $30,000K/month, which would make it higher than the comp limit, so not a reasonable "what if". You are also talking about a person who is well over 65, so you are permitted to Actuarially Increase the $ limit, but not beyond the comp limit, so 24,444 becomes a hard max regardless of age. Therefore, "1" is definitely at least the start of your answer, although the question you aren't asking is what is the value of the offset. Is it just $15,000, or do you need to actuarially adjust that? These may be the things CB was referring to. Many actuaries believe no adjustment is necessary for 415 purposes and therefore Item #1 is correct as stated, but others would argue some adjustment is required. IRS has never said, so do something reasonable.

Lessons learned on this one. FWIW, we very rarely send the 5500 before the invoice is paid. Once they have the 5500, they have no real incentive to pay you. You can warn the new TPA to that they didn't pay you, and definitely don't provide any data to them without pre-payment. If you have been providing 5500s before being paid for a long time, and this is the first time you were unpaid, consider yourself blessed.

Are you asking if it is ok for the fund office to give the union office a mailing list of all of the pension participants so they can send them a non-pension related mailing? Those participants would be all union members, right? I guess there could be non-union people in the plan, but wouldn't the union have access to this information anyway? I don't know if this is common practice or not, but most funds I work with keep the union business separated from the fund business.

Did the sale already happen? If not, they might consider structuring the agreement as a 4204 sale in order to avoid the withdrawal. In a 4204 sale the buyer essentially accepts the seller's history. The Seller is still partially on the hook for 5 years if the buyer withdraws during that period. The fund would also need to accept it.

Everything you are saying is correct, but "good / bad" is all in the sponsors perspective. Larger plans see rising interest rates as "good" and are taking advantage of them by offering lump sum windows and buying annuities in an effort to de-risk the plans and shed liability. Annuity purchases and lump sum windows were at all time highs during 2022 and are still trending up in 2023. Smaller plans may see rising rates as bad for the reasons you suggest, but as David pointed out, the sponsor are not required to use 417(e) rates for lump sums and many small plans only use them for a floor. Part of the problem may be caused by the way the benefit has been explained to them. If they have been shown their 417(e) based PVAB every year, it needs to come with an explanation of how that can fluctuate. We typically never show the PVAB on benefit statements for just this reason. It is also the reason why cash balance plans have become so popular because they are insulated from this issue. This is one of those good "consulting opportunities". Sponsors should understand how their plans work, and if they don't like it, they generally have the opportunity to change it.

A few quick Google searches will provide a significant amount of information about 401(h) accounts. Also, whoever is going to administer the plan for you should be able to provide this information. I don't think there are very many people on this board who work closely with 401(h) accounts. There are some believers out there, but I think most practitioners are treading carefully. Sorry I couldn't be more helpful. Good luck.