QDROphile

It never hurts to check what the plan administrator thinks the applicable forms are now. It is, you know, federal government administration.

Your first sentence and last sentence contradict. I would agree if you meant by the last sentence that the Plan Administrator should do nothing toward helping the former spouse understand or pursue whatever rights the former spouse has under the marital settlement agreement.

As in, Punctilious Pilot? Captain Sully!

Plan sponsors, as such, as have nothing to do with plan administration except possibly appointing the Plan Administrator and trustee. An interpleader by an ERISA retirement plan usually indicates that a plan fiduciary not doing its job.

Have you thought about applicability of IRC section 414(p)(3) (A)? No plan is designed to provide a distribution to a spouse of the participant except as a beneficiary or survivor. Let the proponent bear the burden of persuasion.

Be careful about concluding that the plan accepts rollovers. The plan may accept rollovers only from participants. If the distribution is a total distribution, then the person who wants to roll funds back is not a participant (interpretations matter here) and is not eligible. There are variations on this theme.

Supplement to the reference to interpretation of the plan document: The appropriate fiduciary (usually the plan administrator) will be in a stronger position if the plan’s written QDRO procedures specifically address the issue before the order is submitted. Not that purveyors of domestic relations advice or documents always read the plan documents, but plan provisions that pre-empt what the plan believes to be an inappropriate action (informed by ERISA principles) involving plan assets may also affect initiation of those actions.

You might consider what “sometimes”means. If there is a revolving door with enough people going out and back in within short intervals, immediate distribution might be problematic, or at least the optics raise questions. Rather than live a life subject to the whims of circumstances and intent, a change in plan design or reemployment policy may be warranted. Industry standards and practices would be relevant.

Did you check the linked material?

Good for you. Parts of me aren’t working, but that is what goes with aging. I experienced labor only vicariously through my wife. The closest I got was coaching the breathing.

State law, corporate articles and bylaws, the nature, form, text, and context of the resolution, and what you mean by “signed” and by whom. For example, from your post, I cannot tell if this was (1) a resolution adopted at a meeting on August 25 and memorialized in minutes signed by the Secretary on August 31, (2) a unanimous written consent that specified an August 25 effective date, executed by all directors with dated signatures of August 31, or (3) something else that is valid and effective, as stated, under applicable state law.

I agree with the comments to the effect that a plan-to-plan transfer is the appropriate vehicle, and given the design, unless there is some material difference between the plans that is not described, someone did not do their job if the plan documents do not already provide for transfers of this sort.

But the insurance industry would never allow that.

My recommendation is to close the barn door before the horse gets out and provide in the QDRO procedures that an order will not be qualified if it does not expressly address the withholding issue. If the QDRO procedures do not address the situation, it may be possible to disqualify based on an inability to interpret the order, as has been suggested. The fiduciary may choose to interpret the order with respect to withholding, and make qualification contingent on that interpretation. Disagreement can be resolved under the claims procedures or by resubmitting a modified order. The fiduciary might choose not to extend itself because the interpretation is going to favor somebody, probably with respect to an issue that was not properly considered in the domestic relations proceeding because of ignorance of the tax law.

The question needs to be analyzed under the Prohibited Transaction rules, which tend to be fact sensitive. As part of the analysis one may well run into questions of enterprise organization and ownership (part of those important facts). For what it is worth, I would approach the question with a bias toward the negative, but would not presume anything. In other words, you are not going to get a reliable answer based on what you have provided*, except that it is a complicated question that deserves the attention of competent legal counsel if they are serious about the proposition. Oh, and I think it is unwise in any event. Part of the underlying philosophy of ERISA and the prohibited transaction rules is that one’s employment (and related income) should be insulated from one’s retirement savings. Eggs in a basket and all that. *Providing more information is quite unlikely to get a reliable response, except perhaps a negative. This is not the place for this kind of advice — too complicated and too important —especially for those who may be presumed to be able to pay for it.

While I am at it, this is an opportunity to reiterate my disapproval of a statute that encourages plans to throw unsophisticated individuals to the wilds of self-directed investment as a refuge from the bogeyman of fiduciary liability.

If an official, and presumably well-crafted and reviewed, letter from the most august legislative body the English-speaking world cannot use “begs the question” properly, we cannot expect them to understand ERISA fiduciary nuances. The misuse of “begs the question” for the purpose of sounding sophisticated, elegant, or erudite simply proves the opposite. And if the government believes that cryptocurrency is inappropriate for retirement savings, it can easily legislate to that end, as it has for other exotic or questionable assets. Oh, wait, I forgot that we do not have an ability to legislate anymore. Cranky

I am so sorry that you are facing this. The "small me" wishes you could find a way to make the plan pay painfully for its position, or choice of counsel, or whatever shortcoming is putting you through this. I am also biting my tongue to contain the many negative remarks that come to mind relating to the ethics and competence of churches. Last ditch attempt: Is there any possibility of finding a decent ERISA lawyer in the community of the sinister/bumbling lawyer who would first have a local lawyer- to - local lawyer talk before having to play hardball?

You conclude that the plan is fundamentally 🤐 wrong in its understanding of a 100% J&S. I was trying to avoid any confusion introduced by the DRO language: "The Alternate Payee's Share shall equal Fifty Percent (50%) of the Member Benefit as of the Accounting Date as a shared interest, payable for the Member's lifetime." It seemed to me that an uninformed administrator might misapply that 50% language to the survivor benefit to get the 50% survivor annuity you describe. I don't see where they get the idea that division of the benefit automatically reduces the survivor annuity to 50%. Actually, I do have an idea. The resulting incorrect 50% survivor annuity is 100% of what the participant's benefit is after the participant's current payments are reduced by 50%, therefore is still a 100% survivor annuity to the ignorant view.. I hoped my language, which focuses only on the stream of payments during the participant's life, and not "THE BENEFIT", would avoid misapplication of the division language to the entire benefit. You are just going to have to educate them, which one hopes could be done informally rather than through litigation. Are they totally self-administered? Do they have any independent advisors, such as an actuary, that one can appeal to informally? There are lots of cases about how a spouse at the pension commencement date is "vested" in the survivor benefit at that point and cannot be divested by a QDRO (slightly different facts). But if they are so stuck on the wrong concept, they may be unmoved by authority that does not have exactly the same facts.

How about this: Effective (a) starting as soon as practicable after this [Order] is determined to be a "qualified domestic relations order", Alternate Payee shall be paid directly by the Plan an amount equal to 50% of the amount of each benefit payment scheduled to be paid to Participant, and the amount of each of Participant's actual benefit payments shall be reduced by the amount paid to Alternate Payee, until (b) the earlier of the death of either Participant or Alternate Payee. If Participant dies before Alternate Payee, Alternate Payee shall continue to be entitled to Alternate Payee's 100 percent survivor benefit, starting payment after the death of Participant. I did not try to exclude any future increase in a benefit payment amount. Why would you, unless the participant returns to service and accrues additional benefits, which would be the participant's issue to bring up? The term "shared interest" does not have an established meaning in the statute or the regulations even though it is bandied about in common parlance.

Would it be silly to suggest that the plan document would deal with the issue of priority of charges to pay and adjustment of the deferral election to fit the available amount?

The plan is off track, but I would be curious about how you expressed the award of the 50 percent of the current stream of payments while the participant is alive. Maybe you could make it easier for them. Taking a “split the payment” approach is usually easy to understand if it is expressed simply and completely. But then, some (?) QDRO administrators wear blinders and don’t know it. This may be a situation that calls for submitting a claim under the plan’s claims procedures (you did not state if this is an electing plan). If not, submit your objection, with explanation, anyway and threaten litigation to force a closer look by the plan.

"I have a client that does not want it to show up on the 990 or anywhere else that the agency is putting the money away for him." This does not sound good. At all. Who is speaking in this manner for the employer/agency?

My skepticism of the DOL's views about QDRO law includes its position on use of the section 503 claims procedures to resolve challenges to the determination of qualification of a domestic relations order. I think a participant can make a claim for benefits asserting that the participant's benefit has been improperly reduced because the DRO is not qualified or that the QDRO fiduciary misinterpreted the terms of the order, such as getting the math wrong or failing to observe terms for awarding gains and losses. The participant is very likely to lose, at least with respect to qualification itself. The participant cannot contest under 503 the substance of the order as determined by the state court (i.e. the domestic relations proceeding or outcome was unfair, wrong, contrary to state law, etc.) and the QDRO fiduciary does not consider complaints about what happened in state court other than an assertion that the DRO presented to the plan is not a bona fide final domestic relations order. The QDRO procedures under 206(d)(3) can (and should) refer to the plan's general claims procedures as the avenue for contesting the QDRO fiduciary's determination of qualification under 206(d)(3) and interpretation of the terms of the order. Everyone makes mistakes and everyone needs due process. I also think that the the proper initiation of interpleader by a QDRO fiduciary should be quite rare (and screw California procedure), and usually represents a failure on the part of the QDRO fiduciary to do its job properly.

“Wacky” is charitable.