QDROphile

409A is concerned mostly with timing, not amounts, so a change in benefit amount is not necessarily a problem. You have to be careful that the change is not a late deferral and that the change is not some sort of scheme to exchange or replace compensation with the effect of improperly accelerating or further deferring deferred compensation. For example, if you reduce an amount of deferred compensation payable in five years, but also provide a bonus to the employee, have you just accelerated payment of some of the deferred compensation by paying it currently and calling it a bonus? It gets very sticky, depending on all facts and circumstances.

John: I saw the question and could not figure out what the issue was, so I did not respond. You were either bolder in speculation or more able to read between the lines about what was going on. The question still does not makes sense to me, even with the clarification. There is no overpayment in the picture. A domestic relations order that comes to a benefit in pay status has to deal with the benefit at the time the order is delivered. I think in this case, the answer to my reformation of the question is that the order cannot touch the payments made before the the order was delivered (there was no overpayment). If the order wants to make up a share of the prior payments, it must do it out of future payments. There is no amount to recover and therefore no interest question. This answer is from the point of view of the plan. As between the participant and alternate payee, the economics may be different, but the resolution has to be expressed differently.

Nice answer, John. What was the question?

Puerto Rico has its own tax code and now has a section 125 equivalent. I think you can have dual qualified 401(k) plans, but I don't think you can have dual qualified cafeteria plans. I think the Puerto Rican employees would need a separate plan, but this is not my best subject.

I don't see how someone could exchange a cowboy contract for a contract with an approved vendor.

What does 31 days have to do with whether or not a MCSO qualifies? There is nothing date sensitive about the timing of the orders, so how can the plan impose some time requirement? The plan can choose give effect to the order prospectively, so delay between the date the order is issued and the date of receipt by the plan can affect the timing of coverage, but not the application of the order.

Let me try to be a little more helpful. What is your basis for the statement that, without more, "if other participants want loans they can exchange contracts for a contract with an approved vendor"?

I am missing provisions in the regulations that cover an independent exchange from a cowboy contract to a contract with an approved vendor.

It is permissive, so the plan would have to be amended if the current plan terms do not allow the distributions. Some thought should be given to what the distributions provisions should be. Just because you can do it does not mean you should.

Yes, section 905.

Please don't tell us that someone had the bright idea to keep the unvested balance with the expectation of capturing forfeitures.

No. Normal retirement age or later for the money purchase money.

Except that it is too late in 2009 to elect catch-up contributions for 2008. Catch-up will work only to preserve deferrals that were timely elected in 2008.

Try this: If a service provider refuses to follow to the instructions of the plan administrator, the provider is exercising contol over the plan assets and administration. That makes the provider a fiduciary. Most providers do not like that idea. After explaining the facts of life to the provider, demand proof of the ERISA fidelity bond that is required for fiduciaries. Next, go the DOL. The DOL is more interested in fiduciaries than service providers.

How many of your clients have followed your advice to fire a service provider that does not perform correctly? I think I am batting zero.

Since IRS reviewers are sometimes confused, one must try to get the reason for the resistance. For example, the agent may think the arrangement is a CODA, and the agent could be correct depending on the nature of the vacation pay terms. Or the agent may think the arranagement violates the requirement for allocation terms. Or the agent may simply be taking a negative view without understanding how the arrangement works because a lot of arrangements don't work. You may have to press to a higher level if it is important, and be prepared to show that you know what will work and the plan fits.

We all suffer from the duplicity of the Department of Labor.

Where is the substantial risk of forfeiture in the first place with respect to the lifetime payments? It would be very difficult to have a risk applicable once the benefits started and still be lifetime benefits.

No implied agreement or disagreement with the bigger issue, but where do we get the idea that two providers is enough?

I though it was settled that the investment of employer assets at the direction of the participant was not a problem if the employer (or trustee of the grantor trust) was not legally bound to follow the directions.

Huge fiduciary concerns with respect to the transfer from the 401(k) plan to the ESOP. But you got that point. Best to have an independent fiduciary for that decision.

There is no guidance because there is no problem under the law and it would be beyond imagination that the plan terms would have anything to do with health benefits other than retiree health benefits. Just to stretch to find something to validate the concern, if the cost of the health benefits left the employer unable to cover required ESOP contributions, the employer could have a problem under the ESOP.

Why not just call the EPCRS people and ask?

How do you deal with the risk of forfeiture requirement under section 457(f)?

Consider that an alternate payee's benefit is aggregated with the participant's benefits for purposes of section 415 and 401(a)(9). I would extend the principle.