QDROphile

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.

At least one state statute expressly mentions payment of fees relating to QDROs under government plans, and is not consistent with your speculation about the standard. I did not check to see if 457(b) plans in particular are covered.

Probably because someone was a very smart and sophisticated investor who had a rare and wonderful opportunity.

I second jpod.

Distinguish between "in default" and "taxable." What happens because of a missed payment is a matter of contract so you look to plan terms and loan doucments. Whether or not the amount is taxable can be influenced by the contract terms, but is governed by the regulations.

If the plan has assets it can be amended.

You can run a 401(k) plan through a 125 plan but it has to be set up properly before the salary reductions for the 401(k) feature are made. It is too late to amend to treat "left over" as 401(k) elective deferrals. Timing and proper plan terms are everything.

Not applicable for government plans. The preamble to the 403(b) regulations discusses application of section 414© with respect to 403(b) plans. For example, see p. 41130 of Federal Register, Vol. 72, No. 143, July 26, 2007.

Consider in scenario #2 whether or not the plan is disqualified because the loan was merely a pretense (and a poorly exectued one at that) for a distribution that was probably not allowed under plan terms. In scenario #1, possibly the same result for the same reason. What is the justification for another round of plan loans when the first loans are in default? I would be looking for the reasonable basis for expecting the loans to be paid.

If you look at the ERISA claims procedure regulations under section 503 of ERISA (ERISA regulation section 2560.503-1), you will find two pertinent provisions. 1. When a claim is denied, the denial must explain what would be necessary to perfect the claim. 2. A claimant may submit material for review of a denied claim even if the material was not submitted in the original claim. When I put those two points together, I conclude that if the claimant submitted anything remotely resembling a valid claim by the deadline, you cannot preclude a claimant from supplementing the orginal documentation after the deadline and denial to cover the missing information and be successful in the claim. The conclusion presumes timely submission of materials under the claims procedures, including the review procedures.

Gburns: You are talking out of both sides of your mouth as well as other orifices. A literal reading of the post was the the participant elected $38. I suggested that the benefits be paid to the extent of the election. If the election was $38 per month, a fair reading of the suggestion is that benefits be paid to the extent of $38 per month (the election). Who said anything about refund? $38 (or $38 per month) certainly IS within a claim for benefits of $988. All of that information is in the original post, and it was not disregarded -- all the numbers are consistent, no matter which interpretation of $38 you choose. I dare you to come out and say that benefits are not payable, whatever else you may believe about the ultimate effect of offset or consequences on qualification of the plan. I am waiting for you next twisted take on any of the facts as presented or any of the comments offered. Dig yourself in some more. I did not miss the issue of failure of actual salary reduction. It is my view that the dollar amounts involved do not warrant the trouble of trying to recoup the excess compensation, which was implicit in my first post for lack of any comment on action beyond payment of the claim. The point was explicit in my second post. You can disagree on the ancillary question about offset or related actions, but that is not what you say you are quarreling about. jpod, unlike GBurns, asks a legitimate question in a legitimate way based on implied legitimate disagreement. Disagreement is OK. My response to jpod's legitimate post is that I am very uncomfortable with an employer's messing with an ERISA benefit, even if the benefit is not directly covered by the anti-assignment provisions (you would absolutely never try an offset under a retirement plan). The plan is still subject to exclusive benefit requirements. Therefore, I would not try to get recovery out of the payment of benefits, even if it is convenient. That means recovery must be pursued separately based on overpayment of compensation. That pursuit is more trouble. Even though it is likely to prevail, the matter will be complicated by the employer's fault and the time and effort in the end is not likely to be worth it.

GBurns: Of course the answer is different if the election was not $38 for the year as stated in the original post. But wait, maybe it is not really that different. Let's see, if the actual election added to $988 for the year, and we substitute to come up with "pay the $988 of benefits and call it good" what would you say? I would say you really go out of your way to find something to criticize instead of giving thoughtful consideration to the posts. While the employer might have some recourse to overpayment of the employee, I don't think it is worth pursuing and your suggestion of withholding from the benefit payment is definitely a bad one.

Pay the $38 of benefits and call it good.

If you are talking about health FSAs and colleague two understood that, then if colleague two is in the business, he or she should get out. If colleague two is not in the business he or she should shut up about things he or she knows nothing about. You cannot be too harsh with colleague two about this. This is fundamental baby stuff. You should never consult or believe colleague two again. This is such a bad mistake that it is fatal to credibility.

Red herring. The participant should have provided for a date certain in the QDRO if the participant did not want the uncertainty. The PA has to understand that one person or the other is going to regret market swings no matter what the method for implementing the division, and no implementation and payment can ever occur fast enough for an alternate payee. The PA should not worry about the terms of the order, except to execute a proper one in an administratively reasonable way. However, the PA has to look out for service providers like Fidelity, whose systems will not allow proper QDRO adminstration. In those cases, the written QDRO procedures will have to work around the inadequacies of the system as well as possible and a person drafting an order will as least know the rules of the modified game.

Nope. The order instructs the altnernate payee account to be set up with an amount as of the date the account is actually set up. This is quite neat from a record keeping perspective, but stupid for anyone who is looking for any kind of certainty (or as close as one can get with a moving target). One may presume that the adminisitrator will get around to the task in due course, since it has a fiduciary duty to do so. One may also presume that the administrator is not so stupid as to attempt market timing, even if inclined to favor one person over another (which would be a breach of fiduciary duty).

Could be a PT if Participant A is a fiduciary and used that status to effect the distribution.

Have you just describe a CODA?

Does that mean I have to apologize for my assumption about 457(f)?

I go back to my original response. Whatever it is you are using to measure some ultimate payment, if it is an NQDC plan, the participant does not own it, so no one can get to it through the participant until the day it is payable/paid to the participant.