QDROphile

Although the arrangement has aspects that may not have been adequately considered, and perhaps the participant should not be indulged, why would the rental income be UBTI if the property were purchased entirely for cash?

Call your lawyer to asked what happens when you get sued by employees who did not get the tax qualified benefits that they were promised as a condition of employment?

If you really want to know the legal side: Unless the nonprofit hospital is a government entity or instrumentality, you don't have any 457(b) assets. All you have is promise of the employer to pay you in accordance with the terms of the plan. The assets associated with the plan belong to the employer, but the employer has probably been following your instructions about how to invest and the plan probably says that what you ultimately get paid will be based on the investment results of your investment instructions. Whether or not the terms can be changed depends on the terms of the plan. It is likely that the investment provisions can be amended without your consent. This explanation is probably not your understanding of the arrangement. If the employer shared your misunderstanding and is actually behaving under the view that you describe, it is no wonder that the employer is trying to change things. You may have a lot more to worry about than a $5000 investment loss -- like current taxation of the deferred amounts. On the other hand, you may be simply describing the situation in a practical way rather than a technical way and it boils down to the issue of the rights you have under plan terms.

Start by charging the client by the hour.

Although being a named fiduciary seals some fiduciary responsibility, under ERISA, fiduciary is as fiduciary does. If someone undertakes fiduciary functions, consciously or unconsciously, they are a fiduciary. Writings are important to define the scope of the fiduciary functions. Without some defined scope, any fiduciary of the plan is potentially responsible for all fiduciary matters relating to a plan. I don't understand what you mean by a "claim."

If a volume submitter document does not have an option for involuntary distribution at $1000 instead of $5000, that is enough evidence of incompetence that the plan should go elsewhere for a document.

The plan has to answer the question, even if the plan terms on the page do not provide the answer. If it cannot answer the question, then it could have failed under the "old" constructive receipt rules and you don't have anything to grandfather.

As of December 31, 2004, or any time prior to that, at what time were the amounts distributable for a participant who had not designated a year in the election?

The terms of the plan may allow in-service distributions from any source in accordance with the legal restrictions. It is possible to have terms to allow hardship withdrawal from matching contributions unless the matching contributions are subject to restriction. Restrictions on safe harbor contributions come to mind, but don't trust me on that.

A POP is a section 125 concept and it is not a group health plan. The group health plan that is funded through the POP must comply with HIPAA whether or not the administration of the POP or the health plan is expected to involve any handling of protected information by the employer.

When you reqest a distribution from the 401(k) plan (assuming you are the beneficiary), the plan administrator will react in some unpredictable way. One possibility will be that the balance will be distributed to you without any questions. Another is that the amount award to the the former spouse will be paid to the former spouse and that the balance will be paid to you. Another is the the plan administrator will allow a reasonable time for a qualified domestic relations order to be submitted. It depands on what information and documents have been given to the plan administrator and how the plan administrator interprets the law and the materials submitted. Actions and documents after the death of a plan participant are subject to confusion and controversy.

Governmental plans are not subject to certain requirements, but are subject to others. If the document is of 1990 vintage, some formal compliance changes have been missed, and maybe the related operational compliance. too.

Refunds in the past probably did not comply with the 415 regulations under the circumsntaces where the ESOP ate up most of the limit. So why are you getting religion now? Keep breaking the law. The lack of IRS enforcement is likely to continue at about the same lebvel as before and you are in the same position as before, except may for your ability to express dumbfounded ignorance if you get caught.

The first two questions in any legal analysis are: So what? and Who cares? There is no "responsibility" for 409A changes. I will help with the "so what" -- taxable income and penalties. Now see where "who cares" takes you.

The excerpt is a correct statement. Earning are earnings, not contributions.

Sorry, I was sloppy in the first paragraph about limiting the application to the sex change circumstances and the irrelevance to DOMA with respect to the timing of the end of the marriage and issuance of the domestic relations order. In the end, a benefit is payable to a former spouse who qualifies under DOMA. For same sex marriages, we have the usual analysis about whether or not the partner was a dependent, and the alternate taxation rules when the dependent partner is not a former spouse, as implied by the second paragraph. I also think "don't ask, don't tell" will protect a fiduciary who is reasonably not aware of the sex issues. The published Department of Labor guidance says that the plan adminstrator does not have to look through the face of the order into the state court proceedings, but that the plan administrator cannot disregard facts (which would include terms of the order) that suggest something is amiss with respect to a federal qualification criterion. Pat, Patrick or Patricia?

Tise did not cover the issue of the staututory period very well, if at all, but it gives a workable framework and a lot of power to the fiduciary. The fiduciary has to decide what is reasonable and inform the parties so they can get with it or go to the fiduciary and explain why more time is needed. The 18 month period starts in most cases when the participant requests a loan or distribution. The fiduciary's notice can be taken to the state court to get the court to move, though not at the direction of the fiduciary.

How about DOMA is irrelevant for the division itself? The QDDRO statute is an exception to the anti-assignment provisions of the Code/ERISA. By its terms, it calls for implementation of a domestic relations order, which is a creature of state law. There is nothing in the statute about federal law of marriage in the requirements for qualification, which are the only barriers to implementation of the order in accordance with its terms. It starts getting more complicated when one has to decide how to apply the income tax rules on the distribution. In a case of gender change, I still think you have a spouse or former spouse as alternate payee because at one time they were spouses even under DOMA.

I concur with Sieve.

The Tise case inteprets the law to include a reasonable time for resolution of qualification defects. The Plan administrator cannot determine that an order is not qualfied and then distribute the account the next week, even though that is what the statute could mean. Given that, the plan administrator should be practical about its handling of the TRO. The plan is not served by being dragged into a dispute even when it can win on technical points. Holding back a distribution for a reasonable time under the circumstances is less dangerous than paying.

Explain how you can set up a 401(k) plan that makes any sense at this point.

If you don't have a smart plan document, and indications are that you do not, this could get complicated and you need someone to help who knows what they are doing.

Nice point.

The TRO is probably a domestic relations order and has the effect of restricting distribution and loans for a reasonable period pending resolution of qualification. If a DRO that looks like it wants to be qualified is not forthcoming within a reasonable time, the TRO will be determined to be not qualified and of no effect. The plan administrator should handle the TRO according to the QDRO procedures, and the notices should spell out what the plan administrator expects to do and when.

It is also the briefest.