QDROphile

The DOL's obfuscation got you, too? Consider joining the national conspriacy to fail to recognize ERISA for deferral only 403(b) plans until the DOL provides something but lies for guidance. 1. Maybe exempt, depding on other things you have not mentioned. 2. Not exempt. 3. Not exempt.

As a lousy typist myself, you have my sympathies. The transition rule will work as you describe. No strings attached. Life will be much more amusing when we lose the transition rule.

"I was hoping someone could help with some guidance on the following scenario - our TPA is not sure & I am at wit's end trying to find an answer to this." Sometimes one can find answers by hiring people who are able to advise. And sometimes one hires those people before actions are taken that preclude more certain or favorable options. People who handle benefits in most companies are not authorized to get proper advice and those who have the authority often won't listen and they do not include the benefits people in planning. So we have the unhappy situation where some poor soul who is just trying to do a good job has to say, "Gosh, my only unreliable source of information is not sure, so I solicted the views of strangers to make a decisioon that has tax, economic, and employee morale consequences."

Under the world as we knew it, if the employer designed plan terms, such as availability of loans, the plan would be subject to ERISA. The Department of Labor has not admitted to changing the world as we know it, but claims that all sorts of things can be done now that will not cuase the arrangment to be subject to ERISA. The Department got put in a corner and chose to survive by abandoning credibility and integrity. So the answer to all 403(b) questions is that you can do what you want without fear from the DOL, but if you do something to anger a participant who is willing to go so far, you might help clarify the law by giving the courts an oppotunity to muddle through the questions. I still think a plan design (or product mandate, as mentioned in the excerpt above) by the employer would cross the line into ERISA.

Don't expect to be able to comply with all applicable law if you are with Fidelity. The Fidelity system is the law once you are in it.

Too late to avoid payment for a 2008 termination.

I generally advise not to allow shared payment QDROs if the order is qualified before benefits start. Since a shared payment provides payment to one person for the life of another, it is not a form of benefit provided by the plan. I am not saying a plan cannot allow shared payments. I also think there is no such thing as a truly separate interest. Section 401(a)(9) does not recognize a separate interest.

In case you are wondering, the plan can be designed to work around the leveraging if the employer does not want to be prepaying the loan to make up for value shortfalls. Additional contributions (cash, stock, or cash to buy stock) can go straight to the match to make up any shortfall. Planning not to cover the entire match through the regular debt service for the leveraged ESOP is good planning. Most employers would not want an excess from the suspense account to allocate. And don't forget that an ESOP can be designed to operate on dividends to some degree, so the analysis in not confined to contributions -- another reason not to be locked into thinking about a direct link between contribution rate and allocation requirements.

You are picturing a direct connection between the contribution and the value of the allocation. The amount of contribution and the value of the allocation are almost never the same amount. They are related by (i) the formula that determines release of shares from the suspense account, and (ii) the value of the shares at the time of allocation. To illustrate, the employer may have to increase the contribution that relates to the match simply because the value of the shares declines in order to deliver a match with the appropriate value. The match is a promise of what gets allocated based on a particpant deferral amount. If you are not dealing with a leveraged ESOP, the promise is executed by contributing the promised amount. The promise is executed in a leveraged ESOP by contributing what is required in order to produce the match value. Heady stuff.

ESOPs commonly restrict distributions. Other plans, such as 401(k) plans could, too, but generally don't. If the restriction is due to the terms of the QDRO, shame on you and your lawyer. Three years is an odd number, more than in the mathematical sense, so you should get an explanation from the plan administrator about when the benefit is payable. The employer can put you in touch with the plan adminstrtor. The employer is usually the plan administrator because the employer is usually misadvised. But that has nothing to do you with you and your QDRO.

The match is the match is the match. You don't look at the contribution. You look at the allocation. The value of the shares allocated must meet the safe harbor amount.

EPCRS nonamender filing.

You got mixed up on the unallocated account part. The overpayment was from the participant's account, so the restoration should be to the participant's account. I am not addressing the earnings, so infer nothing from no comments.

Right. It has nothing to to with the plan document. The provision should not be in the Adoption Agreement. The question should be adressed in the services contract with the person who is going to be responsible for the 404© disclosure materials. Nothing has to be in the SPD, either, but the SPD is an appropriate place to have some of the 404© disclosure. Next question: Since when do TPAs get to decide how an Adoption Agreement is marked?

What about a plan document makes the plan a "404© plan" or contributes to compliance with the 404© regulations?

Unless the plan is subject to ERISA, and few DCAPs are, the employer could always keep the money. The proposed regulations add nothing new.

What about Treas. Reg. section 1.401(k)-1(d)(3)(iv)©(5)? The individual borrowed from a commercial source. Are the terms reasonable?

The best practice is to send the money to escrow, with instructions. Then if the deal fails, you don't have to wonder about whether or not the plan can take the money back

The employer can always give raises. Salary reduction elections can only be changed to the extent allowed by law and the plan document.

Plan terms relating to payment of expenses must fit.

The guilty employer can give the emplyee a bonus to make up for the employer's misdirection. But be careful. It is improper to refund the unused FSA amount to the employee, so the bonus should be sized and timed to avoid being characterized as a refund, and the actual excess must be treated properly under the plan terms and section 125 rules. This is not for the timid, the uniformed or the inexperienced and the circumstances may not be right for the move.

How about education and the big stick? The enrollment form and other communications such as the SPD should emphasize the importance of correct designation and consequences of incorrect designation, including recoupment, criminal charges and discipline (including termination of enployment). In the event of questions, someone should be availabe to assist employees with the correct determination. This is sometimes complicated, after all.

If you have started benefits in the form of a QJSA, You might like to know the the 9th Circuit has joined certain others and ruled that the survivor benefit has "vested" and cannot be compromised by a domestic relations order. Carmona v. Carmona. However, the decision was based on terrible facts and at least was more thoughtful than the decision in AT&T v. Hopkins. The 9th Circuit holds open the possibility of different results under different circumstances. One thing can be said for sure, alternate payees need to advance the domestic relations order promptly and diligently to avoid having their interests preempted. I have repeatedly criticized the AT&T v. Hopkins result. It looks like the trend is for QJSA to win over QDRO. I only hope that the insight of the 9th circuit has traction and the outcome will be different if the circumstances warrant. The circumstances did not so warrant in Carmona.

All the reasons why a new or revised order should not be issued should be presented to the state court, including the subsequent marriage. It may not make a difference, but you do not want to fail to make any argument at any stage. If the issue is not one properly considered at that stage, it will simply be disregarded. Unless you made a great effort to resolve qualification in the first place and your former spouse resisted or absolutely failed to cooperate or particpate, you don't really have much to complain about. The original division can be given proper effect unless you have started retirement benefits, or the plan is designed or administered by blockheads, or you have incompetent assistance in describing the your relative rights. Athough your former spouse should have been diligent about reaching a final resolution in a more timely manner, you should not feel entitlted to a windfall. You should make sure that the orignal interests are properly framed against the current backdrop. The state court may have a different view, but your retirement plan should not.

I am confused about why you mention options that involve the company paying for coverage when status changes. That seems contradictory to a caferteria plan or health plan design that provides for ineligibility when status changes.