QDROphile

Somebody should read Schoonmaker v. Employees Savings Plan of Amoco Corp, 987 F2d. 410 (7th Cir. 1993), even though the DOL has not read the case. The DOL thinks a whiff of QDRO should cause constipation. The DOL's position is not only legally wrong, based on an inability to read the statute, and oblivious to practicalities of plan administration, it disregards obligations of fiduciaries to respect the rights of participants. More direct answer: What do the QDRO procedures say? The QDRO procedures should say that the plan administrator will take no action until receipt of a domestic relations order. Until receipt of a domestic relations order, it is business as usual under the plan. If the plan does not have QDRO procedures that deal properly with such typical issues, the plan administrator deserves all the grief that can come its way, especially if the plan administrator know nothing aobut QDROS. So much the better that being in the sovereign nation of California makes things tougher.

And who engaged the TPA and what control is exerted over the TPA? And what about all the 403(b) compliance the sponsor is responsible for, especially with an open market arrangement -- the plan needs all those contracts to make the providers communicate and behave? The DOL says it can be done, but none of us would have said so five years ago, and neither would the DOL.

Q: Do you think the DOL was lying in its most recent field assistance bulletin on the subject or do you think that the DOL was lying in all the years prior to the bulletin or do you think the DOL just lost its mind and sense of shame? If any arrangement can remain exempt, the one you describe seems to be a candidate. How is that for equivocation?

Get competent legal assistance. To get what you want, you will probably have to have the original division of the 401(k) account reformulated. Whether or not the court will do that depends on local law and custom.

I wonder if someone could clarify for me the difference between a one time irrevocable election under the 401(k) regulations (which is wht the original post appears to be describing) and the opt out that pops up in discussion from time to time on the boards. In particular, what is the basis for such an opt out, or is it just that nothing says you can't?

If deferred compensation is secured by amount held in a trust, the deferred compensation is taxable. We were not limiting the discussion to deferred compensation that is subject to a risk of forfeiture. The trust arrangements are of greater interest to vested deferred compensation.

Not well said when words are omitted. I would take my chances with potential problems under ERISA.

You can't have a plan design that is compliant with 409A if you have any way to stop elective deferrals for the year except as expressly provided under 409A. Position eligibility is secondary to the annual deferral election requirement. Section 409A does not care about ERISA. Pick your poison. I would take my chances with potential problems ERISA. You might consider an election to defer "10 percent of my compensation for the year as a vice president" compared to "10 percent of compensation for the year" but it would be risky. You have more to work with for nonelective deferrals.

True as to elective deferrals. You also have to be sensitive to how nonelective deferrals are described.

Typically the company stock fund would be the ESOP portion of the plan and the dividend would either be paid to participants or reinvested in employer securities, at the direction of the participant. The plan document will have appropriate provisions. The ESOP board has posts concerning ESOPs that are defined by the stock fund rather than by legitimate criteria. Notwithstanding the bogus nature of the arrangements, they are common and honored.

Either the plan document or an investment policy document will dictate the dispositon of cash dividends. Same for stock dividends and fractional shares. For public companies it is common for cash dividends to be reinvested in employer securities unless there are directions to the contrary. ESOPs have their own considerations. A plan of public company that pays dividends that has a company stock investment option will probably be an ESOP.

Since when was the husband not eligible for single coverage under the husband's employer's plan?

It is nice to know someone can see a slow high hanging curve ball when it is served up.

If your Delaware Statory Trust is not a rabbi trust, the deferred compensation will be taxable. "Rabbi trust" is just a name, with a historical reference, to a grantor trust. I agree that the trustees often do not pay pay attention to their contractual duties, but who can you really count on to do a job properly anyway?

Loss of eligiblilty for futher accrual is not an event that requires payment, and can't be an event that permits payment. You follow the 409A compliant terms of the plan with respect to payment. I would not worry so much about the accrued benefit causing ERISA problems if everything was compliant during the time of accrual and no monkey business on the side.

The "co-pay" appears to be simply the employee share of the health coverage cost. A cafeteria plan works only with a choice of cash or benefit. The plan can be amended to provide that if the employee elects health coverage, the employee's pay will be reduced by $5 per period and the employee will be provided with the coverage. The $5 "co-pay" cannot be paid from the health spending account because it is a premium for health coverage. I agree with Lori Friedman.

I can see why you would have a question of relevance if you thought it belonged on the 409A board. That is why I guessed at Notice 2008-62.

It wasn't necessary. The IRS did not issue the ruling. Trick question, or do you mean Notice 2008-62? It was necessary if only to get attention to the issue.

Word "joinder" suggests you are in California, so all bets are off. That said, the division of marital property is part of the proceeding, which is a joint responsibility. Traditionally, the alternate payee (not the pension participant) takes on drafting the domestic relations order, but genereally there is no rule and the the court can decide whose responsibility it is and who pays for it no matter who does the drafting. I hope that your plan administrator is not a pansy, but I fear the worst (remember, you are in California). The suspension of your full benefit payment pending resolution of has limits on it, both as to amount and as to time. Unfortunately, the amount of time will seem very long. You will be told 18 months, even though that is not really the right answer. If you are in for a fight, you should try to get an experienced lawyer to help. Most domestic relations lawyers are not up to the task, especially since you might need to take on your plan administrator if matters get drawn out with your spouse. Interview and choose carefully. The court will not help in making sure you get fair treatment. The judges do not understand QDROs even thoguh the California Supreme Court says that they do. I hesitate to do anything to encourage you to take this on without experienced professional help, but the Department of Labor has a QDRO book on its website and available in hard copy upon request. It is a good resource, but is laking in many ways. And remember, the DOL has challenged the California domestic relations procedures as applied to retirement plans and failed. Perhaps it had someting to do with trying to resolve matters in courts in Califiornia.

As far as I know, it is all on paper, and not the subject of any focus or any real concern or actions by the regulators. Also, the ERISA stnadard relating to the relationship of the employers and what constitutes a single employer may not be the standard under the securities laws. But if a participant actually has and exercises rescission rights, I cannot comprehend all of the implications under ERISA and the tax code.

I know everyone retches when I make this comment, but your reference to ADP testing indicates that the plan is a 401(k) plan. The employers need advice about compliance with securities law. It is not an adequate answer to say the the plan has no employer securities. Multiple employer plans have unique problems.

Either is adequate and I could come up with a few more. My downfall is the quick pass by with the obvious solution or observation.

That should be fun if she is still employed by the same employer ... unless she no longer works for that employer. Hmm. Explain how that could happen. I know that Masschusetts is famous for some of its no-show government jobs. Someone could be employed but not really working, but in the private sector even that arrangement would usually not allow a distribution of elective deferral amounts, nor a distribution of other employer contributons. After-tax employee contributions, anyone?

I have advised employers to stay out of it and leave it to the annuity providers to deal with domestic relations orders out of the concern you stated. I would have to go back to the regualtions and the DOL guidance to reconsider under the new regime because I don't have a recollection of how QDROs fit into the mix. I regret that I can't take the time for review now.

What is your policy about providing copies of the account statements from the December 31, 1997 date to the most recent, assuming participant consent?