QDROphile

No. You are in the 409A world now.

How much money would you be willing to bet that FIdelity will not act a a trustee unless the employer "signs off as a fiduciary"? I am not sure what you mean by "signs off as a fiduciary" but I interpret it to mean that the employer is the fiduciary that engages or directs Fidelity. I have several files with Fidelity as trustee and the fiduciary that directs Fidelity is not the employer. I explained how to do that in a prior post. The plan document names the CEO as the person with authority to appoint a committee to serve as plan administrator. The plan document says that the administrator is the fiduciary with responsibililt for managing plan assets. The plan administrator engages Fidelity for custodial services, consistent with Fidelity's policies about refusing discretion over plan assets. If the plan sponsor appoints the trustee in its capacity as settlor of the trust, one can assert that the plan sponsor (acting by the person identified in the plan document) is not acting in a fiduciary capacity. Even if it is a fiduciary, as noted in earlier messages that slice of fiduciary responsibility is limited and the risk of breach of duty is small because it is easy to meet the appropriate standard by engaging a responsible instititution. Managing the plan asset, including direction of the trustee, is a much bigger job. Engagement of an investment manger is also bigger job than appointing a directed trustee.

Interest stops accruing when the loan is paid or distributed. A deemed distribution does not affect the loan itself. However, the deemed distribution will cause subsequent loan payments to be counted as after-tax amounts.

Steelerfan, I think you are jumping to an unnecessary conclusion. When an institution, or any other fiduciary, has limited fiduciary functions because of the express scope of the appointment, such as appointment as a directed trustee, that does not mean the rest of the fiduciary responsibilities falls on the sponsor. It means the rest of the fiduciary responsibility remains with some fiduciary. This discussion has been about who that fiduciary should be and how to assign the fiduciary functions to the intended person rather than lose control over who is a fiduciary and leave it up to chance, the Department of Labor, or a plantiff to determine to whom fiduciary responsibiliry attaches. So if you have the Fidelity trust institution as the trustee, you are at the beginning of the question about who is the fidicuary, not at the answer that the plan sponsosr is the fiduciary. The market may dictate that it is too expensive to have an institutional discretionary fiduciary, but that does not mean that plan sponsors are, or should be fiduciaries. And I assure you that in situations other than the "one person has all responsibility for everything about the business" it can make a big difference who the fiduciary is an how well that is established.

I agree that it is not so important if ownership, employer management, and plan administration are concentrated in the same person or same limited number of people, but should be considered when those roles are divided among different persons. The worst position for ERISA liability, besides outright criminal behavior, is being a fiduciary but not recognizing that one is a fiduciary.

Identify individuals by title in the plan document, if that fits. The title is an identifier only, it is not injection of the corporate office into plan adminstration. That concept that is tough for some to understand, and it may not fit over time and change of personnel, even if it starts right. A more generic and flexible alternative is to have the plan document specify that the CEO or some other identified individual appoints the plan administrator, which may be a committee. The CEO will be a fiduciary in that limited capacity, but at least everyone will know exactly who the fiduciaries are and the fiduciaries will know what their responsibilities are so they can carry them out properly. And then when the Department of Labor or a plaintilff's lawyer goes after the Board for leverage, you slam the door in their faces. I can tell you from experience that it is a very satisfying result.

Pre-QDRO, there is no right to plan documents or account information, subject to subpoena. The Department of Labor is wrong and if it were really serious or sincere it would write some helpful regulations to give us guidance and give the fiduciaries some confort . Until then I flout its position. I think a subpoena has a reasonable chance of success and I think it is bad policy to oppose a subpoena. However, I think plans should require a subpoena for personal information. I don't see the point of fighting over a plan document. The divorce court can order the participant to request the documents and statements and turn them over to the other party.

The law does not impose annual elections on a 401(k) plan that is run through a cafeteria plan, but the plan might. As a practical matter, the plan might have to impose an annual election with respect to employer credits available for the 401(k) plan, but not with respect to salary reduction.

What did the election say?

A plan sponsor is always a fiduciary. Wrong. And when you go to the trouble of italicizing incorrect statments, I have no trouble being direct in rejoinder. Since your premise is wrong, everything that flows from it is flawed. To make matters worse you were perpetuating a commonly held misconception ("ignorance of the masses"). One reason you don't hear that a CEO is liable for plan sponsor breach of fiduciary duties is because a plan sponsor is not a fiduciary unless it is ignorant enough to be designated as a fiduciary or act as a fiduciary. That is my point and Plan Man's point. You get unintended complications when you make the wrong move of designating the plan sponsor as a fiduciary. Your comment in the context of "never" is just plain wrong again (and once again you emphasize a misstatement). The DOL or a good plaintiff will try to find warm body and when the sponsor is a fiduciary. The members of the board and the officers are in the gunsights because a corporation does not act except through those persons and those persons are responsibile for corporate acts. Even if the attemp is not successful, the indivuidals are put through a wringer. Go read the materials in the ENRON litigation. The DOL was after individual corporate officers because ENRON was a named fiduciary for certain matters and undertook fiduciary functions in others. I don't agree with some of the ENRON charges because I think the DOL goes overboard; the DOL sees fiduciaries everywhere and always starts from the proposition the plan sponsor is a fiduciary. The DOL loses on that point regularly.

It is very unlikely that ERISA is involved in this matter. It is unlikely that there is any tax problem, except maybe FICA. The amounts that were supposed to be taken out of pay, but were not, were probably included in regular pay and reported as taxable income on form W-2. If the employer covered eligible dependent care benefits and did not exceed the applicable limits, the employee has not received any taxable income, except maybe FICA. I doubt the situation caused the plan to fail applicable discrimination tests. Maybe discretion is the better part of valor and the employer should back off. Righteous indignation is unbecoming when one participates in the outrage. Yes, the employees got a windfall, but if the employees will not do the right thing and voluntarily pay the employer some fair amount (taking into account tax benefits in some way), is it worth it? If it is worth it for some reason, the employer should go pay for competent professional advice rather than dumping the problems on you.

You are incorrect krijowri. Conforming to the ignorance of the masses may provide some comfort, but it does not provide the best results.

The question for COBRA is when a qualifying event, such as termination of employment, occurs, and when group health covereage terminates. Employers have different policies, and insurance policies have different provisions, with respect to when termination occurs after some period of absence.

A commercial trustee is not necessary and is often not the best alternative (expensive, unless the responsibilities will be limtied to custody), but Plan Man is exactly right about the confusion over fiduciary responsibility and liability if the sponsor entity is named as a fiduciary. Good practice is more important than deep pockets. You pay dearly for deep pockets.

Rolling risk of fofeiture is dead (assuming it was ever alive -- why do you think we got 409A?) . The 409A regulations state that a layered risk is disregarded. The IRS was not going to let this abuse get by.

And, if true, your attorney should tell you so.

The outcome may be different than mjb suggests, but it makes sense for the participant to start with a refusal. All of the next steps involve uncertainty.

No. By the way, the plan sponsor does not distribute plan assets in any event.

A QDRO can be used to provide for distributions. The amounts can be used for any purpose that the alternate payee chooses. A QRDO cannot provide for payment to someone other than an alternate payee. No comment on TIAA-CREF policies or procedures concerning QDROs.

You do not want the plan sponsor to be fiduciary. You probably do not want the Board of Directors to be a fiduciary. I agree with the post about the inability of busines corporations to be a trustee.

How is the description of the plan inconsistent with section 125? We don't have much detail, but there is nothing I see except concern because of use of annual amounts to describe the election. I provided a numerical demonstration on that point and no one has identified anything that is out of line.

Under most retirement plans, if the employee gets $650 and elects under the cafeteria plan to reduce pay by $650 to obtain health insurance, the $650 is still counted in compensation for the purpose of calculating retirement benefits. If the emloyee gets a $500 credit toward health insurance and reduces pay by $150 to cover the remainnder of the cost of obtaining health insurance, the retirement plan only recognizes $150 of compensation.

Was the mistake a breach of fiduciary duty? Was the ESOP harmed, and in what way?

Question #3: The regulations say that the 125 plan must provide for eligiblity within a certain time, even if the individual is not yet eligible for the health plan at that time. How do we make sense of eligibility that has no benefit associated with it and will make it impossible to have a mid-year election when the health benefit becomes available?

What kind person, or what kind of extraordinary circumstances, are we dealing with when a property settlement expressly excludes an IRA interest and then a quetion is raised about whether or not she has a chance at getting the IRA?