QDROphile

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?

Treas. Reg. section 1.401(a)(9) Q&A(6) should answer #3, will help with the other questions, and suggests that the plan and the written QDRO procedures should have provisions for mandatory distributions to an alternate payee that will assure compliance with 401(a)(9). I go for sure compliance rather than allowing anyone to achieve maximum deferral under the plan, which means the alternate payee must start benefits at the earliest of participant's start of benefits, death or age 70 1/2. If the prototype document does not serve, don't buy it. Oh, I forgot. Prototypes are free. Is your provision for distribution at NRA/62 a provision applicable to former employee participants? If so, I would not apply it to an alternate payee if the participant is still employed. This is one of the best examples of why there is no such thing as a completely separate "separate interest" QDRO.

The relevant SEC releases are cited in various messages on this board. Search the securities section.

A specified dollar amount is OK as long as the account has enough money at the time the amount is withdrawn to pay under the QDRO. Some plans, including all the plans run through evil Fidelity, cannot handle this rather simple task properly. The ability of the plan should be taken into account in its QDRO procedures and, if necessary, the order may have to be disqualified or paid according to a default provision under the QDRO procedures that determine a date for separating the funds and attributing earnings. I never give effect to specific instructions in the order about rollovers. Distributions to an alternate payee must be done according to plan procedures. Then usual plan paperwork must be submitted by the alternate payee (or default procedures must be followed), and the 402(f) notice must be properly delivered. The alternate payee can elect a direct rollover under the plan's usual procedures. I take the "just do it" approach and would not disqualify the order. I would state in the notice of qualification that the plan will disregard the offending provisions about the rollover and state that the alternate payee's may elect istribution in accordance with plan terms. I am not saying that if a QDRO says distribute in a lump sump that the plan may allow the alternate payees to elect installments.

First you have to decide if the plan administrator should have paid the QDRO amount whether or not the AP responded, or should have been more aggressive about pushing the AP to come through with the necessary material. To decide about the plan obligations, you have to interpret the plan and the QDRO (such as the requirement to pay in 2001) and the other facts, such as the AP's apparent lack of interest in a relatively small sum until today. If the plan administrator is guilty, then the correction can involve imputed earnings -- an operational error is buried in there somewhere. Depending on circumstances, the earnings could come from the particpant's account. If the plan administrator is not guilty, I don't see how any earnings would be payable. You said the QDRO provided for a fixed dollar amount. Although the parties can amend the QDRO to take into account the unfortunate history and provide the outcome they want as of today, the plan administrator cannot require the parties to take action to pull the plan administrator out of the fire. If I were the participant, I would not put myself out to solve a problem of the plan administrator and the AP. But I would watch to make sure that my account did not get charged more than the QDRO amount and the actual related earnings.

I am very skeptical about the claim that the FSA is funded immediately, except as a budget function. Even if it is, government plans are not subject to ERISA and the plan asset rules do not apply. I think you are fussing about form over substance when it comes to characterization of the election. As previous posts have indicated, the concern should be whether or not salary is reduced for puposes of other benefits that are measured by salary.

Who is responsible for the securities law compliance?

I agree that you have to interpret the order, but good written QDRO procedures would make up for bad or ignorant drafting. Absent anything to the contrary, the subsidized benefit should be divided if they start at the same time. Different answer if the AP started before the subsidy became effective.

I am not asking about the drafter's mental state. I am asking why one would interpret the same law (all members of controlled group = employer) one way when awarding service credit for the employer, but then apply a different interpretation to termination of employment?

Why would a foreign controlled group affiliate be treated as the same employer on the front end of service and not on the back?