QDROphile

It would be nice if plan administrators would catch on to the idea of delivering funds in escrow so failure to close does not create the problem in the first place.

Transfer to another member of a controlled group is not a termination of employement for distribution purposes. No one has a right to continued participation in a plan. The sponsor can define eligibility as it chooses as long as the plan passes coverage and discrimination tests.

You have no legal right with respect to how your account assets are invested. If you are not given effective ability to direct your investments, some plan fiduciary is responsible for how your account is invested and is subject to specified standards. A money market rate of return from March to November is not necessarily a breach of duty. You are not entitled to mapping, but if others were mapped and you were not, the plan or plan fiduciary may have some problems. The plan has to follow its terms, so if it says you are supposed to direct investments and you are not given effective ability to do so, the plan has failed to follow it terms. Also the fiduciary may have breached its duty. Assuming the plan was and remains designed to have participants direct investments, you were entitled to a notice about the transition if your ability to direct was suspended for a certain number of days. Penalties attach to violations, but I don't think participants get any cut. Notices may have been issued and you did not get them for some reason that was not the fault of the plan.

How about the idea that even if the "stop" was legitimate in the first place (questionable), it is not appropriate for such a long time. This would be an easy response if the particpant has been eligible for a distribution for 18 months, but that is not a necessary condition. Get some intelligent QDRO procedures (rare) in place, then notify everyone that the plan will distribute the account within 60 days unless the plan is provided with appropriate reasons for postponing the distribution. Other approaches are possible and don't forget to take into account the documents that the plan has (its own and the communications about the account -- especially what caused the stop). The plan administrator may be liable for inappropriate interference with the distribution. See Schoonmaker v. Employee Savings Plan of Amoco Corp., 987 F2d 410 (7th Cir, 1993).

See ERISA regulation section 2510.3-21.

Nope.

There is more to the rules than "yup."

Not true. Usually you can't find cites for rules that don't exist.

I did not say the the TPA's concerns were wrong or that it was wrong to express those concerns. But it is not the TPA's decison and the TPA should follow instructions of the fiduciary with authority over plan information, unless the TPA was hired for this sort of work and given discretion or authority (which would probably make the TPA a fiduciary).

You might tell the TPA that if it oversteps its role, it could be a fiduciary. ERISA says that if you exercise control, you are a fiduciary even if you are not a named fiduciary. Once you fall into a fiduciary role, you cannot be sure where your fiduciary status, or liability, ends.

If enough people chime in that evergreen elections or automatic amounts are simply a really bad idea, will that do it for you?

TPAs should do what they are told unless they are fiduciaries, breaking the law, or breaking the TPA contract aginst the TPA's will. Plain and simple. Whether or not access to the information is proper, the TPA should follow the instructions of the appropriate fiduciary. Violation section 404© is not breaking the law in this context. N comment on what the fiduciary should be thinking about this.

Someone should ask questions about securities law complaince. There is a thread on the securities board about multiple employer plans and the difficulty of compliance.

LRDG: Please explain the bearing of your post on the discussion. I am not getting your point.

Since money is fungible, you should have the money come as deferral of pay, not necessarily limited to pay this year. Otherwise you cannot be certain about compliance.

If the IRS knows or cares, it is not saying, at least in not reliable guidance.

It is best to state the equivalencies in the document, then nobody will have a good excuse for making the mistake of trying to use 37 1/2 hours a week or 2080 hours a year for purposes that are governed by legal requirements for hours.

If the plan allows lump sum only distributions, why does the individual still have an account? Once distributions started, the entire balance should have been distributed. Same if the particpant is an owner and still employed, although the plan may not be designed for that result for an owner.

Are you disagreeing or are you selectively amplifiying?

I have never had to worry about that extreme. Our contacts arise because the employer has a presence in California. And as you know, it is easy to confuse a plan with the employer that sponsors it. Also, if an employer has presence, I suspect the plan has presence, too. But we tend to manage OK without having to get into those fine points; we use some procedural artifice to reconcile the California law and procedures with the law that really applies. It stinks, but one can hold one's nose. One of the things we do is assert that the court has no jurisdiction when we return the form. We have never had to resort to reliance on that assertion to get out of a bind. But we don't try to disqualify legitimate orders, either.

mjb: You think ERISA preempts California joinder, I think ERISA preempts, the Deprtment of Labor thinks ERISA pre-empts. But the U.S. federal courts in the sovereign nation have not agreed with us. I am unaware that Nasca v. Peoplesoft has been overturned or not followed in a published opinion. It has been indirectly limited by a decision that says that a state court cannot require anything of a plan except what section 414(p) provides. However, there was some later excitement about state courts imposing attorneys' fees on plans for making the the poor proponents modify their proposed orders to meet qualification requirements. I have not heard anything about the issue for some years, but I am always nervous about what the California state courts would be willing to do in their permanent state of rectal cranial inversion and the unwillingness of the federal courts to stop the madness at its root cause.

Although the DOL does not think section 503 of ERISA applies to a question of qualification, I disagee, so I agree with you that the matter must first be pursued through the plan's claims procedures. I don't understand your statement "which is not the case here" because we are not discussing anyone who has asserted any claim or is contemplating taking any remedial action. We are discussing theoretical propositions. I think that a quest for qualification falls under 502(a)(1)(B) of ERISA. Under section 502(e) of ERISA, state courts have jurisdiction. Although I spit at California on the subject of QDROs, California has ruled that state courts may determine qualification. In any event, one can go to federal court.

Please explain the statement about the contempt citation. The battle over whether or not the order is qualified does not have to go the court that issued it, but the court that issued the order would seem to be a good place to argue about it -- the plan would be saying that it won't give effect to the order. I am not overlooking the reality the the court itself has nothing to do with the form or details of the order nor that this is a battle that can be forced into federal court. California does not count.

I am with J. Bringhurst. If an order meets qualification requirements, the plan administrator cannot reject it because the order does not use the administrator's preferred words. Unfortunately, the adminsitrator has the upper hand. I enjoy beating them back in the few times I am on the submitter side rather than the reviewer side. They usually cave when they get enough resistance. I think one would be able to get atoorneys' fees if it got as far as court, but the matters seldom do because it is not worth the fight. I AM serious about Fidelity's arrogance and unwllingness to provide a system that allows it customers to comply with the law.

No. Your employer should should consider a cafeteria plan to get the maximum benefit out of the same dollar outlay. If you employer has a cafeteria plan and has increased your pay by the difference in the premium, you are no worse off except possibly for wage witholding that does not follow the federal model.