QDROphile

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.

Never mind what the DOL says. Fidelity has set us a better example. Its administraitve system does not provide for compliance with legitimate terms of QDROs and it will not make exceptions if directed or asked. So if Fidelity thumbs it nose at compliance, why should anyone else bother?

Does it matter that cafeteria plans are not subject to ERISA? Are you suggesting that the CBA provides supplemetal terms to the health plan, and it is a matter of eligibility and participation terms that are violated? Seems like you still have to connect a few dots before you get to the money part..

That is not the correct accounting. If you commingle, you will not be able to determine the QDRO amount for various purposes, including distributions and 401(a) (9). Maybe that will be irrelevant as things play out, but what will you do if the alternate payee (still employed and age 50) requests a distribution in a few years? No 1099 for establishing an account for the QDRO proceeds.

Depends on what you mean by "entitled." Is she "entitled" under the wording of the court documents and how the words will be interpreted under your retirement plan -- you have to ask your lawyer, who may or may not know, unfortunately. Is it "right" for her to have survivior benefits? Many would argue that she is entitled to survivor benefits in order to protect her share of the retirement benefits awarded to her in the event of your untimely demise. Under various retirement arrangements, a plan will not pay the regular benefit awarded to the former spouse if the participant dies before benefits start. The former spouse could get nothing unless the former spouse is awarded some portion of survivor benefits (the only benefits that the plan will pay after the participant's death), in the same way that the former spouse was awarded some portion of the regular accrued benefit. Looking at it another way, should the former spouse get the survivior benefits (or some portion) that accued during the marriage and the new spouse get only what is accrued after the marriage? Your retirement benefits, and how the arrangement provides for dividing them, may not present this issue.

Pensions in Paradise is correct. Under the divorce decree you go back in time, divide the account, and the later withdrawal will charged to your portion of the former account. However, subject to state law, you and your former spouse can agree to share the withdrawal by adjusting the accounts or changing the award. A fair adjustment and how to express the result will take some thought and understanding of the plan. The QDRO should instruct the plan how to divide the account in a way that gives effect to the adjustment and the QDRO will supersede the divorce decree. The plan need not even see the divorce decree. Pensions in Paradise is also correct that you should get competent legal advice.

The employer can require proof of payment before reimbursing the employee or the employer can pay the provider directly.

Sorry, I stand my ground. I am very sympathetic to a person who has a question and posts it. I also support recognizing possible ignorance and trying to to get a correct answer. But I won't condone an organization that is not compentent to handle a matter but acts on it anyway or gives the appearance that it is providing an answer. If the organization is only providing limited services, it should have the integrity to recognize stay within in its limited scope and limited knowledge and abilities. In other words, they need to say that they cannot handle what they cannot or should not handle rather than create an impression that they are acting on authority. If employers can only afford limited scope services, that is the way of the world, but they should not be snowed into believing that they are getting greater service or expertise than they in fact hired. I was mostly set off by reference to the "legal department, " like that was supposed to mean something. It is arrogance to create an impression of greater knowledge or authority than is really the case. The response to the client and the presentation of the question should have had a very different tone. "We are record keepers who make available a prototype document and we are not engaged or equipped to advise about such matters. We are good at what we do, but his is beyond what we do. We try to help our clients, but they have to keep in mind the limitations on what we provide to them." That was not the presentation. And the legal department should have had the same self awareness and honesty if in fact it is not prepared to do competent work. If the organization is a one-trick pony, it should not act like it is a circus and take advantage of P.T. Barnum's observation about suckers being born every minute. If the organization is not able to help properly, it should at least no do harm by distracting the client with bad information.

GBurns: Under a health FSA, the employer provides health benefits to an employee rather than cash compensation. An employer provides health benefits when the employer directly pays amounts to the provider of the goods or services. An employer also provides health benefits when it reimburses the person who paid the provider of the goods or services. I believe that the employer is entitled to make sure that the employer is directly or indirectly paying for the goods or services rather than simply delivering cash to an employee without regard for the use of that cash for provision of health benefits. Now that I have given a serious response to your inane question, I invite you to give me thoughtful support for the position you take with Joe D and leevena, which I happen to believe is incorrect. To be more specific, I do not think that the language in the regulation concerning substantiation that qualifying expenses were incurred compels an employer to deliver funds to an employee. Incurring the expense is a necessary prior condition to payment of the expense (or reimbusement of payment of the expense), but has nothing to do with the method of payment of the expense.

Is someone in the "legal department" going to be taken to task for incompetence? If the legal department missed this one so completely, it has no credibility. The answer is in the book, where one would expect to find it, even if the matter has not come up as a matter of experience. Also, your client gave you the answer and you couldn't work your way to it. This is pretty basic 401(k) stuff at the provider and administrator level. At a minimum, someone should have looked into the plan terms in detail to determine the plan limits. Shame on your organization. Also, shame on your client for letting you get in the way. The client should have simply told you what to do when it became apparent that you were not up to the task of helping your client achieve a reasonalbe and legal goal. Hooray for this forum to help people with questions. There is nothing wrong with innocent ignorance. Next time, just ask the question rather than make such a blatant display of incompentence or even arrogance. I am disgusted with organizations that allow their clients to think that they are being served competently or are adamamant about the "Rules" when the organization are confined by the very small universe of the prototype that they happen to sell.