QDROphile

You will probably have securities law compliance issues if you have a multiple employer 401(k) plan.

What could constitute a QDRO, and whether or not a divorce decree or a judge is involved, depends on the the state's domestic relations law. I can imagine that child support enforcement would be part of a state's domestic relations law, so an agency order could be a domestic relations order. Then the question is whether or not the order meets qualification requirements of federal law.

A divorce decree is a domestic relations order whether or not it qualifies. If one is submitted to the plan, the plan administrator is required to take some action with respect to it. The action will depend on the circumstances.

If they think they can properly discharge their fiduciary duties without the assistance of a financial or other expert, nothing requires otherwise. Does not matter who sponsors the plan; the question is, who has the horsepower to cover the responsibilities? Who has the duty to advise about the fiduciary responsibilities and standards?

She has her foot in the door. Whether or not the divorce decree is qualified, it is a domestic relations order and she will have a reasonable time to come up with an order that qualifies. That is why the pension benefits are suspended. Your husband may become involved in (1) the state court if further state court action is required to produce an order that will qualify or (2) the qualification process in any event.

My take is to disregard stories about apparently bizarre arrangements until full details are provided with some credibility. I take the same position about analyzing or monitoring proposed legislation. It needs to ripen to avoid a waste of time.

You should get a document called a "summary plan description" that explains your benefits in some detail, but with understandable terms. Ask for it if you don't have it already.

So outlaws can get lawyers, but not record keepers?

1. The plan may have provisions that are violated by the transaction. Whether or not those provisions are grounded in ERISA, you lose 404© protection if you let a participant violate a plan provision. It is fundamental to ERISA that the plan be administered in accordance with its terms. The phrase "consistent with ERISA" does not mean required by ERISA. 2. Sorry about the mistyped reference to Form 5300, I meant Form 5500. Form 5500 is a report to both the Department of Labor and the IRS. Non-exempt party-in-interest transactions are required to be reported on Schedule G. I am not offering whether or not the transaction fits within the exclusions from reporting, but someone needs to determine if reporting is required. If required, I think it is an audit risk.

The plan will have to report a known prohibited transaction on Form 5300, which raises odds of audit. See ERISA reg. section 2550.404©-1(d)(2)(ii) for the exceptions to the 404© protection for fiduciaries. The exceptions include transactions not in accordance with plan documents and transactions with affiliates.

Nowhere in 414(p) (1)(B) do you see the words "court" or "judge". The words "judgment" and "decree" certainly imply a court proceeding, but many agencies issue "orders" and no court is involved. It depends on what the state "domestic relations law" encompasses and permits. To me, child support is in the general category of domestic relations. The DOL has issued an advisory opinion about agency orders as domestic relations orders, specifically to point out that the term is not limited to court proceedings.

Who suggested that signature by a judge is a requirement for a QDRO? Your refinement about child support collections law is well taken. However, the plan has to be careful to act properly in accordance with the requirements, and my experience is that the agencies are terribly sloppy in their communication. Add to that the federal law that is also terribly sloppy (for example, the law refers almost exclusively to employers and incorrectly presumes that the employer is providing retirement benefit payments) and the state law that is probably even worse, and my conlusion is that the plan has to be careful in its interpretation of what is required. I have looked at the collection law as a domestic relations law and applied the QDRO requirements accordingly, including not reading into the law (ERISA) a requirement for signature by a judge (or even a court document) when no such requirement was ever there in the first place.

I think someone needs to beat some sense into the plan sponsor. And someone needs to talk to you about issues involved in trying to humor idiots. Either allow hardship withdrawals or don't. It is shortsighted to the point of blindness to consider the sorts of things you mention.

Unless the participant directs the plan to pay a portion of a distribution to the participant instead to someone else, the plan should not do so unless the payment is pursuant to a qualified domestic relations order. The entire distribution is treated as a distribution to the participant. The plan administrator should not suggest that the particpant provide such a direction, and it is questionable policy for a plan to send distribution amounts to others at the direction of the particpant, even as a courtesy.

Why would anyone want to do any of those things?

A QMCSO can require the enrollment of the employee in order to provide for the coverage of the child and can require payroll deduction to cover the cost. This is rather sensitive and the DA's office may not be particularly adept at getting the right information and preparing a good order. You should get some competent professional help. The QMCSO probably will apply directly only to the health plan. The law allows mid-year election change under a cafeteria plan to accommodate a QMCSO, and if the cafeteria plan is the only avenue for enrollment and payment under the health plan, the cafeteria plan had better have provisions to accommodate.

For an example, look at the thread started by John A on August 9, 2001 relating to domestic relations orders.

Shame and pity.

The amendment scheme also violates section 401(a)(4).

JanetM: While your point about no reduction to retirement benefits is usually true, it is a matter of plan design and not all plans include salary reduction amounts in the defintion of compensation for determining benefits based on compensation. "Recent" law changes allow plans to neutralize salary reductions, but do not require it. As with so many other things that people take for granted, it depends.

How do you mean "designated"? It could happen for purposes of 401(a) (9).

Have you read 403(b) (12) lately? Or is this a government plan? If it is a government plan, state and local law will apply.

Plan administrators have a duty to deliver benefits in accordance with the plan terms. If the plan says that the participant is the person who requests a distribution, the plan adminstrator has the duty to make sure it is not someone else and has the inherent power to carry out its duty, subject to express terms of the plan. In extreme cases, the plan administrator must disregard plan terms if plan terms are inconsistent with ERISA. The plan administrator can take extraordinary protective action based on reasonable belief.

I am ignorant about any authority, but more facts may help. Is the plan with an institution and the individual is trying to decide to move other money to the institution? How will the "savings" be allocated? Seems pretty difficult to allocate it to a particulatr account under the plan. Also consider that the ERISA 404© regulations may protect everyone but the individual participant, so you may be able to let the participant take the risk. However, the plan needs to consider reporting requirements and whether or not it will need to report a prohibited transaction and the portential consequences to the plan of reporting, such as increased risk of audit.

The Code sections do not conflict; they layer. Not all arrrangements are subject to 105 and not all are subject to 125. When they are subject to both (such as typical health FSAs), you have to test under both regimes. EBIA publishes materials on cafeteria plans with extensive coverage of testing, including testin under section 105.