QDROphile

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.

The plan sponsor can't do anything about loans other than establish or amend plan terms. The plan administrator has responsibility for loans and must respect plan terms. If the the plan sponsor is the plan administrator, shame and pity.

I am shocked that you would consider your last two sentences in the context of advising a plan administator about the appropriate way to handle a matter. We are talking about what is right, not what you can get away with. Besides, when the alternate payee wins, she can probably get attorney's fees and I have a different view of the prospects of winning. I have stared down several union plans that took unacceptable views of QDROs and were used to getting away with bully tactics until someone showed a willingness to go to court. Although I don't quite understand all of your other responses (election of remedies doctrine?), I think they are misplaced and I don't care to engage any more on the issue. I stand by my position. Your best point is that the state court may be unwilling to reopen the matter to change approach.

I am shocked that you would consider your last two sentences in advising a plan administator about the appropriate way to handle a matter. We are talking about what is right, not what you can get away with. Although I don't quite understand all of you other responses (election of remedies doctrine?), I think they are misplaced and I don't care to engage you any more on the issue. I stand by my position.

mjb: Forget the controversy over the survivor annuity, that has been hashed out to no resolution in other posts. But I would love to see some authority or even a plausible unsupported explanation of why a domestic relations order would not qualify if it split the participant's monthly check for some period, not to exceed the particpant's life. While one can assert that the form of benefit is an annuity for the life of another, and therefore is not one of the plan's offerings, that is too hypertechnical in a post retirement environment (it is OK in a pre-retirment environment) because it would effectively either (i) essentially prevent QDROs in a post-retirment environment, or (ii) require a plan to reform the benefit and provide separate annuities. Option (ii) would do far more violence to the plan and create a terrific opportunity for adverse selection.

The AP has a right to go back and change the order to get the shared payments if the order fails to qualify because its original terms no longer work. The AP has a reasonable time to do so after notice of disqualificaton and some of the participant's payments may have to be suspended while the AP is working on a new order. Whether or not the AP can get a new order will depend on state law.

The plan can be designed to require spouse consent for distribution, but no federal law requires it. Usually spouse consent is required only with respect to form of distribution or designation of anther beneficiary, but I am not aware of anything that prevents a more restrictive design. Who is responsible for the design and why the design was chosen may be hard to determine, not that it matters. Theoretically, the employer decides on design but governmental plans are often legislated and managment has no say. And it could be those greedy fund managers in conspiracy with those miserly spouses.

Both of your colleagues are wrong for one reason or another. Nothing about the age itself is an issue. However, the order is evaluated at the time that it is submitted to the plan. The plan, the law (or understanding of the law) and other circumstances may have changed since the order was drafted and the changed circumstances can have a profound effect on the outcome, including the disqualfication of an order that may have been qualified if it had been submitted years ago.

Go to the securities law forum and look at the discussion that begins on April 28, 2005.

As much as I like cynical and cryptic responses, it is only fair to warn readers that the comment about board action is oversimplified, but not wrong.

If this is for a 401(k) plan, someone needs securities law advice more than a plan document.

If you are reporting correctly and I am reading you correctly, your HR director is wrong. You are correct that it would make mincemeat of the uniform coverage rule. I would say something unkind about the national administrator, but I have doubts that it agrees with your HR director.

COBRA is required, but most FSAs are subject to a special rule that requires an offer of COBRA continuation if the participant has "underspent" the account. In that situation it is economically rational, even at a 102% premium.

If you have an FSA, your coverage probably ended as of Jan 31, when you were last employed. The uniform coverage rule does not require coverage for the entire year if you are not eligible for coverage for the entire year. It does not matter what the plan year is. If you have an unspent balance as of the end of coverage, you should be offered COBRA and you can recoup your "contributions" by electing COBRA coverage. However, you could get into leapfrog with the COBRA premiums if your medical expenses are not bigger than the unspent balnce plus the COBRA premium for February. COBRA is probably available only through the end of the plan year, so the plan year is relvant for that purpose.

For certain plans, the law requires that benefits be paid in the form of a joint and survivior annuity unless the spouse consents to another form of payment. The law does not prevent payment from starting, but restricts the form. See section 401(a) (11) of the Internal Revenue Code. Without knowing more about the plan, no one can answer your question. Most plans except for IRA-based plans are restricted in some way from paying benefits whenever the particpant may want to receive them. As an oversimplified generalization, benefits are usually not payable before termination of employment. Different rules apply to different plans, with similar effect. In addition to what the law requires, a plan may be designed to be more restrictive concerning spouse consent and when particpants are eligible to start benefits. Most plans have a summary plan description, which is provided to all particpants and is available upon request. The SPD will describe the requirements for distributions, but will probably not tell you if the requirement arises because of law or plan design, and it probably does not matter, no matter how you feel about the restrictions. If the plan is holding up payment beyond what the SPD says, then it is possible that something is wrong.

Shouldn't the plan adminstrator be giving directions in this matter, which involves certain interpretations and judgments necessary in connection with terms adopted by the plan administrator?

If the participant is eligible on the last day of the year, the extension aplies even if they are not employed in the next year. Your plan amendment should give you adequate guidance on this point. If it does not, you might think about whether or not your amendment is valid.

The employer will not need the cafeteria plan if the employer will cover the entire premium. You don't think the arrangement falls within the ERISA definition of welfare benefit plan?

The next time you encounter a Medicare situation, make sure you apply the key word, "entitled". I mistakenly used "eligible" in at leat one of my posts.

Not under an FSA but the employer can adopt a plan that provides for payment or reimbursement of premiums for insurance identiifed by employees and the plan can be funded through the cafeteria plan. You will need help from someone understands how this works.