QDROphile

Please explain why a charity cannot be a designated beneficiary.

Since there is no such thing as a truly "separate interest" QDRO, there is no sure fire way to have ready answers to all of the relevant questions. The answers are determined by the terms of the order, the terms of the plan, the terms of the written QDRO procedures and the law. The law is not settled on various points.

Please clarify what you mean by a non-ERISA plan. Is it is a plan that is not qualified and exempt from most ERISA requirements as a top-hat plan or is it something else? If so, you are left to plan terms and policies adopted by the plan to determine how to process the retirement payments while matters are worked out in the marital settlement and thereafter. If the plan does not have them, now is the time for designing and adopting them. The plan may choose to follow some principles that govern qualified plans, and there are some good reasons to do so. But there are some differences, including tax consequences, that need different treatment.

Consider that a general partner may have unlimited liability. Sounds inappropriate.

Since 105(h) was consciously designed to prevent the result you want, it is unlikely that you have options. The usual solution is to buy a policy for the individual.

Are you referring section 105(h) as the "discrimination rules"? It is hard to tell if you need details about 105(h) or if you know all about 105(h) and are asking for ways around it.

This area of the law is a mess. Some aspects of the issues are discussed in other posts, but you need a competent ERISA lawyer and might as well not even look at the discussions, except to give yourself a headache.

Given that for purposes of section 415 and 401(a)(9), the benefit divided by a QDRO is essentially treated as a single benefit (which is why there no such thing a a true "separate interest," especially in DB plans), I think it is reasonable, and perhaps even necessary, for the plan to take the position that the alternate payee's share of the benefit is not independent for purposes of the restriction. As a plan fiduciary, I would rather be proven wrong in an action by the alternate payee than give away the store without some authority.

While I agree that domestication has a cost, I don't see how charging the plan account as anything to do with it. The plan is not involved in the domestication. I don't think the cost of processing a foreign order coupled with the domestication order should be different from processing a domestic order. Of course, any order could be a mess that increases the processing cost.

I disagree with pax. I am notorius for being overly critical of plan documents, but if actual SSA determination is required, the plan should say so and I have seen plenty that do. The issue is whether the fiduciary determines disability or if the fiduciary simply looks to a third party's determination. Among other things, the difference affects claims procedures as well as the outcome of the claim. As a general rule the fiduciary has primary duty for all determinations under the plan. I think the fiduciary is responsible for determining disability because the plan does not say someone else does. The plan defines disability by incorporating the SSA standard by reference. The fiduciary has to apply SSA standards in its determination. Perhaps the fiduciary could rely on the SSA determination disability if the SSA has actually determined disabilty -- who is better to know and apply the SSA standard than the SSA? I don't think absence of SSA determination lets the fiduciary off the hook. Here is the best part. The fiduciary first has to interpret what the plan says about who determines disability and how. Fiduciaries have discretion in interpretation and it may be OK for the fiduciary to interpret according to pax. But I don't think fiduciaries get points for punting.

As suggested by GBurns, you have two major issues. The first is to determine who is the employer and who are the employees. For various purposes, you may have multiple employers who have their own employees rather than a single employer with employees at various locations. This is a complex matter and you should START with your ERISA counsel, not try to avoid or circumvent your ERISA cousel. This is an issue that should have already been resolved because it is a central issue for management companies. Maybe you don't need to go to ERISA counsel. Maybe someone else in your office is aware of the resolution. Assuming that you have the simplicity of a single employer with employees at multiple locations and with different benefits or diffferent employer funding of benefits, the issue is whether or not the plan is discrimintory. That is determined under section 105(h) of the Internal Revenue Code. It is possible to have differences among emplyees. Someone should be performing tests to determine compliance. Even if the arrangement is discriminatory, it makes no difference to most employees. Certain highly compensated employees will have taxable income and the employer will have withholding obligations with respect to the taxable income.

Cheap response: Take the position that it is restricted, then you should get your answer when the position is disputed. Sounds like both of them can afford to hire someone to get you the right answer and support the conclusion.

The plan administrator's job is to follow plan terms and beneficiary designations. If the plan provides for disclaimer, then follow plan terms about how to determine the next order of beneficiary. In your case it sounds like the estate.

You might consider having the Canadian judgment domesticated if you are really worried about it. All or most states have procedures for domesticating foreign judgments. While you are at it, have the court recite that it is acting pursuant to state domestic relations law or has duly taken into consideration state domestic relations law. I am not so sure you need to go so far, but I don't know.

I did not intend to inject anything into or against your response. I was describing a different potential path that starts with correction of a misconception that a DRO has to be a court order. Compare QMCSOs and the DOL advisory opinion on the subject.

Collective bargaining units are typically disaggregated and tested separately. One can't tell from your message how you broke out the testing or how you treated bargaining and nonbaragaining employees.

Nothing in the QDRO rules says that a domestic relations order has to come from a court. Government agencies are more and more involved in domestic relations proceedings. One interesting issue is how to define domestic relations law when looking at the authority of the agency to act. You have to be careful when paying a benefit to/for an alternate payee who is not a spouse or former spouse. The income is attributed to the particpant and it is not an eligible rollover distribution. You have to deal with other withholding rules. Figuring how withholding should apply is lots of fun. Is the amount to be delivered under the order to be net of withholding, if any? Or do you deliver the stated amount and increase the distribution to cover the withholding, if any?

Here's one on the subtle end: Madison v. Resources for Human Development, 39 F Supp 2d 542 (ED Pa. 1999)

vebaguru: For inquiring minds, could explain in greater detail why you would have a single employer arrangement when the benefits are provided to persons other than employees of the employer? For various purposes under ERISA plans, benefits under an employer plan can be provided only to employees and their beneficiaries, so it would be nice to understand how to distinguish.

A plan administrator especially would not want to be advising anyone about "arrangements" for purposes of using plan benefits to deal with a matter that has nothing to do with the plan. That applies to a TPA, who is an agent of the plan administrator. Embezzlement by an employee of employer money does not concern the plan. If the administrator is presented with an irregular request that arises out of arrangements between the employer and the employee, the administrator will have to evaluate whether or not to comply with the request. A request for distribution to the participant or a direct rollover is not an irregular request.

Form 11-K for a plan is the equivalent of a Form 10-K for a company that is subject to reporting requirements. The plan would be subject to reporting requirements if stock and plan interests were registered for purposes of the plan. Stock and plan interests would be required to be registered if the plan would be treated as offering employer securities. This is a bit of an oversimplification, but the plan would be treated as offering employer securities if plan participants could choose to have elective deferral amounts invested in employer stock. Any plan in this situation needs compentent legal advice. In fact, any plan that uses employer securities should get competent legal advice about the securities law implications, even if registration is not required.

I am concerned with people not understanding limits of what they know and the implications of dabbling in what they do not know. I fear that giving someone an "answer" on this board is sometimes giving them the rope to hang themselves or someone else. A significant part of my work involves correcting the effects of mistaken action or advice of TPAs who do not have the breadth or depth of knowledge to either adequately understand or address the issues. They try to do too much in response to pressure from their clients to go beyond what they are competent to do. You did not pose your question as a newbie who was struggling with inadequate training or supervision, so you did not get an answer that was appropriate for your situation. Therein lies the problem. It is very difficult to ask a general question on this board and get an answer that is the proper fit for the question because all of the aspects of the question were not expressed. The person who asks the question might not understand the bad fit. So in your case, you and the client evidently have protection because of review by a supervisor who is experienced and knolwedgable. Good. I wish you well in your career development.

Rev. Proc 2003-44 is an important cite. The the site at which you can find the material cited can be reached throught Benefitslink or at the IRS website, among others. I composed and deleted several messages about asking anonymous strangers to help you with a matter in which you are evidently completely inexperienced in order to allow you to provide advice and services to your client when your client presumes that you have the knowledge and experience to get the job done and is paying accordingly I gave up because any comments are pointless. The sad fact is that even if you don't get it right, either this time or the next time you are out of your element, your client will be none the wiser and no one will get caught.

I second papogi, including conclusions from the authority cited. I will go one further. I think the TPA is so wrong headed that I would not want the TPA working for me because of fear of the TPA's position on other matters. I would reconsider if the TPA's postion started with an explanation like "this is really out there, but you might think about ... ." Also, I don't see why names should be withheld, as long as you are absolutely sure about what you attribute, and describe accurately. Public exposure can help drive out knaves and incompetents. The knaves of deferred compensation got us all a new section 409(A).

I agree with others that from the perspective of the plan, the only thing that will affect your benefits will be a QDRO. However, some plans will restrict payments to you if the plan administrator becomes aware of a domestic relations proceeding that involved division of your benefits, even if the proceeding concluded six or seven years ago. The restriction may last until there is some satisfactory resolution, although there is an outside time limit. All plans will restrict your benefit upon receipt of a domestic relations order, even if the order is not qualified. Your settlement was probably within some document that a plan would treat as a domestic relations order. If the plan is not aware of any domestic relations proceeding that involved division of benefits, the plan will pay your benefits as provided under the terms of the plan. The consequences of not providing your former spouse with a share of benefits before the benefits are distributed to you is a matter for state law. It is likely that there would be adverse consequences to you, but I don't think anyone can tell you what they are without knowing all of the details of your situation. Subject to that caution, unless you think neither your former spouse nor her heirs will ever come after you or the money, it is probably going to be a lot easier and cheaper to take care of the matter before you apply for your benefits. Among other things, if you get the money from the plan before you reach resolution, you may get taxed on her portion instead of her.