QDROphile

To be overly simple as a starter, what is the business of the management group that allows it to maintain a plan for its employees/members? Then look at the relationships to see if there are complications and limitations.

To avoid plan disqualification, the employer is responsible for correction of the missed deferrals, and related match, if any, in accordance with IRS guidance. As to the ultimate responsibility for the cost of correction, I suppose the employer/plan sponsor can argue with the administrative services provider.

Not enough facts, although the answer is likely not to be absolute, no matter what the facts are because it is messy. The missing facts relate to what the plan procedures are for changing deferral elections, how well those procedures were communicated generally, whether or not participants were required to follow the procedures strictly while others stayed in their lanes. Your presentation implies that employee communication to employer is not the appropriate procedure for changing deferral elections, and that the employer did not follow or refer the employee to appropriate procedures

Now that I know that the employer is quasi imaginary, my fundamental question is quasi academic: What is the employer trying to do? Most employers would like to encourage retirement savings, but many are chary about involvement (e.g. potential liability) and expense (including indirect expense of administrative burden). Your hypothetical has elements of these concerns. I start from the easiest option that allows the employer to exhort employees to save within the IRA limits and make it automatic, without getting involved further in evaluations, payroll deduction IRAs (not state sponsored) : https://www.irs.gov/retirement-plans/choosing-a-retirement-plan-payroll-deduction-ira#:~:text=Under a Payroll Deduction IRA,deduction to the financial institution. If the employer wants to get more involved by trying to get a better or best solution (e.g. better investment options (whatever that means) or least cost maintenance), then it gets complicated. I think the "What are you trying to do or avoid (e.g. potential liability for investment decisions, at the high end)" question is primary and there is no pat answer. Pat answer: As between your choices, the state run IRA involves the employer the least and is beyond reproach, except that may not be the best benefit for the employees or owner. Better just to allow payroll deduction and let everyone fend for themselves if one is involvement averse.

Is the 100 (or less) basis points inclusive, or on top of, the investment fund management expenses? Is the employer willing to work on or pay for analysis of least cost options? What is the workforce like (especially with respect to sophistication, generally, not specifically with respect to investment decisions)? Does the employer wish to allow (passively) or promote (actively) the idea of retirement savings? You used the term "allow" but nothing is preventing folks now from saving through personal IRAs within the scope described, which is one reason for the questions.

Also, the plan may have a formula for providing installments and might not allow whatever schedule you would devise.

It depends on what the order says. 50% of the pension can be written several different ways with vastly different outcomes.

This is an interpretation question. It may well involve corporate law, e.g., is ministry B the legal corporate successor to ministry A? That might provide a satisfactory answer. It might not. I would start there, because it is conventional.

Particular Investment options are not a protected right under ERISA, FWIW.

Just to be picky, I think the applicable term should be "red herring" rather than "smokescreen". A smokescreeen is a deliberate action/phenomenon, designed to conceal or deceive. Some definitions of "red herring" involve deliberate action, but the nuance is that a red herring is a distraction from the subject (leading to misconception) rather than a concealment (misleading to misconception).

Are you reporting that Lincoln does not have a financial product that can be purchased for an IRA investment that approaches the desired Lincoln 403(b) investment option? Am I incorrect in inferring that the desired investment option in the Lincoln-administered 403(b) plan is a Lincoln product?

Does Lincoln have a product you like for an IRA? Is there a reason to keep funds in a 403(b) plan?

A plan is not required to accept rollovers even if the law allows it.

Notwithstanding my respect for your position, which has great merit, I think amending unfortunately drafted QDRO procedures (“hold” on notice of domestic relations proceeding - not a DRO) after the notice is going to be messy if the would-be alternate payee chooses to fight (because the law is not as solid as you imply or state, especially with messy facts and an incorrect DOL position). What saves a lot of bad QDRO advice/documentation/administration is that the stakes are not high enough, or the players are not rich enough to fund the fight. At a minimum, the dispute, including following claims procedures and possibly court appeal or DOL intervention will involve a lot of delay, which is troublesome for a terminating plan. So, the better approach is: 1) not to have bad QQDRO procedures and practices, and 2) don’t go looking for trouble in a misguided attempt to protect the innocent.

Peter, none of your text is ever “normal “. I mean that in a good way.

I don't quite get your point about section 402, but I do remember that the discussion in first-year contracts class about unilateral contracts was unsettling. Pursuing that line would not be helpful in this forum.

If you are considering strategy, and trying to make sense of express claims that seem incongruous (with the facts or the law) remember that the plaintiffs have to frame their claim as a fiduciary breach in order to have coverage under the fiduciary insurance policy and possibly under the corporate D&O policy. It is quite possible the the parties were in discussion about settlement even before the complaint was filed, and both were interested in the insurance pot of money. The prosecution of the claim may have been affected by the testing or refining of different theories to make sure the maximum amount of insurance money was available while soothing some egos.

Does it matter if that "hold" has been triggered under the terms of the QDRO procedures (or plan terms, although not likely to be added there) before the action to amend has been taken?

The plan must follow its QDRO procedures and plan terms even if ill-informed and set standards beyond what the statute requires.

Unless the plan has bad QDRO procedures or bad advisers, the plan is blind to a divorce and needs to take no action out of the ordinary, including proceeding with distributions on termination, until the plan receives a domestic relations order. Finish the distribution and keep quiet and lay low. Don’t seek trouble. Don’t believe the DOL QDRO book.

Thank you for presenting this case. It is fascinating in its parallel to the scare example that Fred Reisch offered when the 404(c) regulations first came out: unsophisticated wary participants on their own would choose the safe money market fund with almost no return over along period and therefore miss a lot of the benefit of a defined contribution plan. He suggested that 404(c) would not (should not? Fred was very sure of his opinions.) protect the fiduciaries. He made his scare story more scary (and sexist) by having the even more unsophisticated victim widow of the unsophisticated participant be the claimant. Apart from the irony, the overlapping point is that the “conservative“ strategy is not prudent for a retirement plan, whether exercised by a fiduciary or by disregard on the part of the fiduciary. I am too lazy to do the work that Bird did, and research the details and evaluate the investment policy and its formulation. From the outside perspective of an uninformed and ignorant critic, with only an inadequate summary, I would say that the fiduciary did not act in good faith in comporting with applicable standards for investment of retirement funds. When I see a case that finds liability (not just a willingness to settle — with how much of the insurer’s funds?) for maintaining a diversified 60/40 fund (a common benchmark for performance), then I will be impressed.

The rear view mirror is a preferred analytic.

Certain visas require that an employer pay the employee a certain (market) rate. Since a retirement contribution is compensation, an exclusion from the plan, especially based on a visa classification, may involve a violation of the compensation rate standards for the visa. This is not my field, so I am not sure that the H-2A visa is subject to the rules. I do not know if retirement plan compensation is part of the compensation under the rules. As noted in another message, these rules are beyond the ERISA realm.

I would say there are no accrued benefits after the effective date in that case. We could quibble about whether or not investment experience is an accrued benefit.

Being old (the document) does not get you a pass for benefits (or the portion thereof) accrued after the effective date.