QDROphile

I think section 72(m)(10) is relevant only when the participant has after tax amounts. The tax basis has to be split proportionately to prevent games with differing marginal tax rates between the participant and alternate payee. In other words, the order cannot allocate after tax amounts between the participant and alternate payee in a screwy way compared to the division of the economic value of the benefit. Otherwise section 72(m)(10) has nothing to do with investment gains and losses relative to purchase price of any assets credited to a participant's account. Unless the plan is an ESOP or something very unusual is going on, tax basis is independent of investments anyway, so it sounds like your record keeper doesn't get it and is making a mess.

Naive question: If it is a very poorly written document, why still have it?

You had better check the rules for universal availability of deferrals if you think you can run a 403(b) plan without including everyone.

You have an initial question under state law. You have to get a DRO before you can think about qualification or its effects on the plan, and the death of the alternate payee may preclude any futher state court action under domestic relations law. After that, it depends on the circumstances, the proposed change, the plan terms, the QDRO procedures which federal circuit court has jurisdiction. You are not going to get a very well-formed answer here. But anything is possible in Texas.

Has the participant notified law enforcement authorities of the missing person? How is the person missing? What is necessary to prove missing depends on the circumstances.

Hopkins is wrongly decided and more recent decisions in other circuits are not following it. Hopkins is so wrong I would consider not following it in its own circuit, but that is a tough call for whoever would be paying for the fallout.

A domestic relations order may divide a benefit that is in pay status unless the payments are made under an annuity that has been distributed from the plan. If the plan is making the payments, the plan should decide how it will allow the benefit to be divided and put the rules in the QDRO procedures. The example that pax gave is a typical and recommended approach -- the benefit payments are split in some fashion but the form of benefit is not affected. In other words, all the payments will be made according to the original schedule as though no divorce occured. The order will determine who gets what part of each scheduled payment.

And what requirements would those be? I can't see those trees in that forest.

Do the written terms of the plan allow two rates?

Yes, unless the basis for the in-service distribution is financial hardship under the 401(k) rules.

I am not aware of a good answer to your question. I specify in the QDRO procedures that the plan's claims procedures apply. In my last contact with the DOL, the representative said that the DOL does not think that the ERISA claims procedures regulations apply to QDROs (for example, the plan administrator's decision is not entitled to any deference). However, I think a court may look to the reguations at least by analogy. Courts like to have claims resolved outside of court if possible, so would look favorably on an administrative procedure even if the claims procedures under the regulations do not control QDRO qualification calims. Some recent cases have stated that an alternate payee has a reasonable time to cure a failure to qualify, but no bright line guidance is given. There are ways to cure disqualification other than getting the plan administrator to change its mind. The court decisions were not directed at administrative claims procedures.

A trustee is a title holder, so you would not need an individual if you had an institution. The fiduciary functions are another matter. It is common to have an institution as a "directed" trustee and have an individual or committee as the discretionary fiduciary.

ElKH: It is usually a bad idea to have the plan sponsor as the primary fiduciary of the plan. This point has been discussed in other threads. Your assignment of fiduciary functions should be reconsidered.

Don't mix up sponsor, fiduciary and plan administrator. Section 404© is primarily a fiduciary concern.

I will take my chances. Will you defend me?

If I were the plan administrator, I would apply the restriction.

Did the plan administrator have notice of the decree before the distribution? Whether or not the plan can get dragged in, there is probably some recourse under state law. The participant has disobeyed the decree by taking the entire balance.

Dick is correct if the settlement agreement was incorporated into the divorce decree or similar domestic relations order and the decree or other order were delivered to the plan. Upon receipt of a domestic relations order, the plan is required to protect the amount that would be payable to the alternate payee if the order is detemined to be qualified. Even if the order delivered to the plan is not qualified, the alternate payee would then have a reasonable time to achieve qualification. The original post does not say the the plan received an order. Without a domestic relations order, the plan should proceed as usual with distributions. If the plan received an order that is not qualified, then questions about reasonable time to achieve qualification come up.

That is what WDIK is saying. You look at the highest aggregate outstanding balance within the year. $45,300 in your example unless some more of the June 2 balance had been paid before June 19.

The loan is a contract. Unless the contract terms anticipate it and allow for it, the contract cannot be changed unilaterally. I think you are approaching the issue correctly. It is the same loan. The LOA suspension simply requires some math to get it back on track, based on the orginal interest rate and terms.

GBurns: I was not trying to respond to Blinky's post, I was expanding the explanation of a point in R. Butler's post about how a plan with no key employee in it at all may be part of the aggregation group.

Rephrase R. Butler's paragraph (2) to provide more detail: You have to include any plan that is aggregated with a plan described in (1) in order for the plan described in (1) to pass 401(a)(4) or 410(b), whether or not the plan has a key employee in it.

Too eager, if you think you are going to score a quick advantage. The claimant should ask the plan administrator for information about filing a claim. Leave the gamesmanship to the sleazy lawyers.

Plan loans are enforceable personal debts. If they are not, then they violate the loan rules. No matter what the reason fo failure to pay, the fiduciary has to act in a commercially reasonable manner with regard to collection. It is not commercially reasonable to allow someone to elect to quit paying or to break an arrangment that provides for payment. If the debtor has a legal right to break an arrangement (such a revoking a revocable payroll deduction authorization), the fiduciary has to consider other means of collection. When the loan is made in the first place, the fiduciary should consider what safeguards there are to prevent being put in the awful situation of pondering how to collect a loan.

That could work. I would want to step back and see how everthing is put together in the plan. Lots of dots have to be connected properly. How the contribution is determined is not necessarily how it is allocated. The document should say what is done with the contribution, although it may not say it in the section that describes how to determine the amount of the contribution. Does it say allocate to accounts or use to pay the ESOP loan? If it does not say what to do with the contribution, then someone is in a pickle and will have to rely on an interpretation of the document to fill in the missing terms. The real problem may lie in the SPD. It may say that the participants "get" the match and describe the match as the amount contributed. This issue applies in every leveraged ESOP. The amount contributed is not the same as the value of what is allocated to accounts.