QDROphile

The Department of Labor may not care, but Blinky's example shows why the IRS might care, disqualify the plan, and create a mess with any rollovers. And the point is well taken even without the extreme numbers.

I wonder if this would be a legitimate correction of the error. Seems like cutting new checks is more in line with correction principles. I don't see anything in the Revenue Procedure about making up investment losses. In fact, making up investment losses is something of a taboo. Mike Preston is correct. The techieswill not be satisfied. If you want wild suggestions, how about breach of fiduciary duty? The fiduciary should not have cut checks without ascertaining good funds. The fiduciary makes the plan whole by covering the shortfall in the checks. The company indemnifies the fiduciary. Still not very satisfying, especially since each participant gets a different windfall.

Make sure you take the period to which the match applies, e.g. annual, by quarter, by pay period. Also take into account when the match is set. Another way of looking at it is, when are the participants induced to defer in order to get the promised match?

The problem with any answer in in this situation is that all the facts and circumstances can't be considered and it would be foolish to try to make a decision based on responses to this message board. Perhaps one might ask a a very specific question that has a right or wrong answer and actually get the answer here. But one should not be seduced or comforted that this board is a cheap and quick source to solve problems. This is a situation where the responses have very little value except to identify some aspects of the situation for consideration. The best we can do is give someone the perspective to realize that expert help is probably necessary. That said, Mike Preston's suggestion is probably a top consideration as a direction to explore, but that is all I would be willing to venture.

Unless the communication 15 years ago had a very strong written disclaimer that the "approval" had no effect on the participant's rights and created no rights in the former spouse, the plan might as well hire a lawyer now before doing anything to make the situation worse.

Try this http://www.access.gpo.gov/nara/cfr/cfrhtml...26cfrv5_00.html

Consider a policy and plan design that does not allow loan rollover unless the entire account is rolled over form the other plan. That is independent of your question. The loan can properly be rolled over by itself. Of the reasons for rolling over only the loan, most are negative from a policy perspective one way or another.

Not many plan documents have adequate language to create the sparate accounts.

You should go kick the author of the plan document that did not provide for a clear and practical disposition of death benefits. Or perhaps you should check the plan document to discover it is not so bad. A decent one would not let anyone "will" a benefit. Benefits are paid to designated beneficiaries. If there is no designated beneficiary, the plan should identify the recipient. Usually, an estate (of the participant or the designated beneficiary) is one of the default recipents.

I agree that the QDRO Procedures should be followed. If the QDRO Procedures don't address the issue sufficiently (that's my bet), you should be aware that the Department of Labor's position is that the plan administrator should protect the would-be alternate payee's interest if the administrator is aware that a domestic relations order is coming. The statutes do not say that, although some legislative history supports the DOL. The DOL's position has some other problems, such as how does plan administrator know with enough confidence that a DRO is coming that a limitation on the participant's rights is warranted? And how long must the plan administrator hold it its position withou receipt of a DRO before having second thoughts? Subject to what the QDRO Procedures say, consider the following: 1. The adminstrator should not decide unilaterally that it would just be a good idea to take some restrictive action. For example, I don't think that mere knowledge of a divorce is enough to project a receipt of a domestic relations order. Receipt of a divorce decree is another matter, because that is a domestic relations order. 2. What would the administrator "segregate"? The restrictive action, if any, should not go beyond limitations on distributions and loans. Restricting investment directions by the participant (if the participant has the right) is an invitation to disaster. See Schoomaker v. Employee Savings Plan of Amoco Corp., 987 F2d 410 (7th Cir. 1993). As Mike Preston wrote, the situation is sticky. Legal advice would be a good idea. I am of the school that believes that nothing is done to compromise rights of a participant until receipt of a domestic relations order.

SEC says you cannot net shares. All shares purchased or issued count against the number you registered, no matter how many are sold/distributed or when. Further, I believe that once you register, all shares count. In other words, you would not have to register if the shares came in only as match. The elective deferrals invested in the employer securities are what causes the registration. But the shares purchased with match dollars (or issued to cover the match) count against the number you registered, not just the shares associated with elective deferrals. Seems odd, and others may disagree, but registration costs are low enough that it is not worth taking a chance on the issue to cut back on the number of shares registered. You really should consult legal counsel when securities laws are involved.

The plan will have to stop receipt of loan payments. You may require notice of the proceeding. You may also have to grapple with a direction to return any payments that were accepted after the time of suspension, but that is much less common. Sometimes payments are allowed to continue, but you would want to see provision for that because most of the time they must stop, same as for other creditors. Next, the fiduciary has do decide how active to be in making claims as a creditor. Be sure to read all the notice materials you get from the bankruptcy court or trustee.

Your plan terms present a problem. You can't distribute the entire alternate payee interest immediately in a lump sum. You could interpret the plan to provide for a distribution of the entire interest in a lump sum at the time the alternate payee becomes fully vested (or when the participant terminates and is eligible for distribution of the partially vested account). You could interpret the plan to mean that "lump sum" applies to the vested portion of the interest and distribute the vested portion. After all, you would do the same for the participant when the participant terminates employment and becomes entitled to a distribution. You would have a "lump sum" distribution of the remaining vested portion when it vested. You might have several years worth of annual lump sum distributions, depending on the vesting schedule. Your interpretations would best be memorialized in the plan's QDRO procedures. Or you could amend the plan to state the rule you want to use, and avoid the need to interpret the plan terms. Remember to read the QDRO very carefully. Will you be followig its terms if you follow any of these suggestions?

A stock dividend cuts the same pie into more pieces; there is no economic substance. The stock dividends on suspense account shares stay in the suspense account and are allocated along with the shares that were there before the dividend, otherwise you would be diluting the ultimate allocation. If you had a real and competent pledge and security agreement, the agreement would provide for the lien to cover shares received from stock splits and dividends.

How about hardships distributions are available only if you have no other assets that can cover the need? The real estate baroness seems to have other assets.

A plan does not have to allow alternate payees to designate beneficiaries. Many defined contribution plans allow it. Although there are arguments to the contrary, allowing a designation of a beneficiary by an alternate payee in most cases under a defined contribution plan should not be an impermissible assignment of a benefit. Certain payment restrictions may apply. Most defined benefit plans (except for cash balance plans) do not allow an alternate payee to designate a beneficiary because they either do not provide for payments to anyone but a participant or spouse or they are correctly concerned with issues under section 401(a) (9) of the Internal Revenue Code. However, it is possible to allow an alternate payee to choose a form of benefit distribution that provides for payments after the alternate payee's death as long as the form is permissible under 401(a)(9), such as a five year certain annuity. One may argue to the contrary. The terms of the plan control, as implemented through the written QDRO procedures.

"Of Counsel" has no estabished meaning. You have to learn more about the particular relationship

Now that pax has explained what "nunc pro tunc" means, I had to go back and edit my message to make the statement negative! Actually, I slipped and omitted the "not" in the post. In short, an order that is issued "nunc pro tunc" has a retroactive effective date. What I was getting at was that I think it would be improper to go back to court to have the original order modified to stop annuity payments on the theory that the modification was not a new (and not qualified) order, but a negation (nunc pro tunc) of the old qualified order, with the same impermissible effect as a new order, but rationalized through legal mumbo jumbo. Hmmm, I wonder what Google would tell us about mumbo jumbo. Sorry about that long sentence and all the commas.

As long as the plan administrator does not suspect fraud, I agree that the plan administrator does not have to take action and the inidviduals need to arrange for the changes they want via an amendment to the QDRO. But even if the parties go back to court and amend the order, I would be reluctant to modify an annuity distribution that had started properly under a legitimate QDRO. A subsequent order cannot change the distribution because an order is not a QDRO if it provides for a type or form of benefit or any option not otherwise available under the plan. I have not seen any plans that allow modification of an annuity once the payments have begun, except suspension upon rehire. A new or amended order could not modify the annuity payments because the modification would not otherwise be available under the plan. And I would not give any credence to "nunc pro tunc." I don't think the plan administrator should choose to qualify the order to modify the annuity. Once the plan allows modification, trouble lies ahead in other circumstances. Also, it may be that permissive modification would cause the plan to be operated contrary to its terms.

It might be helpful to know more abbut the plan's distribution provisions and the QDRO's distribution provisions. Was a lump sum a possible choice, but the AP elected installments? Or did annuity payments start under the QDRO? What would happen to a participant that started benefits but was rehired? None of these questions will lead to a definitive answer, but they might help with interpretations and the choices. One thought: If annuity payments started under the QDRO, I would be very reluctant to stop them. Subsequent events almost never justify modification of an annuity benefit.

If you are worried about a regular monthly 5 day suspension of your trading, you should look for education or advice about investing for retirement.

Why would you want to leave yourself open for dispute at a later date about when you learned or should have learned that you had another defect, regardless of a literal reading of the rules? Hiding the ball is unbecoming. Even if you are square on the rules, you may be put in a bad light that could hurt for other reasons.

When a named fiduciary is the corporate sponsor, there is a very high probability that the directors and executive officers of the company will be identified as fiduciaries. It is always a bad idea to name the company as a fiduciary. In most cases, the "plan administrator" is a fiduciary. Kirk Maldonado makes a decent argument that the plan adminstrator need not be a fiduciary if the duties are carefully limited to only those duties specified for plan administrators under ERISA rules. But plan documents almost never have such limitations.

The purpose is to allow automation. Unless that is compelling, don't use the safe harbor. Life is not so dangerous outside of it. You will need proper plan and adminstration documentation and at least one brain for administration. Bye-bye prototype.

Look at Treas. Reg. section 1.401(k)-1(g)(11).