QDROphile

You should not put the organization in a position to need the fildelity bond for itself. I know you did not ask that question, but take heed.

I regret being too busy to do that. I think you have to go to USERRA, and that is more work for me than pulling a citation from tax materials.

I have ranted about the intellectual bankruptcy of this scheme in another thread. But the IRS buys it and I have done it and received determination letters.

"Fleeing the country to avoid prosecution" caught my eye and facilitating activity in furtherance of a crime and harboring a criminal came to mind. I did not offer a conclusion one way or another, but I think the issues are interesting enough to warrant careful consideration, as I suggested. Attorney/client privilege is a not shield for everything. The rules are very tricky when criminal behavior is involved, especially when the alleged criminal and accomplices have not been apprehended. I don't like lawyer bashing much, but everyone has to take a joke now and then.

Really bad idea. Distance yourself from it to the extent possible. To the extent it has any thinking behind it, the thinking is twisted.

It matters only to the participant's attorney, not the plan.

That attorney might want to take an ethics class and a criminal law class before making such arrangements.

Perhaps someone would like to comment on the language of ERISA section 609(a)(2) (A) (i), which says that the order may "create ... an alternate recipient's right to, or [assign] the alternate recipient the right to, receive benefits for which a participant is eligible ... . This has all sorts of implications, such as the alternate recipient could be substituted for the employee/participant if dependent coverage is not available, or perhaps that the alternate recipient gets the reimbursement money instead of the participant. I don't believe that the statute means what is says (if you can figure out what it says). I also believe that another section trumps the stupid language, but isn't it nice to be working from a comprehensible concept?

It sounds like you have a bit of a lead. If the owner is an employee, the owner is a party in interest under ERISA. If the owner owns 10 percent or more or is an officer or director, the owner is a party in interest under ERISA and a disqualified person under the tax code. The owner might be a fiduciary of the plan, which would be both a party in interest and a disqualified person. If the owner fits the definitions, the transaction is prohibited. Then you go looking for exemptions.

The amount she would have earned if she had been at work. She gets a contribution if she meets the statutory requirements for the leave and the return.

Have you tried providing an estimate to the rugged individual of ALL of the plan's administrative expenses that his/her plan account will now bear?

You may wish to search prior threads about naming the employer as plan administrator. In one of them, Kirk Maldonaldo explains that technically, a plan administrator is not a fiduciary if the plan administrator is limited to only those record keeping and reporting functions expressly assigned by ERISA to the plan administrator. His is a nice analysis and probably correct, but it requires a precision and discipline that most plans cannot maintain. A plan administrator is likely to slip into fiduciary functions and it is also practical to have the plan administrator be a fiduciary. The fiduciary would have to oversee a "pure" plan administrator." The employer should never be named as the fiduciary and you are correct the the TPA will not want to be a fiduciary, so the TPA is very carefull to avoid "plan administrator" or any other label that implies "fiduciary."

The ability to get money out of the plan before you terminate employment is a very limited. The plan must follow the law. Distributions while you are still employed are allowed only for "unforeseeable emergency." Among other things, a distribution is not allowed if events that cause the financial need are within the control of the participant (like running up consumer debt) or can be met from other sources, including liquidation of assets or reimbursement by insurance. To put it bluntly, you must be close to destititute. Even then, the distribution must be limited to what is actually needed to meet the emergency. So all of your debts and all of your resources, even your ability to borrow, are relevant to whether you may get the money and how much you can get. Some plan administrators are more lax than others about the scrutiny they apply to requests, but it is difficult to argue with exacting standards. It is not supposed to be easy to get the money and the administrator must be satisified that the rules are followed.

Why avoid adopting the model amendment? Why do you want to deal with even the suggestion that you are not following plan terms? Why deal with the suggestion that the plan could decide to limit contributions more than the law requires by intentionally retaining the multiple use provisions as a matter of design?

Is the question about service or contributions/deferrals? If you are looking at service, you must look at ERISA regulation 2530.200b-2. You can get into situations where additional hours are credited. I am not saying that this is one of them. We don't have enough facts.

The rule is in the 401(k) regulations. 1.401(k)-1(d)(3).

My limited comment on the 0% is that the amendment would be stupid and inflammatory. Almost a guarantee of a challenge. If the plan is amended, it should be to eliminate the reference to interest at all, not to change the percentage to zero. No comment on how to implement.

How about the ERISA and tax provsions that require the plan to be administered in accordance with its terms?

One wonders if a government unit may have a retirement plan if it does not have statutory authority for it.

If the fiduciary with responsibility for QDROs has interpreted the order and arrived at the number, then it is a lovely idea to get the participant and alternate payee to confirm that they agree with the interpretation. Agreement can be obtained expressly or implicitly. Just like in school, it is probably best for the presentation to explain or show how the fiduciary arrived at the result. All the better if the terms of the order are ambiguous or otherwise difficult. If they disagree, then the fiduciary can disqualify, even if the fiduciary has previously qualified, based on latent ambiguity or other issues with the interpretation. If both parties don't agree with an interpretation, one or both are wrong, and the fiduciary may be wrong, so it is reasonable to disqualify so they can go back and fix it. Answering your question is a bit difficult without detail, but that is the nature of the message boards. ALL determinations of qualification should be conditioned on the interpretation of the fiduciary, and the fiduciary should state interpretations when appropriate. If there is a quarrel with the interpretation, then the fiduciary can disqualify and let them work it out. I will spare you my usual comments about how the company should have no part in fiduciary functions. Oops. But what does the lawyer involved in the first place say to all of this now?

The participant and alternate payee cannot simply agree to a modification. You can get them to confirm that the number arrived at through the calculation is correct or within their expectations and intent, if the calculation is ambiguous or reasonably disputable. If they have any disagreement, that won't help. Someone has the authority to interpret and determine qualification. That person is probably not the TPA, because interpretation and determination are fiduciary functions. How strange is it? Why can't the fiduciary tell the TPA the numbers, whether or not the TPA agrees with the interpretation? If the TPA is a fiduciary and has the authority, then the TPA/fiduciary should be controlling the communications and can do what it wants and will have responsibility for what it does.

If you want specific answers that don't require presumed knowledge, you have to ask a specific answerable question. The first question for you, and almost always the first question in any analyis, is what does the plan document say can be reimbursed? Unless you post that information, readers can only guess. Actuarysmith made a reasonable guess and gave an answer that is responsive to the typical issue about eligibility.

Ask the rocket scientist who drafted the plan document. Most children are taught to clean up their own messes... .

Does the plan say that it accepts property other than cash as loan payments? Very unconventional and not very smart if it does.

I agree with Mike Preston and mbozek. Unless the participant's account does not have enough money, you can do (and must do) what the order says. The order simply divides the account between the AP and the participant and specifies a minimum for the AP. The order can insulate the AP from loss to the extent of the participant's account total balance. In the notice of determination, you should explain and illustrate how the AP's interest is calculated. I assume that you don't segregate until the valuation date unless you have a very sophisticated system for apportionment and true up of accounts. Perhaps that is what is gnawing at you. You can require the order to work within the plan's valuation dates and system. In that sense, I can agree with MWeddell if the order insists on some timing of the division that the plan (e.g. a particular segregation date that is not a valuation date) cannot accommodate, but I would try to interpret the order in a way to fit the system and then rely on the explantion. If they don't like your result, they can amend the order. Your written QDRO procedures should spell out any restrictions on timing of valuation and division of account. If you are simply looking at a draft rather than an order, you can be tougher on them and insist that the order fit better with the timing of the plan's valuation and accounting system.