QDROphile

You are asking for trouble if you get involved with how or why the individuals are choosing how to divide benefits. As far as a plan is concerned, there is no right answer and the only thing that matters is administrative ability to follow the instructions for division, satisfaction of the qualification requirements, and compliance with the plan's written QDRO procedures.

The plan document has to be drafted properly to preserve the right to withdraw pre-1987 after-tax contributions only. Chances are good that bad drafting precludes the separate withdrawal. You have somewhat better odds if the plan stopped taking after- tax amounts after 1986.

If you are going to forfeit, the plan document should have provisions providing for the forfeiture and what happens if the participant or other payee subsequently appears. You also have to determine if you have made reasonable efforts under the circumstances to locate the participant. A single mailing might not be sufficient, or it might.

Still not a bona fide termination. Also a fiduciary breach because the participant is robbing the plan of value, at the expense of other particpants. A fiduciary has to be careful about value robbery even with bona fide termination. If the drop in value is material, the distribution should be postponed or a special valuation should be performed. The plan should be designed to provide for the delay or special valuation so the fiduciary does not have to stretch plan terms (what does "adminstratively feasible" mean? I would be tempted to read fairness into feasibility if the drop invalue were material). The more infrequent the valuation date, the more important it is to have safeguards.

If the plan document does not clearly cover the situation, the document must be interpreted. The person with authority to interpret the document should decide. Are you that person? In a well drafted document, the person with authority to interpret will be identified, and is usually the plan administrator or other fiduciary.

Be careful to distinguish what the law allows by way of a change and what the plan allows. Plan terms are not required to go to the full extent of what the law allows. The plan might not allow the mid-year enrollment based on the change in work schedule.

Reversing the order you asked: 1. Allocate all fiduciary duties away from the employer to the persons who will be responsible for the functions. Those persons will either be employees or third parties, exactly the same as if the employer were the misnamed fiduciary. No extra cost because the same persons are performing the same functions. 2. It is a mistake to have the employer in the position because naming the "employer" tells you nothing about what person is responsible. Corporations act through many persons, and the directors and officers of a corportion are responsible for what a corporation does. If the fiduciary is not more precisely identified, any of the agents could be liable for fiduciary responsibilities, even if they were unconscious about their theoretical responsibilities. To put this in more practical terms, if the employer is a named fiduciary and someone sues for breach of fiduciary duty, each officer and director will be named individually as a defendant. I am not saying that each will be liable, but the corporation will want to avoid the embarrassment and the expense and struggle to dismiss the action against the wrong bodies. Plaintiffs will have too much leverage. It is much better to name the persons who have the functions. They will know that they have the responsibility and they will answer if a claim arises. Everyone else should be left alone, and if not, will have an easier time with extrication. We have stomped all over plaintiffs who try to sue and fail to name the fiduciaries when the fiduciaries are precisely identified in plan documents and records. Persons who do not have the responsibility will not have to worry and will be less likely to interfere with or waste time on matters that are not theirs.

Appointing a fiduciary is a fiduciary function, but either (i) the employer does not have to name any fiduciary, or (2) if you believe that adoption of a plan document that names a fiduciary (or the fiduciary who names fiduciaries) is a fiduciary function, it is at least a very limited fiduciary function and is materially better than having a more general fiduciary status. I won't get into a discussion about Varity. The point is that the employer should not be set up to be a fiduciary, as happens with many plans because of bad plan documents or lack of thought.

By naming fiduciaries that are not the employer and allocating the fiduciary functions appropriately among those fiduciaires. What is it about being an employer that makes you think an employer is a fiduciary? Most employers are fiduciaries because they have plan documents that name them as the plan administrator.

It is a mistake to make the employer a fiduciary.

And even if the NHCE percentage is less than 20% I don't think it works because the exception only applies to the leased employee rules and does not address the other contolled group rules that would aggregate at least all of the 100% owned businesses. In your situation, the leasing organization is 100% owned, too. Pretty transparent device. Not effective.

There is a reason for having provisions about leased employees in section 414(n) of the Internal Revenue Code. Section 414(n) is followed by section 414(o). If you like puzzles and can break the code, the answer is: 414(n), 414(o), which reduces to (n),(o), which further reduces to "no."

It is a mattter of interpretation or policy whether or not a plan will allow proceeds from a second loan to repay the first loan under a "one loan" restriction in the plan. Nothing compels the plan administrator to allow it. As noted above, there are compliance issues if the plan administrator does allow it.

You have a deemed distribution if any loan payment is more than 180 days overdue (and probably before that). Under the circumstances the probability of a prohibited transaction or a disguised distribution seems very high. You need help from someone who knows how to deal with this stuff. The issues get fuzzy and the consequences are complex.

Depends on: 1. Whether or not the plan has an assigment of pay. 2. Whether or not the payroll deduction authorization is irrevocable. 3. State law concerning payroll deductions (the pre-emption of state law is the subject of some debate). 4. What the plan and loan documents say. The plan administrator cannot simply let the participant off the hook because of unpleasant circumstances, nor can the plan administrator walk away from easy collection of loan payments. If the participant does not have the right to cancel payroll deductions, the administrator can't let them be cancelled simply because the participant would like it. The loan must be enforced. The plan administrator can decide whether or not extraordinary collection efforts are warranted under the circumstances if the particpant is able to cut off the easy money because of a right to cancel the payroll deductions.

It is also common not to allow distributions until 5 years after termination of employment unless you retire or die. IRC 409(o). This is actually a good rule, because otherwise the ESOP could string you out until you are 65.

Why don't you ask to have the learned legal counsel brief the plan on the proposal?

Other threads have addressed these questions. An alternate payee may roll to a qualified plan if otherwise eligible, including the plan that makes the distribution under the QDRO. Plans are not required to accept rollovers. Amounts rolled over remain rollover amounts subject to any special rules of the plan applicable to rollovers. The applicable regulation is ambiguous, but the the IRS model rollover notice is not.

And what fiduciary of sound mind would exchange liquid diversifed investments straight across for company stock, especially in a privately held company? This is an extemely sensitive proposition and I know many expert professionals who will have none of it.

You should probably also consider that the 403(B) plan is subject to ERISA because of its pairing with the 401(a) plan. Sounds to me like that may have been overlooked or misunderstood.

Why is this deadbeat different from any other deadbeat as far as a court is concerned?

Please explain how you get after-tax contributions into a 457 plan.

I have never encountered what you describe; pardon my ignorant assumptions. I don't understand why a participant gets a certificate, so I am missing something here. I assume the participant is in pay status. It seems to me that if the plan continues to hold the contract, the contract is simply a funding vehicle and is a plan asset. The plan is making the annuity distributions and is is no different position than a plan that makes annuity payments and takes the investment risk (defined contribution plans can't take investment risk on aanuity payments). The plan administrator has responsibility for determining the qualification of domestic relations orders and administration of them. The annuity company is nowhere in the process. I assume that the annuity contract simply pays in accordance with its terms and the payments are set once the participant starts benefits. If the plan andministrator makes a decision that causes payment form the plan to diverge from the stream of paments under the contract, so be it. The contract is simply a plan asset and may not necessarily match the plan payment. It seems unlikely that a plan administrator would be in such a position if the annuity contract were designed to fit the benefit in the first place. The plan adminstrator would need appropriate QDRO procedures to make sure that the benefit could not be divided in a way that caused problems. For example, the only way to divide benefits in pay status would be to divide payments. The plan could not allow the value of the benefit to be divided and give each recipient an annuity based on the recipient's life. If the particpant is not in pay status, I hope the annuity contract anticipates that the benefit can be split. The plan administrator is still responsible.

"Read all the documents" is good advice. So is "get advice on all the documents before they become a problem." I did not see any suggestion that the annuity provider had contracted for the plan administrator to be responsible for property division issues. Woe to the plan administrator who agrees to such a contract. After the distribution form the plan, the issues multiply and state law is more of a factor, if not completely controlling. What about annuity contracts issued on plan termination? What plan administrator retains responsibility? I am afraid that I don't see the contempt issue if the domestic relations order applies after the plan has distributed the benefit. Perhaps the annuity company advises the court that it would love to follow the order, but the plan administrator is breaching the contract to instruct the annuity company how/whether to comply with the order? The court holds a contract party in contempt for its breach of contract with the annuity company?

If I were a plan administrator that had distributed an annuity contract, I would not consider any subsequent request by anyone to take any position on how to divide the annuity. Proper distribution of the benefit ends the plan's responsibilities, whether or not some judge thinks a QDRO is the means for the division. Separate point: If section 414(p) of the Internal Revenue Code applies, the better view is that the S in a J&S benefit does not have a "vested" right if one means by "vested" that the survivor benefit cannot be invaded by an alternate payee's interest awarded under a QDRO.