QDROphile

I think it would be a breach of fiduciary duty when the loan went into default unless the fiduciary went to extraordinary lengths to determine full payment could be reasonable expected despite the apparent lack of current projected income to do so. Making a loan that is expected to default is effectively allowing an in-service distribution, and if the participant is not otherwise eligible for an in-service distribution, it could be a disqualification event if the loan in fact goes into default and is not cured before deemed distribution. Also, there is following plan terms, and projecting a shortfall in payroll deduction while approving a loan does not look good. I would guess that the majority of plans allow regular payment only through payroll deduction. Are you suggesting that those terms are improper limitations, so that loans should be approved even though the plan will have to deviate from plan terms to accommodate loan payments?

No loan should be made without the expectation of repayment, Using payroll deduction as a repayment method is the primary factor in a determination that the loan will be repaid (as well as an administrative aid). Without that support, it is reasonable (or compelling) for a fiduciary to refuse a loan because of the uncertainty of repayment, or the likelihood of failure of repayment.

Yes, there is a deadline for a nonspouse beneficiary to roll over the distribution of the death benefit if the beneficiary wishes to use the lifetime method of distribution from the IRA: end of the year following the year of participant's death. That is not the plan's concern.

The DOL shamefully failed to fulfill the mandate to deal with post-death QDROs in the same way the the DOL has consistently failed to get QDROs right since 1984. The regulations provide no new information or guidance. Don't fuss over what the regulations say or do not say in your situation. It is pointless. The DOL had nothing on its mind, so no one can fathom what to do in the interiesting sitations from the DOL's mindless imagination and inadequate efforts reflected in the regulations. I approach the problem by looking at what was determined before the participant's death. If there is no domestic relations order provision that speaks to the division of the pension benefits, then it is unlikely that I would allow any interest to be awarded after death. However, I would be liberal in the evaluation, subject to allowing a cheat because the participant is not around to negotiate. For example, if the divorce decree (issued before death)said that the spouse gets half of everything as of some effective date (no specific mention of pension), I would allow a post death order that specified that the spouse would get half of the accrued pension benefit as of the efective date, including half of the related QPSA. The post-death order is not trying to cheat by capturing more of the QPSA that is implied by a reasonable interpretation of the decreee. I would not approve an order that tried to award more than half of the QPSA. If the plan administrator wanted to be aggressive, then the post death QPSA wold not be allowed because there is no pre-death evidence that the QPSA was intended to be awarded and the the law requires a death benefit to be specified in order to be valid. I recommend against stingy and technical interpretations, but I would hold the line at an agressive post-death award that appears to try to exploit the absence of the participant to resist. That means anything but a conventional division would be rejected.

Depends on the relevant state law. Under an ERISA retirement plan, if the beneficiary was the spouse of the participant at time of retirement, the former spouse cannot be assigned any interest in the survivor annuity.

Are you entertaining questions about the premise, such as whether the plan is an ERISA plan and whether or not the employer is going to concede the validity of the judgment to the extent it requires retroactive installation? I can understand that compliance with the judgment may be the lesser of evils.

What is the need? What are the needs identified by the plan?

Are you asking if the employee has a right to enroll in the plan, or if section 125 and the terms of the cafeteria plan allow the employee to change the salary reduction amount mid-year for payment of the employee portion of the premium. The cafeteria plan can be more restrictive about mid-year changes than the law, but most are not, so checking plan terms might answer that question.

I am with Chaz.

An amount deferred in violation of section 409A is subject to the consequences of violation. An amount that is deferred and paid in compliance with section 409A will not be subject to any of the taxes imposed by section 409A

As far as the plan is concerned, this is the same as the Mr. Green situation. Some or all of the periodic payments to the participant can be assigned to an alternate payee. The federal circuit courts that have considered the issue have ruled that the spouse annuity benefit cannot be invaded. An order that tries to assign any of the spouse benefit is not a QDRO. The decisions in the fourth and fifth circuits are intellectually unsatisfying. The decision in the ninth circuit is at least grounded in law, although one could argue that it could have gone the other way. If your interest is in justice for the former spouse, the discussion is more complicated. Justice for the former spouse is not a concern of the plan.

I have been waiting for this for years. Pretty Effen funny.

Try thinking of it as the employer gave everyone raises to the extent of the deferrals. That would make FICA wages understated and FICA withholding and employer contribution would have to be corrected It could also violate the rule about giving benefits other than a match as a reward for deferral. Check the regulation. Another approach would be the obvious -- the employer mistakenly overpaid the employees outside of the plan. That might send you on some sort of recoupment analysis and into state law, among other things.

I suppose you could rely on the compliance language to make a special contribution and then specially allocate the results of the contribution to the participant. But you would still have to figure out the number of shares that should be allocated to the returned participant and what contribution would produce the correct number of shares depending on how the shares are ultimately sourced and delivered . You may not need the the detailed directions in the plan document, but the terms of the plan document would have to be figured into the figuring. One way or another, the path has to be charted and followed, but your point is valid.

You need to evaluate availability of in-service distributions under in-service distribution rules (and be careful about creating protected benefits). The ESOP diversification rules do not give you a pass except in accordance with those rules.

"Distortion" is not a bad thing if the plan amendment provides for it. Even if the employer wants to contribute more to cover the make-up, the plan will need provisions to account for it and the special allocation because the employer will probably want to apply the contribution to the ESOP loan and that will require a special allocation for the extra shares released for allocation. Distortion of some sort cannot be avoided. If you used extra contributions, an interesting question is whether you measure the make up by the value of the contribution or the value of what is ultimately allocated because of the contribution. I cannot recall without a refresh. I think it is the value of the allocation.

I do not subscribe to your proposed suspense account approach. The USERRA make-up should work like any other nonelective make-up except the employer should have the option to contribute more to cover it. Otherwise, in a leveraged ESOP, it comes out of the regular allocation, and thus distorts the allocation. The plan terms should provide for the special allocation, but do not count on the drafter cabal to have taken care of the matter. It is just so much easier to say the plan will comply with USERRA requirements than figure out how that will work.

Do not bother asking that question. It is meaningless in the current circumstances. The benefit has changed. it is now a stream of payments for the participant's life. A domestic relations order can assign some or all of the payments to an alternate payee. That is all.

This is a really stupid idea. If the employer is going to the trouble of maintaining a nonqualifed plan, it should not be limited in such a complicated way. Among other things, it is an invitation to mistakes in the plan

For a nonqualified plan, distributions are subject to FICA and taxation under special rules. the extent that benefits have not been included in FICA wages or SECA earnings at the time of accrual, they are subject to inclusion at distribution, again subject to some special rules for annuity type distributions. The instructions to Form 1099-MISC reflect those rules, but you need to know the rules to figure out the correct taxation and reporting. You also need to know how the deferred compensation was designed and administered to know what to do now. This is an area of considerable confusion.

And if the plan restricts rollover amounts, the plan should provide very clear disclosure before the rollover.

Perfect advice if you love agitation and intrigue, except that you should substitute Departement of Labor for DOJ. It is possible that the Departement of Justice was involved, but the DOJ comes in at the request of the DOL to add some enforcement muscle. If you think something is amiss generally or with the execution of the remedy, your entry point is the DOL. And if you take the bet, let us know the payoff.

Is it a nonERISA plan because it is a church plan or government plan? ERISA applies to nonqualified plans, subject to a lot of exemptions. The ERISA claims procedures should apply, and that is the forum for resolving who gets benefits.

I doubt that there is a requirement to provide a narrative account of the events, although it would have been a good practice. The failure reveals the attitude that the "powers that be" have about the ESOP and is the basis for my conclusion that the participants have been minimized -- so much for the ideal of creating an ownership culture, the Holy Grail of ESOP believers. The transactions should have shown up in some way, if only to show an adjustment to share price. Evidence might be found in the ESOP's Form 5500 (which should be made available to you on request, but it is not exciting reading) or in comparison of participant statements from year to year.

To you, the ESOP is a retirement plan that has its assets invested in the stock of the company that employs you. You hope that the value of your account goes up because the company is successful and and the value of the stock goes up. A sale of the company may or may not put an end to the ESOP, and with favorable economic consequences if you are lucky. You get statements about the value of your account, which should also let you know what the value of the stock is. If you think you have a more exalted position in the life of the company because of the ESOP, forget it unless you enjoy the agitation and artificial intrigue.