QDROphile

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.

Fiduciaries get in trouble when they venture beyond established duties and plan terms to "help" participants.

For the once and future king?

The various benefits can be provided, subject to terms of insurance policies and other contracts, but the tax consequences are likely to be different and administration of benefits generally will be complicated by the addition. The organization must be particularly cautious about retirement-type benefits. There is some possibility of state insurance law concerns, depending on the benefit and how it is provided.

With respect to cafeteria plans, in which the stakes are higher because elections cover the entire year, the IRS has informally commented that a mistaken election can be corrected. That leads to a lot of discussion about how it is determined that an election is truly mistaken and the IRS assertion that a mistaken understanding of the tax effect of the election is not the kind of mistake that would be eligible for correction. Because of that assertion and the more limited scope of the "mistake" (only one pay period, then the election can be changed under normal procedures depending on plan terms), I would not get into the mess of looking behind the surface of the election paperwork and into the mind of the participant. The matter is not important enough for the plan to go out on a limb. I am unaware of any reliable authority that would allow recharacterization of the election or "refund" of the deferral.

This thread illustrates why it is not a good idea to have the corporate plan sponsor be the plan administrator. The Department of Labor can assert that every individual director and executive officer is a fiduciary personally based on the formal identification of the plan sponsor plan administrator, and it has done so. In the end, the argument that there is a very clear and well defined (by practice) limited number of persons who are the functional fiduciaries will probably control the personal liability questions, but it will be rather uncomfortable for those poor formal fiduciaries to suffer through the process with the liability cloud over their heads and the outcome is uncertain.

With respect to deposit of elective deferrals, the Department of labor view is the the plan administrator, or some other fiduciary, is responsible for receipt because the amounts become plan assets at some time and the fiduciary is responsible for the management of plan assets. To use what jpod posted, the fiduciary has a duty to make sure that the plan receives its assets. That does not mean liability for a late deposit unless the fiduciary breaches its duty either by not paying attention or by failing to take appropriate action if the deposits are not received timely (including an appropriate correction if the deposit is late).

OK to amend as you describe.

Has the plan filed Form 5500 in the past? Why not ask the vendor to explain its statement?

How does one change the plan sponsor if not by restatement or amendment? A restatement is an amendment, but not every amendment is a restatement.

The plan document should say that the sponsor may elect to cover administrative costs. Sometimes the sponsor is required to cover certain admimistrative costs.