QDROphile

The account owner must be the organization. You must have assurances that the participant cannot provide instructions concerning payment. Most 457 arrangements allow the participant to direct investment, but that is a tricky combination: the particpant has authority to direct investment, but not the authority to direct disbursements. As awkward as it may be, the safer arrangement is to have the participant provide investment instructions to an authorized organization representative for execution; the particpant should have no authority whatsoever as far as the provider is concerned. If you keep it simple this way, it is just a brokerage account for the organization. No explanations needed for the provider.

Another reason for "don't"

Does the plan have self esteem problems? Employers have plans for the benefit of employees, and former employees probably only because ERISA requires it. You have identified some reasons not to go beyond the convention of allowing rollovers into the plan only by employees at the time of rollover. So don't.

Carmona v. Carmona, 603 F3d 1041 (9th Cir. 2010). The survivor interest under a QJSA cannot be invaded directly or indirectly. The opinion cites the earlier Fourth and Fifth Circuit decisions to the same effect, but with less convincing analysis. Until Carmona, I and others (in the minority) asserted that the Fourth and Fifth Circuits were wrong. The participant's payments can be assigned.

"The recipient can be changed to a different person providing said different person is an alternate payee and they get a new QDRO directing the payment to the alternate payee." Not true for the contingent annuitant's QJSA interest; possibly true if the plan is expressly designed to allow it, but no plan should be designed that way.

Stay away from extra-judicial input on determination of matters required to be included in domestic relations orders. The plan administrator can determine that an inexact title refers to the plan, but the individuals do not get to agree on anything and the plan administrator should not seek agreement or stipulation. The courts are very forgiving about what "clearly specifiy" means; it is up to the judgment of the plan adinistrator. A "supplement" to the order is really an interpretation of the order that is expressed by the administrator in the notice of qualification. Examples above are feasible. Another example: "The order applies to the Plan."

I agree with your approach to fit the circumstances. Even in my dream world the plan cannot bring forward earnings from early dates, such as "50% of the balance as of the January 17, 1998 divorce, with earnings on the AP's share until distribution." The parties to the order have to figure out some formula or number for the earnings up to some viable date in the present administration system. There is no legal requirement for the plan to perform that function, so 414(p)(3)(A) would apply. But there is that nasty records requirement for balances. The reason my clients can do it is becuase we have been advising them about what needs to be done when record keeping changes.

For real. The point you make is a good one, but involves different issues and a different set of policies. And I believe that a plan has an obligation to keep historical balances no matter how many changes in record providers, not that they do it properly. I do not think they have to keep daily balances, which gets into policies about using reasonable valuation dates and conventions for identifying the appropriate one to the extent the order does not specify (the valuation date that is nearest the desired date, immediately preceeding, or immediately following?). Most of my clients can handle January 17, 1998 within legally acceptable tolerances (the answer is December 31, 1997). I am living the dream.

This is not a problem and you are going overboard when a solution may be at hand. All you need are the beginning and ending dates dates of participation and the marriage. I certainly have encountered dingbat lawyers who refer to times relating to the marriage but do not provide the relevant dates, as though plan should know what is in all the court documents. You ask them to specify the dates in the order, not demand specification in a rigid format (although I am sympathetic to the idea that they sould do the work, not the plan -- but then the plan will get lots of requests for balances at different dates, which might be more trouble). Example for a DC plan in which the participant had a balance at the marriage date: Take the balance at the marriage date and subtract it from the balance at the divorce date. That is your number as of the divorce date to divide by 2 (50%), effectively giving you the "as of" date you want. It works the same when the particpant was married when participation started. The subtrahend is zero.

You still have not provided enough information to respond to your request about any requirements for disclosure or information required by mandates other than ERISA (since ERISA does not preempt). For example, if the plan is not subject to ERISA, but is a governmental plan, state law may have requirements or standards for something that is functionally the same as an SPD. Document providers are seldom to be trusted, even on matters relating to documents. Are you relying on the document provider for the conclusion that ERISA does not apply?

The 403(b) regulations require a plan document and are oblivious to the application of ERISA. Your question is ambiguous. Are you asking if the plan is subject to ERISA or are you positing that the plan is not and asking if there are requirements nontheless? Either way, you have not provided enough information for specific answers other than about a plan document.

Plan amendment. The plan sponsor controls the terms of the plan. I have no sympathy for buyers of inferior products. There is a more sinister approach. If only a few rugged individuals refuse to direct a distribution, they might want to know that they will be bearing the full administrative cost to the extent permitted by law. They might be less intransigent after seeing some relatively hefty expense charges.

I think your conclusion is correct. None of the compensation from the original controlled group employer should be considered with respect to B, so there are no HCEs based on compensation for the first year of B's plan unless there is an employee with compensation in December 2013.

Firing the brokerage firm is appropriate, and some discipline is mandatory. The fiduciaries also have to document that they did everthing reasonably necessary to prevent the problem, including contractual assurances from the brokerage firm at the time of inception of the custodial account that the beneficial owner could not order distributions. That means not using they typical form documents for the account. The typical la-ti-da approach to brokerage accounts is a breach of fiduciary duty. But who cares in an environment of no enforcement?

Both the sending and receiving plans should have terms for transfers. If the sending plan does not have terms for a transfer, how can you tell that departing funds are not a distribution, which is the only thing the plan describes that fits with departing funds?

If you have been continously employed except for the leave of absence, it is strange that you would be getting a distribution relating to the default, especially after you returned to work. Even if the loan went into default, there should have been no actual distribution check -- you would have the tax equivalent of the distribution (a deemed ditribution), but no cash. You should have received no check even if the amount was distributable (an offset distribution). Your story sounds like many mistakes were made, including ones that the plan needs to fix. If so, you may be able to get a big fix, more along the lines of what you would like.

If that is it, the post is only about some symptoms and remediation of the very serious real problem is required.

Would you care to explain how it was possible for a participant to take an impermissible in-service distribution, pesumably with a diret rollover, no less? That might have a bearing on threats or consequences to the participant. It also has implications with repsect to breach of fiduciary duty with respect to some named fiduciaries.

Sounds like you are under EPCRS without a specific Code correction. The failure is a failure to follow plan terms.

If you read the prior threads, you did you read Treas. Reg. section 1.411(a)-11(e)?

SCP by definition does not involve filing. Late remittances are not a tax qualification matter unless the plan has not been operated in accordance with its terms. That would be your guide for determining what is required under EPCRS.

The whole point of the cafeteria plan is to provide a choice of cash or notaxable benefits. If the choice is cash ($200 or $50, or $250), then the cash is w-2 income. If the choice is benefits, then the nontaxable benefits are .... nontaxable (not included in income). "Choice" can occur by default -- the premiums are what the premiums are. If the employee gets the medical benefit and the residual cash, the employee has chosen the amount of cash. If the plan talks about "bonus" for amounts delivered in cash to the extent not applied to pay premium, the drafter of the plan is incompetent.

Well, I hope at least the citation was understandable.

The DOL published in Interpretive Bulletin 96-1, found at 2509.96-1 of the ERISA regulations, in footnote 1, its postion that there is no duty to provide investment education. Investment advisory firms, such as Oppenheimer, have been lying/misinforming to the effect that it is required ever since. And they would be happy to help you with your investment education program. "Not sure why they wouldn't..." I don't know who you think "they" are, but they are not so stupid as to think that investment education has any value to the masses of plan participants who have been thrown to the dogs under 404©. Investment education is just a feel-good pill for those who should feel guilty about resorting to 404©. One really good indication that 404© has produced a total travesty is the popularity of target date funds as "the answer" for the unsophisicated investor.

I think this discussion is going on flights of imagination and misunderstanding, so I am going to reform the question so we can at least be posting about the same thing. Perhaps I misunderstood the original post, but here is the reformed post: Alternate payee is awarded a portion of benefits under a defined benefit plan. The AP starts benefits in the form of a life annuity. Later, a domestic relations order is received that purports to cancel the AP's interest and restore that interest to the participant. Can the order be a QDRO and how can it be implemented? Response: Assuming the plan does not have the terms as described below for reformation of benefits, the order would not be a QDRO and would be given no effect. It requires the plan to do something that the plan is not designed to do -- reform a benefit that is in pay status. The order could be a QDRO if the plan provided (or was amended to provide) that after an annuity benefit started, the benefit could be reformed so the remaining actuarial value of the benefit could be paid in a form other than the form orginally elected at the start of benefits (such as restoring it to the participant and paying in the form of benefit elected by the participant). That would be a terrible idea and would allow adverse selection. All it would take is a post-starting-date diagnosis. The benefit would be reformed to shift benefits away from the recipient that has a newly-discovered shorter life expectancy, to the actuarial disavantage of the plan. The reformation (the cancellation of the QDRO) would apply only prospectively. Amounts paid would reduce the value of the benefit and plan would have nothing to do with prior payments. The court could order the AP to pay amounts to the participant, but that would be independent of the plan. And I now question my original response that if the sponsor was ill-advised, the plan could be amended to set it up to qualify the order. That amendment might violate section 411(d)(6) by ultimately cutting back the AP's benefit. I vaguely recall some authority that beneficiaries are protected.