QDROphile

Many states have payroll laws that forbid withholding without employee consent. There are law firms that specialize in bringing class action suits for the statutory penalties involved. If I were of such a mind, I might assert that failure to deliver to the retirement plan as directed means that delay in refunding the money that could not be used in accordance with the consent is a violation of the statute. Withholding money and then not paying it until it happens to be convenient for the payroll system does not present a nice picture.

While a plan can get away with whatever it wants as a practical matter, and mistake is the rule with respect to "holds" (there is really no such thing under the law), if a plan is presented with a domestic relations order it is required to determine qualification "promptly" and provide a reasonable time for correction of qualification of defects. If defects are not cured, the distribution should proceed. If the plan does not have a domestic relations order at the time of application for benefits, the plan should pay the benefits. Even the mistaken plans will need to assess what is has by way of a "hold" and require some diligence in processing. I infer that you are in California and the California abomination of "joinder order" is in play. It is interesting that AT&T is a named party in quite a few reported QDRO cases -- mostly getting it wrong. Your problem is that you will need representation by someone who knows that stuff and you won't want to pay what it will cost -- that is why the plans can get away with whatever they want. CADMT's bottom line is is the most practical approach, even if I disagree with the other details.

The sad reality is that a lot of small plans (and others) rely on a bundled service provider for all advice about maintaining the plan because the advice appears to be free. The advice is often worth exactly what is paid for it and it often makes the provider a functional fiduciary, which is a problem both for the provider and the named fiduciary.

To be able to change coverage becuase of a change in status, the change in coverage must relate to the change in status. Most plans require the election to change coverage to be made within 30 days of the change in status event, some go out as far as 60 days, as a matter of determining that the election relates to the event.

See IRC section 402(g) (1) and (3) concerning aggregation of elective deferrals for limit applicable to the individual.

You also have to follow plan terms. You hope for a a provision that allows a choice of any permissible definition of compensation for testing.

A good plan document will answer the question. Absent a clear answer from the plan document, I would avoid deviation from standard practice. What whould the plan have done if one of the three had terminated? I suspect that distribution would be prompt and then there would be a tail distribution of the 2014 allocation. The answer might be affected by the employer's decison to terminate the plan or not.

You should be able to transfer assets even if it is a different plan of a different employer. The vendor should do what the plan administrator directs the vendor to do. That does not mean the vendor will behave. It also sounds like the new set-up is confused, and perhaps mistaken. That spooked the vendor. You need someone who knows what she is talking about to evaluate what was done formally, what needs to be done under the circumstances, and communicate with the vendor.

While the ERISA side of plan status may be arguable, the tax regulations have no confusion concerning whether or not there is a plan, and there is a plan unless there is some fatal defect under the section 403(b) regulations, such as not having a plan document. While I offer no comment on the safe harbor question directly, I don't think the "new plan" theory is viable no matter how you dress it up with plan numbers.

Forfeiture is an acceptable approach, but I would not forfeit until distributions are mandatory, which does not include a provision that is triggered by simply losing touch with the participant. It would work with mandatory distribution of small balances, keeping in mind the mandatory rollover rules.

What caused the request for the document?

The plan must be operated in accordance with its terms. I doubt that correction of the operational failure by simply skipping one year and extending the installment period would be an acceptable correction.

Yes and not much. Administratvie burden increases. Edit: Sorry, big oversight. Usually you have a second section 415 limit so employer contributions can be greater than with a single plan. Most nonprofit organizations are not that generous. It can work for organizations that are not subject to discrimination rules.

Self-insured plan or group insurance contract?

You can do whatever you want in 457(b) plans, subject to contractual restraints. Contractual restraints are likely to restrict ability to make mid-year changes that diminish participant benefits. Whether anyone will assert a contract claim is another matter. Results may vary depending on whether or not the 457(b) plan is a government plan. I assume that your response to the question thrown your way will not be taken in any way as advice. Although many apply 401(k) principles to 403(b) plans, the rules can be different. A last day provision is not in itself improper. There is no basis for retroactive amendment under 403(b) as there is under 401.

Unless the distribution is rolled over to a qualified trust (a trust maintained in connection with a qualified retirement plan) or an IRA that is maintained as a trust, distribution to a trust will be taxable. Delivery of funds to a trust other than a qualfied trust or IRA is not a rollover. If you are a representative of the plan, you should not be discussing personal tax matters or financial planning with the participant. Your script about distributions is very narrow. You can find it in the SPD and the tax/rollover notice.

This is not just about document updates. You have some legal issues involved in the arrangement that you have not mentioned and that have a bearing on what should be done. Given your inexperience with ESOPs, someone else should be hired to provide direction and you should not proceed yourself based on responses that you might get on this Board, however good they may be.

I am missing the premise concerning the successor plan rules. If Target's plan is terminated before the closing of the merger, the plan maintained for Target employees after the merger is not a sucessor to Target's plan. That allows transplanting accounts by rollover. The Roth accounts can be blocked by the post-merger plan and the other accounts can be rolled over. That may be unacceptable becuase it would allow participants to dispose of accounts in other ways. I agree with Lou S. that you can set up your separately accounted frozen Roth buckets if you merge the Target plan in to the aquirer plan.

What does the IRS have to do with it?

The estate will handle the check just like any other property of the deceased that is not subject to any other arrangement. The representative can negotiate the check.

A plan administrator has fiduciary duties generally with respect to participants and to a more limited extent to beneficiaries. Law relating to QDROs has some specific aspects that affect the more general duties. The law specifies that the administrator is required to do certain things when a domestic relations order is received -- that is another matter that I will not address but that might explain the poster's California employer situation. Until a domestic relations order is received, it is business as usual for administration. Among other things, that means that the administrator may not interfere with the participant's exercise of rights. For example, that means that if the plan administrator knows the participant is divorced, no delay or fooling around with respect to distributions on speculation that there might be a domestic relations order that has not appeared or that one might be prepared some day. However, the plan administrator is required to follow plan terms and procedures, so if the Administrator is dumb enough to have QDRO procedures that impose obligations with respect to some kind of notice about a possible domestic relations order, the Administrator may have to follow the procedures and delay or restrict distributions or loans or ??? The Department of Labor's view on the subject is contrary to the statute and the case law. The DOL informally maintains that a fiduciary has obligations to a would-be alternate payee if the fiduciary has notice (whatever that means -- a note taped to the mirror in the ladies room?) that a domestic relations order may be forthcoming.

I was asking My 2 Cents for clarification of the question posed to practitioners.

I would expect to find language in the plan document or loan policy that says that parties in interest are eligible for loans.

What's your question?

Not necesarily the specifiec benefit amounts for that particpant, but the options must be illustrated with representative numbers.