QDROphile

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.

Don't expect to find anything specific about your Roth circumstances in EPCRS. You will have to build on principles. The IRS asked for comments about Roth issues whe it published Rev. Proc. 2013-12. I agree that VCP is warranted, but check on the self-stated limits of VCP with respect to income tax issues that are outside of qualification matters.

It is possible for the CA pension to have begun distributions to the participnt without a QDRO. In fact, the plan had to begin on time unless it had a domestic relations order. I think the responses are too specfic given the uncertainty about the facts. I could come up with an entirely different explanation, but it woud involve the same degree of speculation that the other views engaged in. I can say for sure that a social security number is NOT a requirement for qualification and neither is a birth date. The Plan can and will require both for determining and paying a benefit, but that information is not required to be in the order and is not required to be given before the order is determined to be qualified. The Plan may assert otherwise, but it would be wrong. Usually it does not pay to fight the Plan about formalities like that. Under some circumstances date of birth is not necessary at all. Prudence about identity acknowledged, the AP's address (not "last known address" by the way) still must be stated in the order for qualfication. Some courts have procedures for protecting the address from public disclosure.

Evaluation for operational failure and possible remedial action would be appropriate.

I am curious about you conclusion that the plan cannot distribute anything more to Dr. B. Unless the plan's QDRO procedures have an earlier trigger, the plan conducts business as usual until it receives a domestic relation order. Then it depends on the terms of the order wether or not distributions are allowed and how much. It is possible that the contempt proceeding has generated a domestic relations order that has been delivered to the plan, but I don't take it for granted. The person who should be concerned is the plan administrator, who can be liable for consequences of improperly interfering with the rights of participants. Given the complexity and potential nastiness of the situation, you should be very careful about reaching any conclusion about what should be done and should look to instructions from the plan administrator unless somehow it is your job to be providing advice about distribution eligibility and QDRO administration. If it it your job, you might consider buying some advice; the details and nuances may be very important in this matter.

From instructions to Form 1099-R: Nonqualified plans. Report any reportable distributions from commercial annuities. Report distributions to employee plan participants from section 409A nonqualified deferred compensation plans (including nongovernmental section 457(b) plans) on Form W-2, not on Form 1099-R; for nonemployees, these payments are reportable on Form 1099-MISC. Also, report distributions to beneficiaries of deceased plan participants on Form 1099-MISC.

The board does not have responsibility for naming a fiduciary if the plan document gives that authoriity to someone else, such as the CEO. That means you are screwed (in so many ways) by using a prototype plan. If the prototype does not name the sponsor as the plan administrator, the best that you get is a provision that the sponsor can name a different plan administrator, and the authority to act for the sponsor rests with the board unless corproate governance documents provide otherwise.

I misunderstood the question to be more like "Who should be named as the plan administrator?" than "Should we do anything if we see an apparently mistaken identification of the plan administrator in an RFP?".

Would you rather tell the independent directors of the company that they (and others) are ERISA fiduciaries, which would be the case if the plan sponsor were named as the plan administrator? Who do you think it should be? The HR person is the person who, in fact, is usually responsible for operation of the plan. Who better to discharge the responsibilities? I recommend a committe of the chief HR person and whoever else is supposed to have top level responsibility for the plan, such as the CFO.

Only in the Departmentof Labor's mind, contrary to the plain words of the statute and federal court decison.

I agree with GMK except for the penultimate sentence. Unless the QDRO procedures speak to what happens before receipt of a domestic relations order, the plan should not do anything out of regular course in anticipation of receipt a dometic relation order. If the procedures are silent, the "hold" is a mistake and the plan administrator can be liable for any adverse consequences of interfering with the pariticipants rights or benefits.

From instructions to Form 1099-R: Nonqualified plans. Report any reportable distributions from commercial annuities. Report distributions to employee plan participants from section 409A nonqualified deferred compensation plans (including nongovernmental section 457(b) plans) on Form W-2, not on Form 1099-R; for nonemployees, these payments are reportable on Form 1099-MISC. Also, report distributions to beneficiaries of deceased plan participants on Form 1099-MISC.

SIC is relevant to a QSLOB analysis.

W-2; 20% mandatory withholding does not apply; other withholding rules apply. If you are asking these questions I hope the plan is getting advice about eligibility for the distribution.

QDRO question: They are usually similar, but it depends on plan terms and policies that should be reflected in QDRO procedures. Did you intend to put this in the 409A column? Getting outside of qualified plans adds some wrinkles to QDRO questions.

What remedial action is going to be taken concerning the CPA?