QDROphile

If the original election was a one-time irrevocable election within the meaning of the 401(k) regulation, what about "one-time" and "irrevocable" is ambiguous, especially in combination?

A plan disregards any election of COBRA at its peril, even if the person who submits the election is not a legal representative of the qualified beneficiary. The courts are very practical about elections, and have even inferred elections under circumstances of incapacity.

SCP is not available for correction by plan amendment.

Separate employment agreements will not avioid the problem. Even a one-off arrangement can be a pension plan, and this employer would have a collection of them. By themselves or viewed together, they don't escape. We know nothing of the intended design, but atomizing does not change the issues.

PHLester: What makes you think what you did was compliant with the law? "Select group" is not enough by itself. How does katieinny get to the "management" or "highly compensated" components of the definition?

There is no question that the decree is a DRO. All DROs are imperfect QDROs until the plan administrator determines qualification. If the decree were not a DRO, the plan would not implement restrictions on the account (assuming the plan knows the law better than the DOL). I don't see what is the fuss, especially for the 401(k). The DB plan might be a more interesting situation depending on the plan's death benefits and whether or not the divorce decree speaks to death benefits. Death benefits are not awarded automatically under most DB plans; the order has to award them experessly. Even if the divorcce decree has a lot if details, it probably does not mention death benefits. Is that fatal now because adding the death benefit terms after death is too much? Or does one infer death benefits from the express award of regular benefits becuase it is unlikely that the asymmetry was intended? If so, then the post-death order that qualifies can pick up the express award and details. That is a tough call because I have seen deliberate asymmetry and there are many nuances in defining death benefits that relate to the award of the regular benefit -- it is not a matter of automatic mapping.

Only the opinion of the plan counts. That could play out either as not recognizing the termination for purposes of distribution or not rehiring you for fear of consequences of an improper distribution.

The ERISA claims procedure requirements are at ERISA Regulation section 2560.503-1.

1. The Department of Labor spit on us with its useless regulations on a difficult subject. The Department has a very low batting average on QDROs. The standards are uncertain. 2. I think it depends on what the divorce decree said. It could be rehabilitated, or not. If the decree mentions dividing the retirement benefits with enough clarity and particularity that a subsequent order is only an embellishment on that substance, then a valid QDRO is possible. If the original terms about property division do not demonstrate intent to divide the property with enough particularity to keep the former spouse from just making up substantive terms (without opposition from the dead guy), then the door might be closed to an order. How the subsequent order comes about might make a difference. If the children get involved in the state court proceeding to limit the imagination of the former spouse (which may be impossible under state law), then the plan might not have to be so critical. 3. The statutory 18 months does not apply as you suggest. I assume that is where you got the number from the statute. I think the standard for correcting qualfication defects is a reasonable time. Trustees of Director's Guild v. Tise (9th Cir.).

Ask the ESOP fiduciary how it views being treated as a shareholder.

The executor stands in the shoes of the participant. The plan should respond to an inquiry from the executor as it would respond to a particpant whether or not the benefit is payable to the estate.

A governmental qualified plan is not subject to the discrimination rules, either.

Have you determined that FICA taxes were not paid as the benefit accrued? I suspect that most 457(b) plan designs call for FICA taxes to be paid as account balances accrue. Compliance is another matter.

I just got a stupid checklist comment from an IRS reviewer who requested that "retired" be substituted for "terminated employment." The client was willing to suffer fools, so I amended the terms, but I informed the IRS agent that the amendment also included a definition of "retirement" to mean "termination of employment after age 70 1/2" because the plan did not otherwise use the term and nothing in the law defined retirement despite the IRS having authority and many years to do so.

The six month suspension after a hardship distribution of elective deferral amounts is only a function of plan provisions (not law), so you can be confident that only plan terms would be the source of restrictions on account of other distributions.

Many plans stop installment payments after rehire. Subsequent distribution is treated as a new distribution election and is governed by general distribution provisions. Other plans continue installments and account separately for new accruals. Tom's message is a good reminder to consider section 72(t)(2)(A)(iv), but your facts involve section 72(t)(2)(A)(v).

Just for starters, at best you will have facts and circumstances sensitivity under section 4975©(1)(E) or (F).

I was just asking about what was at stake in the matter. You have seen examples on these Boards of serious battles over what is right or who is right, and that is all that mattered. Sometimes you need to know what is right because you are responsible for some sort of compliance or reporting, and not getting it right can have adverse personal consequences or liability. Sometimes you don't have direct personal consequences riding on what is right, but you don't want to be associated with something that is egregiously wrong. You think something is wrong and seem to care a lot when it does not look like you have any potential liability for following instructions based on the wrong position. I was hoping to learn if I was missing something about responsibiity for following instructions. For example, if you are a fiduciary, you usually cannot rely on instructions and have to be satisfied that you are taking reasonable actions. Or you might have responsibility for reporting and cannot take a postion that you do not believe is reasonable. Or you might be so digusted with your client (or afraid of its judgment and recklessness) that you are considering firing the client or putting the client at a greater distance. Also, I like to know what makes service providers tick, so I can either work with them better or fight with them better.

Are you asking for citations out of curiosity, concern for compliance with some rule applicable to you, or because you are the sheriff of something?

Mistaking tules for rools.

Who is advising the plan administrator about how to handle the situation?

Just the opposite. The court said the plan administrator had no business second guessing the bona fides of a state domestic relations proceeding. Years earlier, the Department of Labor reached a different conclusion about sham divorces in an advisory opinion.

Section 403(b)(12) brings in section 410(b) with respect to nonelective contributions.

Yes.

I assume that the poster is certain of facts and wants the optimal result, which could not be achieved by cycling the money via rollover. If you can get all the money back in the plan conventionally, then I agree that extraordinay actions should not be taken. You point out some of the questions that must be answered before taking the agressive approach. I agree that a change of mind will not justify the extraordinary action and the plan administrator has to be wary. I think the plan can accommodate remedial actions for a victim of fraud, even though the formalities of communication with the plan were conventional. If they don't have enough hair (or the right facts) to conclude it was fraud and take actions accordingly (including reporting the broker), then they should follow plan B and live with the outcome. People ask for ideas in this forum. The counterpoints provided by other members of the community provide balance and perspective, lest anyone think they are getting fully baked advice.