QDROphile

I don't recall a fine relating to noncompliance with ERISA claims procedures. It may be a breach of fiduciary duty to disregard claims, but I think the consequences of failure to comply with the procedures described in the regulations are that the claimant can go directly to court and the plan loses the procedural benefits of making decsions through a valid claims procedure. Please elucidate about the fine.

But refund is not a remedy that can be provided by a plan document.

If the match is based on the 403(b) elective deferrals, the 403(b) plan is subject to ERISA.

State law contracting restrictions can be worse.

A fiduciary with limited responsibility should make sure that the specification of the limited duties is clear and in writing. Except for some of the extreme parts of the co-fiduciary rules, the limits on the duties should also provide limits on the liabilities to the same extent. If the limited cofiduciary knows of a material breach of fidciary duty by another fiduciary, the limited fiduciary has a duty to take appropriate action. It is unlikely that bad investment judgment or execution by the other fiduciary would impose a duty on the limited fiduciary to act, but it depends on the circumstances.

Would the university be so stupid or ignorant, by itself or with an incompetent advisor, that it would adopt a document that is designed for an ERISA plan and the document states that the plan will comply with ERISA or has a significant number of ERISA provisions in it? Don't bet me that it has not happened.

Someone is making a judgment about whether or not the distribution is necessary to prevent foreclosure. The process between a missed payment and foreclosure, and the time when it is reasonable to conclude that foreclousre will not be avoided another way, is complicated and lengthy. Someone also has to decide what amount is necessary to avoid foreclosure. Look at all the questions on the board about such details. The answers are not always easy or mechanical, despite the so-called safe harbor criteria. If decisions are made case-by-case, some fiduciary action is implicated. If you have such detailed guidance that you don't have to make any judgment calls, please share it with us. Many would be delighted to have the resource.

jpod: To explain your circumstances under my analysis, you are not determining that an order is qualified. As you report, you are advising the PA about qualification and the PA is making a determination of qualification in reliance to some degree on your opinion. You are not determining qualification. The order is not qualified or implemented until the PA acts (makes the determination). If your action were sufficient by itself to cause implementation of the order, you would be a fiduciary. For example, if you sent your letter directly to a Fidelity or Vanguard or other service provider for creation of the alternate payee's account and the PA was not the intermediary (with ability to disregard or countermand your conclusion or direction), you would be a fiduciary.

Yes, determination of qualification is a fiduciary function, but that does not mean the annuity provider should not provide the service. The provider can serve as a fiduciary for the limited purpose or it can provide the service under the supevision of the plan administrator without being a fiduciary. The relationship with the plan will be different because the plan administrator thinks (or should think, if the plan administrator has the ability, which is questionable becaue if the plan administrator had full ability to think, the plan adminitrator currently should be even more concerned about certainty of status than the provider) the QDRO stuff has been fully outsourced to the provider. Instead, the provider will be handling the matter and documentation subject to the approval of the plan administrator. The plan administrator will be relying on the provider as an adviser to assist the administrator in the administrator's fiduciary capacity rather than relying on the provider as a fiduciary responsible for the QDRO matters. The discussion assumes an ERISA plan.

Be very careful about the limitations on the relief. If a fund is actually created or described to participants, the exemption does not apply. Most cafeteria plan FSA arrangements fail to qualifiy for the exemption, but no one seems to care. Amounts that immediately pass through to cover insurance premiums are relatively safe. Any self-insured benefit arrangements need attention.

No legal issue, but watch out for how the plan calculates match. The front loaders might not get the related maximum match.

Section 105(h) of the Internal Revenue Code.

Maybe the plan did not use the safe harbor and the suspensions were not required. Get out of the business if you did not consider this possibility. Apologies if you did.

The question was answered and the answer is still the same. A mulitiple employer does not have an exemption from registration under section 3(a)(2) and probably not the under the Investment Company Act, either. Most multiple employer 401(k) plans that are not registered are violating the law, and few are registered.

QDROs are creatures of federal law and federal law (because of DOMA) does not recognize same sex marriage. The would-be alternate payee would not be recognized as a spouse or former spouse, so it seems that the order would not qualify. And since QDROs are an exception to the anti-assignment rule, the plan cannot expand on its own the scope of domestic relations orders to provide for an assignment to another person.

We used to think that if the employer limited the action to two vendors, there were serious concerns about the exemption from ERISA. We did not know a magic number for the exemption, but one was too few and two can be as bad as one if you listen to Three Dog Night. A 401(a) plan was irrelevlant unless the 401(a) plan related to the 403(b) arrangement, such as by matching the 403(b) deferrals. Now all bets are off. The most recent Department of Labor field assistance bulletin on the subject is so full of lies and confusion that all we know for sure is that the DOL does not want the extended responsibillty that probably results from the changes in the tax regulations. In the chaos, some people are floating the idea that limiting vendors is OK as long as a sufficient number of investment options offered by the vendor. The unrelated 401(a) plan is still irrelevant.

A well drafted plan will consider elective deferrals under other plans that count against the limit if the plan is advised of the other deferrals. That will allow designated catch up amounts that would otherwise exceed the section 402(g) limit. Even if the plan does not consider other amounts and treats the deferral as withn the lower limits, unless the plan is poorly drafted, the excess is still a catch up whether or not so designated. A well drafted plan will not depend on the "catch up" label.

Check your exposure to unrelated business income tax.

What you have is an interpretation problem. The plan does not know what it is to deliver to the alternate payee because of the odd twist that the participant can elect withholding. The solution is to require the order to speak to the withholding. If it does not, the order does not qualify because the plan cannot determine the amount payable to the alternate payee.

The plan does not care how money is ultimately used. The plan only cares that it is a domestic relations order (e.g. issued in connection with divorce) and meets qualification requirements. The plan can pay only an alternate payee. If the order provides for payment to a lawyer, or joint payment to a lawyer and alternate payee, then the order does not qualify. If the alternate payee pays to the lawyer all of the distribution from the plan to the alternate payee, that is not an issue for the plan. Otherwise the plan would be concerned with liquor and cigarettes. It does not matter if the court orders the alternate payee to pay the lawyer, but the order cannot give the lawyer an interest under the plan.

If something is an employee "benefit" and the employer can't provide just the "benefit" of allowing the employee to pay for the expense at the expense of the public fisc (compare section 125), then I don't see anywhere for the benefit to come from other than the employer. To put it another way, employers who are willing to subsidize bicycle commuting may do so, up to a point, without including the payments in the employee's income. The government thus joins the employer in the subsidy.

IRC section 132(f)(4)

Off the point, but what do think happened under those custodial agreements when there was no plan document adopted by the employer, and no further involvement by the employer in administrative documentation, which would have been the case for nongovernmental exempt arrangements? No plan document, therefore no hardship withdrawals?

The fourth paragraph under "Analysis" in Department of Labor Filed Assistance Bulletin No. 2007-02 says that employers may not make "determinations" with respect to hardship withdrawals or loans, among other things. That could mean simply administrative determinations under plan provisions that allow hardship withdrawals or loans, or it could be more prohibitive, given that most annuity contracts have provisions for hardship withdrawals and loans and the employer would be "interfering" with the contract and the administration of the contract. The sixth paragraph says that the DOL expects that an exempt arrangement would consist mainly of the TDA contracts provided by the annuity providers and the employer can adopt a plan document that "coordinates" administration among the different contract issuers. No mention that an employer can adopt a plan document that limits the terms of an annuity contract and still stay in the safe harbor of non-involvement. If the employer is completely risk averse, it should leave those elements of design and administration to the vendors, but make sure there are agreements with vendors for compliance, including coordination among the vendors. Personally, I think the Field Assistance Bulletin is both disingenuous and a nightmare for interpretation. I think it really means that the DOL just wants to look the other way rather than get into a new realm of enforcement. Meanwhile it provided a great disservice to those of us concerned with compliance issues (and who therefore are ill-suited to work in the 403(b) arena).

Sounded like a governmental plan to me, but maybe it was a private school.