Peter Gulia

If the participant's right to deferred compensation is unfunded, wouldn't the "transfer" you mention be a participant exchanging his or her contract right to a payment from the employer for another contract right to a payment from the same employer? Would it be simpler to amend the one plan to allow no more deferral?

RatherBeGolfing, thank you for thinking about the Chevron complaint. As I read that complaint, it didn't assert that the fiduciaries made a poorly considered decision about which fund to select within funds of the same kind. Instead, it asserted that the fiduciary's construction of the menu was imprudent by failing to include a category - stable-value - that a prudent fiduciary would have decided should be in the plan's menu. Or am I superimposing my knowledge to imagine a complaint reasoned differently than the complaint the plaintiff made?

CuseFan, thanks for your help. Beyond the unnecessary-expense cases, the only pure prudence case I know is almost 30 years ago: Whitfield v. Cohen, 682 F. Supp. 188, 9 Empl. Benefits Cas. (BNA) 1739 (S.D.N.Y. March 7, 1988). And that case was about a selection that was obviously imprudent without considering investment performance. Has anyone seen a case that challenges a selection of investment funds on grounds other than self-dealing or unnecessary expenses?

So far, it seems there are two kinds of claims that an individual-account (defined-contribution) retirement plan's fiduciary breached its responsibility in selecting a plan's "menu" of investment alternatives for participant-directed investment. One kind asserts self-dealing. For example, plaintiffs asserted that ABB made suboptimal investment selections because this resulted in Fidelity's willingness to lower its fee for services used for purposes other than the retirement plan. And the "proprietary"-funds cases assert that a fiduciary of a retirement plan for employees of a business that's in the business of serving as an investment manager selected "house-brand" funds because the manager had a compensation interest or business interest in the retirement plan's use of those funds for which the manager gets a fee or cares about whether the manager and its employees are seen to "eat their own cooking". Another kind asserts that the plan could have bought essentially the same investment at a lower expense. Has anyone seen a lawsuit that alleged a fiduciary selected an investment alternatives that was weak on its investment merits without either kind of claim described above?

If a retirement plan bought that contract and remains in the class, a plan's financial statements might include in the notes a narrative explaining the gain contingency. Ordinarily, no accrual is expressed in $$ until restoration is had or is substantially certain.

Flyboyjohn, thank you for your good help. On presuming that a licensed insurance company would not offer a contract that fails to include minimum essential coverage, is that because there is some Federal law that makes it unlawful to offer such a contract?

Or is it reasonable for an employer/administrator to approve its employee's claim for a reimbursement on no more than the employee's written statement that the individual health insurance contract he or she paid a premium for meets the conditions?

ERISA § 203(e)(1) states: “If the present value of any nonforfeitable benefit with respect to a participant in a plan exceeds $5,000, the plan shall provide that such benefit may not be immediately distributed without the consent of the participant.” It might require a little imagination for a plan’s administrator to obtain the consent of a decedent. Is a plan’s IRC § 401(a)(9) minimum-distribution provision an exception to ERISA § 203(e)? 26 C.F.R. § 1.411(a)-11(c)(4). Does a plan’s termination obviate the ERISA § 203(e)(1) provision? 26 C.F.R. § 1.411(a)-11(e)(1). K2retire, is there anything about the distribution that needs the recordkeeper’s cooperation? Or is the plan’s administrator free to ignore what the recordkeeper says?

If the participant didn't begin a distribution before the participant's death and the designated beneficiary didn't begin a distribution within one year of the participant's death, what would preclude the plan's administrator from applying the plan's provision that "requires full distribution within 5 years of the death"? A related question for BenefitsLink mavens: If the plan pays the distribution but the beneficiary does not deposit or negotiate the check, must the plan's administrator continue filing Form 5500 as long as the plan has some asset? Or is there another reporting treatment practitioners are comfortable with?

I tell many clients and friends that the only dumb question is the one you didn’t ask. And for myself I think it’s better to reveal my ignorance than pretend knowledge I don’t have. I’ve never seen an individual health insurance contract, so this is my naïve question. To meet tax-law conditions for a qualified small employer health reimbursement arrangement within the meaning of Internal Revenue Code § 9831(d)(2), a plan must provide its reimbursement only for medical care and only after the employee furnishes proof of minimum essential coverage. Further, imagine a QSEHRA plan that reimburses only purchases of individual health insurance, not other medical expenses. Following this, to be reimbursable the insurance contract must meet two conditions: it must include (i) minimum essential coverage within the meaning of IRC § 5000A(f)(C) and (ii) no coverage beyond medical care within the meaning of IRC § 213(d). If a small-business employer puts in a decent effort to apply those conditions, how does one discern that a contract meets them? Does a contract that provides minimum essential coverage recite that it does? If so, where in the contract would one expect to see that language? If there is no such recital, what language clues would one look for to find that a contract includes minimum essential coverage? Without reading the whole contract, what shortcut might one use to form a reasonable belief that a contract insures nothing beyond medical care?

austin3515, some retirement plans and TPAs furnish a model form of domestic-relations order, typically as an illustration of what would get an administrator’s Yes. Many divorce lawyers put requesting the plan’s model form as a first step in their work toward a domestic-relations order. Some plans furnish a model form only to a requestor who presents herself as an attorney-at-law. Some plans furnish the form also to a non-attorney requestor who is the plan’s participant or who refers to a participant and presents himself as that person’s spouse or former spouse. Some service providers offer a service, often for an incremental fee, of deciding whether an order is a QDRO. They reason a service is non-discretionary under 29 C.F.R. § 2509.75-8/D-2 if the service provider does no more than check whether an order follows the model form the plan’s administrator specified. I’ve designed and written these regimes from both sides – sometimes as counsel to a plan’s sponsor/administrator specifying its procedure and forms, and other times as counsel to a third-party administrator that designed what its customer would instruct the TPA to follow. These services are increasingly a norm for large plans that prefer to outsource the work. But the service might be even more useful for small plans. A small employer might have so few submissions that it’s too hard to teach an employee how to do QDRO reviews. But a TPA with a sufficient aggregation of clients might see enough volume (and might have enough related knowledge and experience) that the TPA can do QDRO reviews efficiently.

MoJo, thank you for describing a different view. If anyone is wondering, my views distinguish out-of-court advice and in-court acts as a representative of a litigant. But those distinctions don't change my view that even an unrepresented litigant ought to be permitted to choose any drafter. The litigant accepts responsibility for the document he or she submits to a court. I'm aware that my views are a departure from received ideas; so again, thank you for helping me think about different ideas.

Without expressing my view about what would or wouldn’t be an unauthorized practice of law, let me indulge a bit of history. In the 1980s, if one wanted Corbel to produce a plan document, one needed a lawyer (or at least someone willing to say she’s a lawyer) to sign the intake questionnaire. In 1990, Florida’s Supreme Court found that the State lacked “power to place limitations on the authority granted to a nonlawyer by a Federal agency.” The reasoning referred to how 31 C.F.R. Part 10 allows a certified public accountant to practice before the Internal Revenue Service. The Florida Bar re Advisory Opinion – Nonlawyer Preparation of Pension Plans, 571 So.2d 430 (Fla. Nov. 29, 1990). After that decision, Corbel revised its intake form to allow not only a lawyer but also a certified public accountant to be the instructing professional. Some might defend an accountant’s, actuary’s, or ERPA’s drafting of plan documents under an assumption that she might file a Form 2848 to appear before the IRS as a representative on the plan sponsor’s application for a determination. (With fewer opportunities to apply for a determination, this reasoning becomes more tenuous.) For drafting a domestic-relations court’s order, it seems doubtful there is much connection to a proceeding before the Internal Revenue Service. So a State authority would decide whether the nonlawyer’s practice is unauthorized without applying the U.S. Constitution’s supremacy of Federal law. If one fears enforcement grounded on unauthorized practice of law, one might design a service to avoid judgment or discretion about what provisions to state in the draft order, and to avoid advice about what a particular retirement plan allows or precludes. I remind BenefitsLink readers of my longstanding view that the law ought to permit any person to give legal advice (including drafting documents that involve advice), and to be responsible for that advice.

Does anyone know whether Fidelity checks the OFAC lists?

Last week, Groom Law Group published a Benefits Brief suggesting that at least some retirement plans consider procedures to comply with laws administered by the U.S. Treasury department's Office of Foreign Assets Control. http://www.groom.com/media/publication/1863_OfAC_Update_8-7-17.pdf Groom suggests this might include "[c]hecking if participant or beneficiary payments are going to individuals on the SDN [specially designated nationals], FSE [foreign sanctions evaders], or SS [sectoral sanctions] lists." Are recordkeepers providing this service?

DocuSign, RightSignature, and other providers are glad to take you through a demo of the software. If you use a CRM software, one might ask that provider which of the e-signature software providers built integrations for your CRM software. If you use CCH/Wolters Kluwer, Citrix, or another file-sharing host, one might ask that provider which of the e-signature software providers build integrations for your file-sharing software.

Perhaps you might do a short request-for-proposals to select the consultant that would run your RFP to select the pharmacy benefit manager.

In my experience, another advantage of a carefully automated plan-documents system is that it facilitates reviews to increase the likelihood that a document will be complete and accurate before the signer signs. But if there is a revision, why should the plan's sponsor desire to delete a record of what previously was done. My clients' experiences are that their older signers (even many in their 80s or 90s) are favorably impressed, and younger signers simply assume electronic is how business is done.

I’m aware of at least one big recordkeeper that uses an electronic-signature regime for adoption agreements, other plan documents, and service agreements. And some of my clients that are investment advisers use it for investment-advisory agreements. I like electronic signatures because: A signer can be anywhere (unless it’s so remote it lacks an Internet connection). A recipient gets much more confidence that the signature was made by the person named. Knowing that the computer systems make and keep detailed time records of what was done when reduces a temptation to make a false statement about when the document was signed. There is no incremental expense for delivery of the signed documents. Some systems facilitate a courtesy delivery to a lawyer or other third person as the signer requests. To advise clients, I’ve reviewed several providers’ electronic-signature services. All I’ve seen are good. One might choose a service provider based on available integrations with other software one uses. I had one client who needed to get a few hundred signatures on new agreements in one month. Not only did she succeed, the set-up of the software handled almost all the work. The software’s reminders and nudges helped get signatures (without telephone calls), even from signers on vacation far away.

Beyond the other suggestions, in the AICPA's Audit & Accounting Guide for Employee Benefit Plans, a few Q&As at the end of chapter 11 illustrate what the independent qualified public accountant's report should state or explain when the IQPA did not audit a comparison year's financial statements.

In my experience, rigorously and carefully following ERISA 503 claims procedures, including explaining every reason for a denial, often results in a further flow of information.

fiona1, does your client's plan mandate a single-sum distribution if, on severance-from-employment or other retirement, the present value of the participant's pension is less than $5,000?

If the participant died before a distribution began, what are the plan's provisions for that situation? If no survivor has communicated with the plan's administrator, perhaps there is no claim the administrator need respond to? Do the plan's provisions mandate an involuntary distribution? When is the required beginning date?

For situations that involve uncertainty about the law or about the law’s application to a set of facts, lawyers are trained to go to one’s client for a conversation about how much uncertainty and risk the client is comfortable with and how to manage possible interpretations or applications. Perhaps the practical world of documenting an IRC § 401(a) plan might help you frame a similar discussion. Would the plan be stated using a preapproved document? Consider whether your client’s desired provisions can be stated within the adoption agreement’s check-off-box choices. If instead a provision would be stated by “free writing” on a blank line, how much confidence can you muster in telling your client (whether expressly, or impliedly) that the provision follows the “parameters” the preapproved package allows for that line? Or if your client’s desired provisions would not “color within the lines”, is your client ready to pay for an individually-designed document, and for your advocacy in persuading the IRS it states a plan that, in form, tax-qualifies?

I think you’ve spotted an issue. Beyond the definitely-determinable issue, consider also whether a discretion of the kind you describe could lead to related problems under civil-rights law, employment law, labor-relations law, or a law special to government employment, such as a civil-service or merit-protection law.