Peter Gulia

But, assuming those premises, and considering the possibility that the payer might be an ERISA-governed plan, be careful to discern that it really is a rollover contribution of the amount received in an eligible rollover distribution, rather than a transfer or an exchange. A distribution can extinguish the rights and attributes of the payer plan; a transfer or an exchange might not.

jpod, you're right that PWBA in the QDRO booklet states some views that aren't supported by the statute, and some that are contrary to the statute. When I've written about QDROs for publication, I've sometimes called out a few of the differences. I've never had a client that needed an answer to the question you asked, and the answer was beyond what would be useful to the readers of the books for which I did a QDRO chapter. The statute is a pile of gibberish. If a client wanted my opinion, I doubt it would be a more-likely-than-not opinion (51%) in either direction. I suspect either conclusion could be expressed in a reasonable-basis opinion and even as a substantial-authority opinion. As your post yesterday hints at, sometimes no one has enough need to get a lawyer to reason through the text.

Luke Bailey, if a plan provides different distribution forms for different classes of participants, do you think the distribution forms available to an alternate payee must be based on those available to the participant from whom the alternate payee derives a right to an assignment or alienation of the participant's benefit? Or do you think ERISA permits a plan to treat alternate payees as a class of participants?

jpod, if you're looking to support the mainstream view you described, it is the last sentence on page 39 of EBSA's QDRO booklet, and EBSA's citations to support Q 3-8 are on page 40. https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf Even if that view is wrong, I doubt the Internal Revenue Service would tax-disqualify a plan because the plan's administrator decided it must honor a QDRO that directs a distribution form that is not provided by the written plan but is, under the administrator's good-faith interpretation, required under ERISA 206(d)(3)(e)(i)(III).

I checked BNA. Pension & Benefits Daily (and the weekly Reporter) ran an article on the Employee Council on Flexible Compensation's 15th Annual Cafeteria Plan Symposium on August 16, 2002. The article summarizes Harry Becker's remarks, but none of John Sapienza.

This seems to be a question about whether the written plan states a provision that is inconsistent with ERISA 206(d)(3)(E)(i)(III). If so, does the plan grant its administrator discretion to decide? How strong is the plan's language about deference to the administrator's discretion. Might the deference not matter because a dispute would play out in a circuit that doesn't recognize deference for something that goes beyond a pure claims decision to involve an application of ERISA's part 4? Is there enough at stake that the administrator might consider applying to a Federal court for instructions?

MoJo, thank you for the learning. Imagine this hypo: A retirement plan has a big insurance company as its recordkeeper. The plan’s investment menu includes a bunch of (non-insurance) investment funds and one stable-value account. The stable-value is a group variable annuity contract with one insurance company separate account, and the plan’s contract is the only one that uses that separate account. Under the contract, the plan has a right to take delivery of the separate account’s securities whenever the plan wants to. The insurer’s guarantee of the declared crediting rate is only one month at a time. The retirement plan has selected a new recordkeeper, another big insurance company. By the “conversion-out” date, the stable-value account’s current value is below its book value. Couldn’t the retirement plan instruct the “old” insurer to deliver not money but the separate account’s securities to the “new” insurer? Then, the plan and the new insurer set whatever amortization formulas and crediting rates use the separate account’s securities within the risk the new insurer will insure. But what complications am I missing?

TPAJake, does the problem you describe happen only with insurance company general-account stable-value contracts? Or could one also encounter difficulties regarding a separate-account stable-value contract?

Consider ERISA § 404(a)(1)(D): “[A] fiduciary shall discharge his duties . . . in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this title {I} and title IV.”

These publications might help you learn the “Windfall Elimination Provision”: https://www.ssa.gov/pubs/EN-05-10045.pdf https://www.ssa.gov/planners/retire/wep.html https://www.ssa.gov/planners/retire/wep-chart.html https://www.ssa.gov/planners/retire/anyPiaWepjs04.html https://www.ssa.gov/OACT/anypia/anypia.html The effect can be startling if a worker had many periods of noncovered work.

On a somewhat similar kind of notice, a client only recently received a notice on his 2015 return.

Although President Ford signed the Employee Retirement Income Security Act of 1974 on September 2, it was Labor Day of that year and the choice was deliberate. “It is certainly appropriate that this law be signed on Labor Day, since this act marks a brighter future for almost all the men and women of our labor force.” President Ford’s statement on signing ERISA. “I think this is really an historic Labor Day—historic in the sense that this legislation will probably give more benefits and rights and success in the area of labor-management than almost anything in the history of this country.” President Ford’s remarks on signing ERISA. So happy birthday, ERISA!

RatherBeGolfing, thank you for the nice help.

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.