Peter Gulia

Interpretive Bulletin 94-2 – even if a court chooses to consider it – describes a PWBA (EBSA) view on figuring out which fiduciary votes a plan’s shares. (There are also some letters and court decisions about the circumstances in which a directed trustee must, may, or must not follow an instruction.) But this view doesn’t consider a situation in which a plan’s documents state that a specified set of shares in a specified security is not to be voted by anyone. So a question remains about whether a settlor’s “don’t-vote” provision might be so contrary to a retirement plan’s purpose that a fiduciary must ignore the provision as contrary to ERISA. Apart from this, even if the terms of the shares (including any related shareholder agreement) don’t restrict the shareholder’s right to vote, a retirement plan’s “don’t-vote” provision might call into question whether the shares truly are employer securities that meet relevant ERISA and tax conditions. For stock not traded on an established market, meeting these conditions often requires that the shares have voting power that’s no less than that of the class of common stock with the greatest voting power. If a plan’s and employer’s circumstances are such that those persons don’t need the shares to meet any definition of employer securities, a question about whether a fiduciary should follow or must ignore a settlor’s “don’t-vote” provision could remain.

Although ERISA's fiduciary standard of care includes the idea that a fiduciary follows the plan and trust documents, ERISA 404(a)(1)(D) also says that a fiduciary does so "insofar as [the] documents ... are consistent with the provisions of [ERISA's title I]." For readers of this board (and especially those who often advise plans that invest in employer securities that aren't publicly traded), what's your outlook on whether (and in what circumstances) a settlor's "don't-vote" provision might be so contrary to a retirement plan's purpose that a trustee or other fiduciary must ignore the provision as contrary to ERISA? Does the fact that a question is important enough to be put to the shareholders' vote suggest that the decision fundamentally affects the shares' value?

Sorry for the wait (clients who keep the lights turned on come first). Federal courts’ decisions under ERISA § 206(d)(3) include several cases in which a Federal court ordered a plan administrator to pay an amount (or provide something) based on a State court’s order that the court found was a QDRO for ERISA purposes. Some of these opinions found a QDRO when an employee-benefits practitioner would find (and sometimes a plan administrator had decided) that the order was not a QDRO. (For discussion, we’ll ignore the worse problem of California and its Federal court, which said that a State court can have jurisdiction to declare that an order is a QDRO.) If a proceeding is about an ERISA claim (and not a dispute about a Federal tax assessment or claim), usually the Secretary of the Treasury or the Commissioner of the Internal Revenue Service is not a party to the court proceeding; most involve competing claimants, the plan, and the plan administrator. Even if collateral estoppel arguably might preclude the participant or the alternate payee from asserting a tax position that’s inconsistent with the Federal court’s decision on a similar issue, it won’t preclude the IRS if it wasn’t a litigant in that proceeding. While a Federal court’s finding on whether an order is a QDRO under 29 U.S.C. § 1056(d)(3) could be argued as some information that’s relevant to whether the order is a QDRO under 26 U.S.C. § 414(p) for Federal income tax purposes, it doesn’t necessarily control the plan administrator’s or payer’s tax-reporting. Without more, I’d feel uncomfortable advising a plan administrator to tax-report a payment as a QDRO distribution if the plan administrator’s evaluation did not conclude that the order is a QDRO within the meaning of IRC § 414(p). (That’s not to say a plan administrator wouldn’t do it; I just wouldn’t advise it.) This discomfort has at least some sense because ERISA’s QDRO statute and the Internal Revenue Code’s QDRO statute have different legislative purposes and effects. ERISA affects whether an amount is paid to a nonparticipant or isn’t; IRC § 414(p) affects also whether a payment is an exception to the general rule against pre-retirement distribution, whether an extra 10% tax on a before-59½ distribution applies, and which person recognizes income because of the payment. Some of the cases in which the Labor department has helped find an ERISA QDRO as a way to let a plan pay money to a nonparticipant are less sympathetic if one considers income-shifting and even the non-application of a tax. This tax-reporting question is a difficult one because Form 1099-R and its Instructions don’t readily recognize that a retirement plan might pay an amount in ambiguous circumstances. This question gets easier if a plan pays on an order when no one (not even the State court) finds that the order is any kind of QDRO: this sometimes happens with a non-ERISA plan. Let’s all hope that we don’t need to think about these questions.

While I don't know your client's issues and preferences or the underlying facts and circumstances, are they such that it might be feasible to include in a settlement agreement a clause that conditions the settlement's effect on the employer's and the plan administrator's receipt of an IRS tax-qualification determination and an EBSA Advisory Opinion, together with the court's approval of everything? Or is that so obviously inapt that you've already ruled it out?

John Simmons, you’re way smarter than the average bear, so the following sources – some ERISA Advisory Opinions and one court decision – should give you enough background. At least one court [see my last source below] has interpreted the “pursuant to … law” phrase to mean little more than “under color of law” or “court having jurisdiction”. Further, the Labor department doesn’t mind if a plan administrator “looks the other way” on many DRO conditions as long as the result “feels” comparable to what domestic-relations law would or could provide. A State domestic-relations law includes community-property law “only insofar as such laws would ordinarily be recognized by courts in determining alimony [sic], property settlement[,] and similar orders issued in domestic relations proceedings.” A community-property division after the nonparticipant’s death (and not incident to a divorce or other family-status proceeding) is not made under domestic-relations law. ERISA Adv. Op. 90-46A (Dec. 4, 1990). A plan administrator need not review the correctness of a State court’s decisions. A court order described its purported “alternate payee” as the participant’s “former spouse” (and designated her as the “surviving spouse”) despite the fact that the same court’s order annulled the purported “marriage” as void from the beginning. The purported “alternate payee” had been married to the participant for 38 years and bore him six children. Perhaps because these facts were sympathetic, the Labor department struggled to reason away the condition that a QDRO must provide for a spouse or former spouse. (The order didn’t purport to describe its alternate payee as a dependent.) Likewise, the Opinion ignores the condition that an order must provide “child support, alimony payments, or marital property rights[.]” The opinion notes that “the [c]ourt approved the property division prior to granting an annulment ab initio of the marriage between the parties.” But such a fact shouldn’t mean anything because an annulment means that there never was a marriage and there never were spouses. t is the view of the Department that, to the extent [that] the Order was executed by a court of competent jurisdiction pursuant to Michigan domestic relations law, neither the determination under the Order that Y is a “former spouse,” and thus meets the requirements to be an “alternate payee,” for purposes of section 206(d)(3)(B) of ERISA, nor the determination that Y is a “surviving spouse” for purposes of section 206(d)(3)(F) of ERISA, are [sic] required to be reviewed by the plan administrator. ERISA Adv. Op. 92-17A (Aug. 21, 1992). In its opinion about sham “divorces”, the Labor department suggested that a plan administrator’s general fiduciary duty might require it to make some effort to avoid acquiescing in an obvious fraud. ERISA Adv. Op. 99-13A (Sept. 29, 1999). f the plan administrator has received evidence calling into question the validity of an order relating to marital property rights under State domestic relations law, the plan administrator is not free to ignore that information. Information indicating that an order was fraudulently obtained calls into question whether the order was issued pursuant to State domestic relations law, and therefore whether the order is a “domestic relations order.” …. When made aware of such evidence, the administrator must take reasonable steps to determine its credibility. If the administrator determines that the evidence is credible, the administrator must decide how best to resolve the question of the validity of the order without inappropriately spending plan assets or inappropriately involving the plan in the State domestic relations proceeding. The appropriate course of action will depend on the actual facts and circumstances of the particular case and may vary depending on the fiduciary’s exercise of discretion. However, in these circumstances, … appropriate action could include relaying the evidence of invalidity to the State court or agency that issued the order and informing the court or agency that its resolution of the matter may affect the administrator’s determination of whether the order is a QDRO under ERISA. Appropriate action could take other forms, depending on the circumstances and the fiduciary’s assessment of the relative costs and benefits, including actual intervention in or initiation of legal proceedings in State court. The plan administrator’s ultimate treatment of the order could then be guided by the State court or agency’s response as to the validity of the order under State law. If, however, the [plan] administrator is unable to obtain a response from the court or agency within a reasonable time, the [plan] administrator may not independently determine that the order is not valid under State law and therefore is not a “domestic relations order” … but should rather proceed with the determination of whether the order is a QDRO. This last quoted sentence tells us the Labor department’s view that ERISA plan administrators should review a court order almost exclusively for offense against the plan’s terms, without considering the truth or falsehood of the assumed facts or findings that support the order. Although the Labor department wanted to help the plan administrator combat fraudulent divorces, it didn’t want to break the line that State courts decide State-law issues and plan administrators decide plan/ERISA issues. The Labor department’s guidance tells a plan administrator to rely on the status and characterization findings stated by a court order, even if they’re openly suspect or wrong. The background of this Advisory Opinion was the United Air Lines plan’s exposure to a use of a divorce as a way to defeat a § 401(k) plan’s distribution restriction and extra 10% tax on early distributions. After UAL’s attorney received the Opinion, the plan administrator informed the domestic-relations judges; the State courts changed nothing. At least one court has found that a plan administrator need not determine whether a court order violates State law. “ERISA does not require, or even permit, a pension fund to look beneath the surface of the [state-court] order.” It observed that the fact that an order violates State law does not cause the order to fail to qualify as a QDRO. The court further explained a reason to defer to plan administrators’ need for administrative certainty: ERISA’s allocation of functions--in which state courts apply state law to the facts, and pension plans determine whether the resulting orders adequately identify the payee and fall within the limits of benefits available under the plan--is eminently sensible. Pension plan administrators are not lawyers, let alone judges, and the spectacle of administrators second-guessing state judges’ decisions under state law would be repellent. Unsuccessful litigants would refile their briefs from the state litigation with pension administrators, in the hope that lightning may strike as laymen review the work of judges. Far better to let the states’ appellate courts take care of legal errors by trial judges. Pension plans are high-volume operations, which rely heavily on forms, such as designations of beneficiaries. Administrators are entitled to implement what the forms say, rather than what the signatories may have sought to convey. [citation omitted] So, too, plans may mechanically implement orders from state courts. Reviewing the substance of these orders would increase the costs of pension administration (costs ultimately passed on to beneficiaries), increase the error rate (to the detriment of participants and their loved ones), and cause delay as plans carried out the additional inquiries (again to the detriment of beneficiaries, who may need the income quickly). Blue v. UAL Corp., 160 F.3d 383, 22 EBC (BNA) 1941 (7th Cir. 1998). One last point: an order that’s a QDRO for ERISA purposes isn’t necessarily a QDRO for Internal Revenue Code purposes. A plan administrator should tax-report a QDRO distribution following its evaluation of whether the order is a QDRO within the meaning of 26 U.S.C. § 414(p).

The plan administrator (likely with your help) might want to review the SPD, other expense-allocation procedure (if any), QDRO-determination procedure, and any other documents that relate to this expense allocation to consider whether they're clear or ambiguous concerning whether the QDRO-review expense is charged before or after the segregation of the participant's and alternate payee's portions, and what portion of the expense is allocated to the alternate payee.

Although not necessarily required by ERISA’s Part 4, the better practice is for a sole fiduciary who also has a personal interest in a decision to recuse himself or herself from that particular decision, handing it off to a temporary fiduciary who is not a subordinate of, and free of any material conflicting interest concerning, the conflicted person and the decision. Some employee-benefits lawyers and other practitioners are comfortable serving in this plan-fiduciary role. Avoiding a conflict that could affect a fiduciary’s exercise of his or her best judgment solely in the interests of the plan can be a “necessary” service in the sense of one that’s “appropriate and helpful to the plan” within the meaning of 29 C.F.R. § 2550.408b-2(b). Thus, the reasonably incurred expense for this service can be a proper plan expense. It may be allocated among all individuals’ accounts if that’s what the plan, or a prudently-decided expense-allocation procedure, provides. A second-best way is Kim Sheek’s idea of enabling the conflicted person to defend his or her decision by saying that he or she relied on what he or she assumed to be objective advice from an expert lawyer. (This is second-best because rendering advice is not the same thing as making the decision.) The terms of the engagement or task should make clear that the lawyer advises the decision-maker as plan administrator, not personally. The lawyer should be one who is unassociated with any lawyer who advises the participant regarding divorce or domestic relations. Further, the terms should seek to remove conflicting interests by, among other things, paying the lawyer his or her full fee before he or she begins work. The plan’s expense may be allocated as generally described above. That said, a conflicted decision (using neither of these methods) to approve a court order as a QDRO is unlikely to draw an objection from the alternate payee (even if the order is not a QDRO). But if a participant who also acts as the sole fiduciary decides that a submitted court order is not a QDRO, it’s much more likely that the alternate payee might raise objections. In facing such a challenge, the conflicted person should fare much better if he or she: (1) was correct in the decision; (2) sent a denial letter that cited the relevant plan or ERISA provision concerning each defect, and explained how the submitted order failed to meet the requirement; and (3) made his or her decision following an expert lawyer’s advice. Some people might think that it’s somehow unfair for a plan’s other participants to bear their pro rata share of an expense for a situation like this. But remember, those participants have generally enjoyed the reduced expense (perhaps with some disadvantages too) of having an unpaid volunteer serve as the plan’s administrator: from inception or at any time, the business owner could have named a paid plan administrator. If the fee for a temporary fiduciary’s service is less than, or not significantly more than, the fee for an expert lawyer’s advice, acting in the plan’s best interests might mean that the conflicted fiduciary should prefer the temporary fiduciary. Further, some lawyers who are available to serve in either role sometimes have lower rates for serving as a plan fiduciary.

QDROphile, thanks for the reminder about that decision. Like you, I've cited it (in books and elsewhere) to support the idea that a plan administrator might reduce its liability exposure by not writing or speaking information beyond a required decision on whether an order is or is not a QDRO. In Templeman/Dahlgren/U.S. West, the court held that a lawyer's state-law claim (if any) against a nonlawyer who gave legal advice to the lawyer was not ERISA-preempted, and sent it back to a state court. The Federal court did not consider whether that third-party plaintiff had alleged sufficient facts to state the claim - leaving that issue to the state court (which then did not have an occasion to decide whether a lawyer could reasonably rely on a nonlawyer's legal advice). But even the strained reasoning of that opinion was grounded on an allegation (accepted as undisputed for the purposes of the summary-judgment motions) that the plan administrator had given advice. The court did not consider whether the plan administrator had any duty. Again, in the interests of "equal time", has anyone seen a case in which a court suggested that a plan administrator could be responsible for a failure to provide advice or information (beyond the required QDRO decision)?

The last post particularly, and this thread generally, remind me to ask a request of the practitioners who read these boards: Does anyone know of a court decision in which a court found a plan administrator liable (or potentially liable) for failing to inform an alternate payee that an order, although qualifying as a QDRO, does not protect the alternate payee in circumstances not provided for in the order? One would like to think that there should be no such liability, because the plan administrator's task is only to make a correct decision on whether an order presented to it is or is not a QDRO. But any of us who's had even modest exposure to courts and judges can imagine ways that they'd put an extra duty on a plan administrator. Still, I haven't found any court decisions; have you read or experienced any? Even if there is little or no risk of liability, are there "best-practices" arguments for or against the idea that a plan administrator should tell an alternate payee, a participant, or both about circumstances not provided for in an order?

In some States, whether a lawyer is or isn't a member of a bar association is a choice of voluntary association. In other States, there is an "integrated" or "unified" State Bar, in which membership is mandatory if one wants to be a licensed lawyer. A "unified" State Bar often has some governmental powers, and sometimes is recognized as an instrumentality of the State. If a State Bar is an instrumentality of a State, it's an eligible employer under IRC 457(e)(1)(A). Although a 501©(6) business league (which a voluntary bar association might be) also is an eligible employer (under IRC 457(e)(1)(B)), the governmental-or-not distinction matters for some important differences: A nongovernmental employer's plan is unfunded (see IRC 457(b)(6)); a governmental employer's plan must use an exclusive-benefit trust, custodial account, or annuity contract (see IRC 457(g)). A nongovernmental employer's plan that's not a church plan must limit participation to a "select group" so that ERISA Part 4's funding requirement won't apply.

Sorry to hear that. So far, it seems that BenefitsLink readers don't have obvious magic for your (hypothetical) client's situation. And one imagines that Y might not be in a good mood to hear that it should have considered the true expense of the job before taking it. In the right circumstances, a carefully written request for a review of the accuracy of the plan trustees' withdrawal-liability demand (done with all the right ERISA/MEPPAA details, and leaving behind some traps for the plan's vulnerabilities) could set the stage for a negotiation. Although in theory the plan trustees aren't supposed to accept less than the true withdrawal liability, in the real world they weigh the risks (and there is some law support for the idea that it can be proper and prudent for them to do so). More than a few of us have had some success with getting a satisfaction on a compromised amount. At this stage, the hardest part is for a client to decide how much professional effort is worthwhile.

This isn't an answer to your question; but: Before making the agreements, did Y ask a lawyer for advice about the effect of the agreements? If so, what was the advice?

For Pennsylvania's personal income tax, a benefit under an IRC-qualified cafeteria plan might or might not be compensation (one of Pennsylvania's eight classes of income) depending on the terms of the plan, whether the plan is discriminatory, and the nature of the benefit. For example, a health-care arrangement usually is not compensation, but a dependent-care arrangement is taxable compensation. The attached regulations explain the rules. 061_0101.pdf

Before a plan fiduciary or a plan sponsor decides whether either really wants funds managed by the employer or its affiliate as investments of the retirement plan, those involved might read the plaintiffs’ complaints in some of the lawsuits on that topic. (Some settled; at least one began recently.) Even if they’re confident they’ll win it, does your client want to invite litigation? Further, even if the client’s practical legal risk is remote or almost none, some practitioners worry about one’s own reputation risk or just can’t get comfortable ethically. To answer cac1134’s question, there are some ways to design a plan or choose its investment menu to use “house-brand” funds so that the investment is not an ERISA § 406(b) prohibited transaction. All of the ways that I know about require lawyering, and all but one or two require independent experts. Any real discussion of this topic involves information that one wouldn’t want written in a forum that’s open to anyone with an Internet browser. (I’ve advised clients on both sides, about attacking or defending these arrangements.) If you’d like to talk about this, please feel free to call me.

Whether any particular decision is or isn’t a fiduciary breach always depends on all of the surrounding facts and circumstances. Although the call for “care, skill, prudence, and diligence” is unchanging, the measure is what one would do applying those behaviors and skills “under the circumstances then prevailing”. ERISA § 404(a)(1)(B). A decision that’s wrong for a $100 million plan might be sensible for a $10 million plan. To answer MSN’s question, yes, there are fiduciaries of smaller plans that don’t merely eat out of a recordkeeper’s can but add their own language to individual-account statements. Some recordkeepers provide a “slot” to put plan-customized language on a statement. While such a slot often is limited to a specified number of lines and characters, a careful writer can convey information in two or three sentences. If space is very tight, an explanation’s last or second sentence might point to a website page that provides more information. Another choice: a recordkeeper might give a plan administrator a choice to include or “suppress” a rate-of-return display. Until one finds a way to explain the information, a plan fiduciary could consider whether potential harms to participants who might misunderstand the information might outweigh potential benefits to those who might understand and might use the information. (Even if a good explanation of a rate-of-return approximation could be furnished, some plan fiduciaries believe that the display is unnecessary for a participant who would understand the information, and useless or even harmful for a participant who wouldn’t understand the information.) While smaller plans might have fewer good choices, there’s always some choice – even if that’s pushing a recordkeeper to improve its services, or finding another service provider. The one thing that’s not acceptable is for a plan administrator to abdicate responsibility for individual-account statements. ERISA § 105(a)(1)(A) makes account statements the plan administrator’s duty. ERISA § 105(a)(2)(A)(iii) requires that a statement “be written in a manner calculated to be understood by the average plan participant”. ERISA § 404(a) calls a plan administrator to act diligently and as a prudent expert would in carefully considering what is or isn’t helpful for an “average” participant. A fiduciary can’t delegate to a non-fiduciary. And while service providers can offer tools that plans might want, they should design them to let the plan fiduciary be in charge. If our society’s pensions are provided from participant-directed investments for individual accounts, it’s time for us to care about building good “train tracks”, and to recognize that the information of an individual account is itself part of a plan’s benefit.

The method that David Rigby describes is in use with some recordkeepers. (Some furnish it regarding a year and a quarter.) A few observations: If a plan fiduciary chooses to furnish this information, the same statement should include a plain-language explanation of the formula, why the illustrated return “rate” is only an approximation, why that illustration likely doesn’t match a “rate” that could be computed by counting the actual flows of the account, and the conditions under which the illustration might or might not closely approximate the account’s return. If a statement includes any investment-return information, the same statement should include a plain-language explanation that the past isn’t an indication of the future. To try to avoid the mind-numbing haze that comes from something that looks like “disclaimer” language, a plan fiduciary should write this with an emphasis and style that makes it noticeably different from what most securities people write. Even if the plan fiduciary is certain that participants will ignore all explanations, it’s still worth doing. If a plan fiduciary volunteers to furnish information that’s not required by law, its fiduciary duties require it to communicate carefully – with a prudent expert’s appreciation of the possibility that a participant could be misled or otherwise harmed by information that isn’t sufficiently explained.

As you already suspect, you'll want to turn your mind to the super-specialized world of governmental plans. If you don't already have it, Governmental Plans Answer Book [Aspen Publishers] is the source you're looking for. It explains, in Q&A form, governmental plans to a practitioner whose grounding is with nongovernmental qualified plans. The citations are thorough, and include off-Code sources. Also, consider that Federal tax law is not the only law that's relevant to your questions; State law governs what a municipality may, or must not, do in providing or maintaining a retirement plan.

Assuming all the facts you described (and the absence of any that would support the decision as prudent and diligent), the breaching fiduciary might want to reevaluate his or her business decision after understanding that he or she bears uninsured personal liability. (For many, such an evaluation would next turn on the decision-maker’s perceptions about the risk of detection.) Concerning a fidelity-bond insurance contract, the insurer would deny coverage, saying that the situation described isn’t the kind of theft loss that the contract covers. (And if any coverage is provided, the insurer may pursues its rights against the wrongdoer.) Concerning a fiduciary liability insurance contract, even a contract with the fewest possible exclusions typically provides no coverage to an insured who personally benefited from the breach alleged. Beltane, if you’re a practitioner who would touch the assembly of the plan’s Form 5500 or financial statements at any turn, consider how to protect your engagement. Even if you’ve done a good job of making sure that you’re not responsible, consider asking your lawyer whether you should (or shouldn't) make and keep evidence that you warned the plan administrator that he, she, or it should report prohibited transactions and fiduciary breaches. And remember that each prohibited transaction is continuing (until the plan is restored) and there’s a continuing fiduciary breach until the plan fiduciary takes prudent action to get the plan’s restoration from those involved in the prohibited transactions.

Assuming the IRA holder requests a distribution .... If a distribution consists only of a delivery of worthless property, the instructions to Form 1099-R make clear that a report, while not required, is permitted, and may show a distribution amount of $0.00. See page 7. Some practitioners consider doing a "zero" 1099-R a good idea because it creates a record that one could use as evidence of the delivery, and, if it was the only investment, the end of the account. If you decide to do this, check your tax-reporting software: some include an assumption that zero can't be a distribution amount, and it might take a little time to figure out an override.

Without considering anything of what the plan fiduciaries ought to be thinking about, might the TPA (assuming it’s confident that it’s a non-fiduciary) choose to provide the service, if paid for, of sending whatever writing the plan administrator has composed to whatever audience it instructs - while carefully reminding the client that the TPA hadn’t been asked to, and didn’t, advise the client about any effects of delivering that writing. Your query asks: “What are the inherent dangers of doing [a notice the way the client suggests]? If the “client” already has said that it doesn’t want to pay for records work, how likely is it that they’ll pay for advice? Please understand that this post doesn’t express a view about to whom a default-investment notice should be sent or what a notice should or shouldn’t say. That’s a set of questions that a plan fiduciary should carefully consider by prudently considering the facts, circumstances, expenses, and needs of a particular plan. The solution that’s the right answer for one particular plan might not be for a different plan.

Beneficiary is a minor While nothing in ERISA or the Internal Revenue Code precludes a retirement plan from paying a distribution to a minor, many plan administrators prefer to pay a minor’s conservator, natural guardian, or UTMA custodian. Why? A payer wants to be sure that a payment is a satisfaction of the obligation to pay the benefit. Ordinarily, a beneficiary’s deposit or negotiation of a check that pays a retirement plan distribution is the beneficiary’s acceptance that the payment satisfied the claim under the plan. A minor is a person still young enough that he or she can’t make a binding contract. At common law, the age of majority was 21. Now, all but three States’ laws end a person’s minor status at age 18. Before a child reaches age 18 (or the other age of competence to make contracts), his or her conservator may disaffirm an agreement or promise the minor made. After a child reaches age 18 (or the other “full age”), he or she may disaffirm an agreement or promise he or she made before he or she reached the age of competence to make contracts. A typical payer won’t take the risk that paying a distribution isn’t a satisfaction of the plan obligation. Thus, payers usually are unwilling to pay a plan’s benefit to a minor. To facilitate payment in these circumstances, most plans permit payment to a minor’s conservator, guardian, or Uniform Transfers to Minors Act custodian. If a participant named a minor as a beneficiary (rather than naming as beneficiary a trustee or custodian), a typical payer is likely to honor a claim made by the child’s conservator or natural guardian. As always, a plan administrator should read carefully what the plan says, and, if the right administration isn’t obvious, get its lawyer’s advice. Beneficiary is not a U.S. person If a retirement plan distribution is payable to a foreign person (such as a nonresident alien), a withholding agent must withhold 30% for U.S. Federal income tax unless the withholding agent has proper documentation (such as a withholding certificate on Form 8233 or the correct form in the Form W-8 series) that it properly relies on to treat the payment as made to a beneficial owner who is a foreign person entitled to an exemption from, or a reduced rate of, withholding. Detailed rules govern the circumstances in which a withholding may or must not rely on the distributee’s or payee’s certificate. See 26 U.S.C. §§ 1441-1443; 26 C.F.R. §§ 1.1441-1 through 1.1441-9, 1.1443-1. The United States has an income-tax treaty with the United Kingdom. A distributee who’s entitled to claim that treaty’s protection likely qualifies for an exemption or a reduced rate.

The publisher provides this website and its message boards without asking practitioners to pay any fee; instead, advertising supports this website. If we want that to continue, it's business-smart to use the advertisements. So a good place to start would be this website's advertisements, including those at benefitslink.com/software.

Yesterday, I looked at this question for a Delaware corporation, and found that Delaware law is favorable to allowing a general corporation that is not a bank or trust company to serve (without compensation, of course) as the trustee of a qualified retirement plan for the benefit of the corporation's employees.

I guessed wrong on the software's rules; here's the plaintiff's complaint. LaRue_complaint.pdf

Here's the plaintiff's complaint, and the defendants' answer. DeWolff_answer.pdf