Peter Gulia

Before Vanguard exited its “Individual 401(k)” business, Vanguard sent a customer a “beneficiary verification” that included this information: Beneficiary To the person I am married to at the time of my death Backup Beneficiary Benjamin Brother 50% / Roberta Relativebyaffinity 50% Here’s what I don’t know: Could the lingo “To the person I am married to at the time of my death” have resulted from Vanguard recording exactly what the participant typed in the website? Or had a participant tried to type in that phrase, would Vanguard’s system have rejected the entry because it was too many characters or because it seemed not to be a name? Did Vanguard set up that lingo as a programmed choice a user could click on? Did Vanguard set up that lingo as a plug-in for a situation in which the participant declined to name a beneficiary and Vanguard’s records about a participant showed the participant as having a spouse? In the circumstances I’m advising about, whether “To the person I am married to at the time of my death” resulted from the participant’s considered writing (which might be plausible because the participant had filed a divorce petition, and was lawyer-advised), or partly or wholly because of something Vanguard set up might matter in how the retirement plan’s administrator interprets the participant’s “backup” or contingent beneficiary designation. BenefitsLink neighbors, thank you for your gracious help.

An employer has a § 403(b) plan, elective deferrals only, with only TIAA-CREF. The employer is considering a different provider for ongoing § 403(b) elective deferrals. The employer assumes it lacks power to remove assets from TIAA-CREF. Even if it might have some such power, the employer would be reluctant to interfere with an individual’s choice to continue with TIAA or CREF for previously accumulated assets. If it matters, this governmental plan cannot be ERISA-governed, no matter what provisions or restrictions the employer might set. If an individual considers rollovers, if 59½, or § 403(b) transfers from TIAA or CREF to the new provider: What exit expenses will that bear? Is there a lock-up on all or some of the TIAA credited-interest contracts? What else should an adviser to this employer or its participants tell them to worry about?

A fiduciary might consider whether to delete or display terms not used in any of the plan's communications and also not used in any of any designated investment alternative's communications. I can imagine reasoning in either direction.

If the MEP also is a PEP, consider that a pooled-employer plan must “designate a named fiduciary (other than an employer in the plan) to be responsible for collecting contributions to the plan[,] and [must] require such fiduciary to implement written contribution[-]collection procedures that are reasonable, diligent, and systematic[.]” ERISA § 3(43)(B)(ii). Even without that statutory command, a non-PEP multiple-employer plan might have a fiduciary other than the participating employer responsible to collect contributions. The participating employer might ask the plan’s administrator or, if distinct, a contribution-collection fiduciary about that person’s procedure for collecting a past-due contribution and adjusting individual accounts to make good the elective deferral and an investment-opportunity loss.

Is this plan ERISA-governed? For example, if all participants are self-employed individuals (and the plan never covered an employee), the plan might not be ERISA-governed. And whether ERISA or a State’s law governs the plan, consider how remedies might differ regarding a partner. When a participant who is an employee has an amount intended as an elective deferral taken from her otherwise due wages and the amount is not promptly contributed to the plan’s trust, the participant might be due a plan investment adjustment. But an amount not contributed as a partner’s elective deferral might not have been segregated from the partner’s income or capital interests under the partnership agreement. That might affect related measures partnership values, plan investment values, and interacting opportunity losses and gains. Yet, consider also full correction of nonexempt prohibited transactions. If there is a correction for the retirement plan, the plan’s administrator might want its TPA’s help in coordinating with the employer’s accounting for partners’ income interests and capital interests. This is not advice to anyone.

A fiduciary assembling an ERISA rule 404a-5 disclosure to participants and other investment-directing persons plans to use a “Sample Glossary Of Investment-Related Terms For Disclosures To Retirement Plan Participants” collected by The SPARK Institute, Inc. and other trade associations and related charities. The document the fiduciary has is labeled “Version 1.01 April 26, 2012”. A visit to https://www.sparkinstitute.org/resources/best-practices-industry-standards/ shows that 2012 version. But is that first version still the current version? If not, what is the current version? BenefitsLink neighbors, thank you for your gracious help.

Recognizing some ambiguities of ERISA § 104(b)(3) or of 29 C.F.R. § 2520.104b-10, I’m curious: What conventions do designers of software for administering health plans use to set whether a former participant, a former beneficiary, a former alternate recipient, or a former continuee routinely receives a summary annual report on the plan-accounting year in which one was not former?

DSG, for an analysis of some (not all) of the issues, read or re-read In re Marriage of Janet D. & Gene T. Shelstead, 66 Cal. App. 4th 893, 78 Cal. Rptr. 2d 365, 22 Empl. Benefits Cas. (BL) 1906 (Cal. Super. Ct. 1998). Interpreting ERISA § 206(d)(3) and applying § 206(d)(3)(K), the court reasoned that an order can be a QDRO only if it restricts its alternate payee—including a successor-in-interest to an original alternate payee—to a spouse, former spouse, child, or other dependent of the participant. While a California court’s opinion sets no precedent for any Federal court, some judges might adopt or adapt Shelstead’s reasoning. Some plans’ administrators might follow Shelstead’s, or even harsher, reasoning regarding a would-be alternate payee who died before the order one hopes is a QDRO is made. For an order directed to an individual-account (defined-contribution) retirement plan, a plan’s administrator might be less likely to deny QDRO treatment if the order, instead of providing for a payment to some named person other than the decedent, provides that a separate interest not paid or distributed before the alternate payee’s death is distributable to the alternate payee’s estate. This is not advice to anyone.

The Treasury rule sets no definition for the phrase “primary residence”. So, unless the plan’s governing documents define the phrase, an administrator must form its interpretation, doing so with exclusive-purpose loyalty and no less prudence—including care, skill, and diligence--than ERISA § 404(a)(1) requires. Even if one reasons that an interpretation logically consistent with Federal laws generally, or with Federal tax laws particularly, should be preferable, that reasoning might yield no obvious conclusion. The United States Code generally, and the Internal Revenue Code particularly, each has many uses of the phrase “primary residence”. And all those are for a purpose different than deciding whether a retirement plan should allow a participant to invade one’s savings before severance-from-employment. If one interprets the § 401(k)-1 rule’s use of “primary residence” to refer to a common-law meaning, a leading dictionary defines both primary residence and principal residence as “[t]he place where a person lives most of the time.” Residence, primary residence, principal residence, Black’s Law Dictionary 1568 (12th ed. 2024). But that one-phrase construct does not say what measure of time to look to. Is it the most recent year? The most recent five years? Ten years? One generation? A whole adult lifetime? Or the time since the most recent establishment of domicile? A plan’s administrator might form the best interpretation it can while not incurring an unreasonable expense. This is not advice to anyone.

If the plan’s administrator denies the hardship claim, follow ERISA § 503 and the plan administrator’s claims procedure. That includes giving a denied claimant an opportunity to present evidence and legal argument to support one’s claim. That might include showing facts and explaining reasoning about which place is the participant’s primary residence. If hardship claims are on a § 401(k)(14)(C) self-certifying method, does the plan’s administrator have actual knowledge that the participant’s certification is false?

TPApril, this might not answer your question aimed at what might be one way to appease a participant; but consider, if the plan’s trustee might be willing to pay in currency: What place would the administrator tell the participant to go to? A bank lobby? If not, what are the security arrangements? What steps would the plan’s administrator and trustee use to satisfy themselves, prudently, that a person who appears is the participant? What compare-to documents does the administrator have to check that a person is the participant? To the extent that the plan’s administrator uses the employer’s records, were all or some records destroyed after the employer’s records-retention period ended? Who will do the work of identifying the participant? (Some might be unwilling to be in the participant’s presence.) Will the plan’s trustee or administrator require the participant’s written receipt-and-release? Will the plan’s trustee or administrator require that the participant sign, and acknowledge, the receipt-and-release in a notary’s presence? How confident are the plan’s fiduciaries that a court would find that the receipt-and-release is sufficient evidence to prove that the distribution was paid. Will a bank’s convenience fees, the notary’s fee and add-on convenience fees, and other expenses of arrangements to pay the participant in currency be charged against the participant’s account? If the participant’s account balance is not paid in a single sum, are the plan’s fiduciaries ready to repeat the pay-in-currency arrangements every year? These are only some of many questions.

Yes, as R Griffith suggests. BenefitsLink’s generous neighbors, including Patricia Neal Jensen, don’t want a BenefitsLink reader to think there might be a nongovernmental § 457(b) to § 403(b) rollover. Not every reader would have discerned that Patricia Neal Jensen likely meant to describe a transaction involving nongovernmental § 457(b) plans regarding both transferring and assuming sides of a transfer. Further, while I’m aware there’s a business usage of rollover that’s wider than the tax law meaning, I find it more helpful to think about a transfer. Using a distinct word might remind us that, if the transferring and assuming plans so provide, one employer’s obligation is satisfied because the obligation is transferred to the other. (For a nongovernmental employer’s unfunded deferred compensation plan, the obligation is not an obligation of an exclusive-purpose trust.) Returning to WolverineBenefits’ originating post, if establishing a § 457(b) plan for a nongovernmental school’s employees would not set up an opportunity for a § 402 rollover, the school might reconsider the school’s and its to-be-compensated employees’ plan-design preferences.

Beyond Paul I’s caution about whether there was a direct-filing entity investment any time in the reported-on year, consider also: Some people (less detail-oriented than FishOn) use the lingo “mutual fund” without distinguishing between SEC-registered shares of a company or trust registered with the SEC under the Investment Company Act of 1940 and an investment fund of some other kind, including a bank’s or trust company’s collective investment trust fund or another arrangement that might be a direct-filing entity. A plan’s administrator should distinguish, for each investment fund, exactly which kind of fund the plan invests in. Not all reports show the classifications.

I read Internal Revenue Code § 402(c)(8)(B)(v) as including in the defined term eligible retirement plan a § 457(b) plan only if the § 457(b) plan “is maintained by an eligible employer described in section 457(e)(1)(A)[.]” Likewise, Internal Revenue Code § 457(e)(16)(A) provides an exclusion from gross income for a rollover of an eligible rollover distribution only “[i]n the case of an eligible deferred compensation plan established and maintained by an employer described in [§ 457](e)(1)(A)[.]” I don’t see that a school, even if not a qualified church-controlled organization, “still listed as a church[-]related entity in the master list of [Roman] [C]atholic organizations” would be “a State, political subdivision of a State, [or] an[] agency or instrumentality of a State or political subdivision of a State[.]” I.R.C. § 457(e)(1)(A). If a nongovernmental § 457(b) plan is not an § 402(c)(8)(B) eligible retirement plan, how would such a plan be a payer of an eligible rollover distribution? See also IRS, Automatic Rollover, Notice 2005–5, 2005-3 I.R.B. 337, 338 Q&A-6 (Jan. 18, 2005) (“[A] governmental eligible deferred compensation plan described in [§ 457](e)(1)(A) must meet requirements similar to the requirements of § 401(a)(31). . . . . The automatic[-]rollover requirements of § 401(a)(31)(B) do not apply to non-governmental § 457(b) plans.”). Some nongovernmental § 457(b) plans allow a transfer of a deferred compensation obligation from a § 457(e)(1)(B) obligor to another § 457(e)(1)(B) obligor that accepts the obligation. This is not advice to anyone.

I’ve never seen a defined-benefit pension plan participant’s ERISA claim grounded on the participant having received a greater benefit than the plan provided. The Internal Revenue Service might be reluctant to assert a plan is tax-disqualified for a failure to follow the written plan when a Pension Benefit Guaranty Corporation employee requested the deviation (even if it was a deviation, and not an ERISA command). This is not advice to anyone.

To follow this case about whether Congress enacted an appropriations act that includes SECURE 2022: The appeal’s docket number 24-10386 is unchanged; the case’s caption is Texas v. Blanche. The United States Court of Appeals for the Fifth Circuit heard an oral argument on May 12, 2026. The Justice department continued to defend that the House of Representatives’ action on December 23, 2022 was not contrary to the Constitution’s Quorum clause. No precedent is in effect anywhere.

In my view, a plan’s sponsor should not require, or even permit, a plan’s administrator to decide whether an individual’s circumstances fit a deemed immediate and heavy financial need. Instead, a plan should provide § 401(k)(14)’s self-certifying claim as the way a participant gets a hardship distribution.

Even if you’re confident that the documents governing the plan state no provision that could tax-disqualify the plan (and do not omit a provision needed for the plan to tax-qualify): Consider that an IRS opinion letter on preapproved documents warns that it provides no assurance about ERISA’s title I. If the plan is ERISA-governed, the plan’s administrator might consider whether its reading of the plan comports with all commands of ERISA’s part 2 of subtitle B of title I (ERISA §§ 201-211). Treasury rules to interpret similar provisions of the Internal Revenue Code might be persuasive authority to support interpretations of some (not all) provisions of ERISA’s part 2. But, strictly speaking, there is no reliance on IRS-preapproved documents. This is not advice to anyone.

In 26 C.F.R. § 1.401(k)-1, none of the four uses of the phrase “principal residence”, including the one that sets up a deemed immediate and heavy financial need, refers to a definition. 26 C.F.R. § 1.401(k)-1(d)(3)(ii)(B)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(k)-1#p-1.401(k)-1(d)(3)(ii)(B)(2). If a plan’s administrator does not rely on a participant’s § 401(k)(14) self-certifying claim, the administrator may use its discretionary authority to interpret the plan to discern the meaning of a principal residence. Further, an interpretation about excluding from income a gain from one’s sale of her principal residence includes this: “Whether property is used by the taxpayer as the taxpayer’s residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer’s residence may include a houseboat [or] a house trailer[.]” 26 C.F.R. § 1.121-1(b)(1) https://www.ecfr.gov/current/title-26/part-1/section-1.121-1#p-1.121-1(b)(1). Whether a trailer is someone’s primary residence or another residence is a distinct question. This is not advice to anyone.

For a § 457(b) plan to provide an I.R.C. § 402(c)(4) “eligible rollover distribution”, wouldn’t the plan need to be a governmental employer’s § 457(b) plan? Internal Revenue Code (26 U.S.C.) § 402(c)(8)(B)(v) https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleA-chap1-subchapD-partI-subpartA-sec402.htm.

Thank you for catching my word-processing error. Yes, a participant's 2026 Social Security wages from the employer drives whether one is § 414(v)(7)-affected for 2027.

rocknrolls2, the comments suggest that the pension plan’s fiduciaries might have acted incorrectly by commencing the participant’s annuity based on less than the benefit the plan then provided (if no ERISA § 206(d)(3)(H)(i) segregation then was in effect because the plan’s administrator had not received a DRO, or a segregation had ended). How the plan’s administrator mops up the mess calls for some lawyering. This is not advice to anyone.

Jakyasar’s illustration suggests the shareholder-employee’s compensation was $0 for 2025, the measure for whether a participant is § 414(v)(7)-affected for 2026. For 2026, the corporation might not have decided yet how much compensation to pay this shareholder-employee. If a participant’s 2025 Social Security wages from the employer was $0 (and so no more than $150,000), the participant’s 2026 age-based catch-up deferrals elections may be non-Roth. Likewise, if 2026 Social Security wages is no more than $155,000 (est.) for 2026, the participant’s 2026 age-based catch-up deferrals elections may be non-Roth.

From the facts described above, it looks like a delay in beginning payments to the might-become alternate payee does not result from the plan administrator’s breach of its responsibility to administer the plan. Unlike an individual-account (defined-contribution) plan that provides no assurance of the amount of a benefit, a defined-benefit plan promises a specified benefit. A participant (including alternate payees when one or more shares in the participant’s benefit) is entitled to no more than the benefit promised, applying the documents governing the plan. The plan’s administrator might want its lawyer’s advice about whether the court order now submitted is a DRO and, if it is a DRO, whether it is a QDRO. Prudence might suggest getting that advice from a lawyer who is independent of anyone involved in previous advice or decision-making. Further, the plan’s administrator might, in some circumstances, want two distinct lawyers—one to advise the administrator about how to administer the plan now; another for advice about the administrator’s past conduct. Under a doctrine some label the “fiduciary exception”, communications about how a fiduciary administers the plan will lack a useful evidence-law privilege for lawyer-client communications. But confidential communications to advise the administrator personally about how one defends against claims grounded on the fiduciary’s past conduct might get the lawyer-client communications privilege. And even if the administrator wants no evidence-law privilege, it might be imprudent for a fiduciary to rely on advice from a lawyer who faces conflicting, or even potentially conflicting, interests. Does the court order specify that its alternate payee gets interest on what would have been her payments had a QDRO been approved before the annuity starting date? If not, why would the pension plan’s administrator provide something beyond what the relevant court order calls for? Does the plan provide interest or another time-value-of-money adjustment on a missed payment? If not, wouldn’t a DRO that specifies interest be not a QDRO because it attempts to specify a benefit the plan does not provide? In what other ways might the court order be consistent with, or contrary to, the construct that a QDRO cannot specify a benefit not otherwise provided under the plan? Consider, a QDRO specifies an alternate payee’s portion as an amount or as a percentage of the participant’s benefit. ERISA § 206(d)(3)(C)(ii). Consider, ERISA § 206(d)(3)(H)(i) segregates amounts only during a period that begins when the plan’s administrator has received a DRO and ends when the administrator decides whether the DRO is (or is not) a QDRO. And § 206(d)(3)(H)(ii) provides interest on an alternate payee’s portion only to the extent of the amounts segregated during that period. Congress specified a situation for which interest is provided. Does that mean interest is not provided for other situations? At least not if the plan doesn’t provide it? ERISA § 206 (29 U.S.C. § 1056), https://www.govinfo.gov/content/pkg/USCODE-2024-title29/html/USCODE-2024-title29-chap18-subchapI-subtitleB-part2-sec1056.htm. This is not advice to anyone.

To determine whether a participant is § 414(v)(7)-affected, a retirement plan’s administrator looks to the employer’s Form W-2 wage report of the participant’s wages in the preceding year. 26 C.F.R. § 1.414(v)-2(c)(3)(ii), https://www.ecfr.gov/current/title-26/part-1/section-1.414(v)-2#p-1.414(v)-2(c)(3)(ii). I suspect no one yet has thought much about what retirement plan adjustments might become needed if an IRS examination asserts that a shareholder-employee did not pay herself reasonable compensation. What if a settlement or a proceeding results in redetermining the shareholder-employee’s wages for one or more back years? Could that make a participant § 414(v)(7)-affected for some years? Must or should a retirement plan’s administrator adjust the individual’s account between non-Roth and Roth deferrals? BenefitsLink neighbors, do we concur on these points: ? A nonfiduciary service provider ought not to be responsible for relying on information the plan’s administrator (typically, closely aligned with the employer) furnished or instructed. ? A plan’s administrator ought not to be responsible for relying on the employer’s Form W-2 wage reports unless the administrator knows the employer’s report is false.