J Simmons

In DoL Opinion 92-17A (8/21/1992), the DoL opined that a PA did not need to delve into whether the alternate payee designated in a QDRO was a 'spouse' under state law, called into question because the dissolution of the marriage was an annulment (meaning legally it is as if they were never married) rather than a divorce (meaning they were legally married but the marriage is ended). So I do not think the PA has to review state law issues such as those that would be raised by the re-marriage.

jpod--A state domestic relations court could issue a subsequent order submitted to the PA and found thereby to be a QDRO, possibly impacting the effect of the earlier QDRO. To that extent I agree it would be a matter of state law--whether a subsequent order will or will not be issued. The concern I have for the suggestion you make about the continuing validity of an order previously found to be a QDRO is that it would put every PA on the edge, having to determine before making any payment pursuant to an order having once been found to be a valid QDRO whether a remarriage has occurred and what the effect under state law would be. That is the type of uncertainty for PA that the QDRO statutes were designed to avoid. Once it is determined to be a QDRO, I do not think the PA's acting upon it depends any longer on the vicissitudes of state law.

If the 403b contract is one that depends on an employer's plan for its tax exemption (per the 2007 final 403b regs, depends on the contribution history), then the plan limits in-service, pre-age 59 1/2 distributions in accordance with the final 403b regs.

What's the rate in your locale for 15 year mortgages?

The remarriage does not invalidate the divorce, the QDRO nor the fact that each was single until the remarriage. The spouse is yet the alternate payee of the QDRO awarded benefits. The remarriage may mean the spouse is such for QJSA/PJSA with regards to the benefits the employee retained by the employee.

Randy, take a look at the recent decision in Scharff v. Raytheon Co. Short Term Disability Plan, 9th Cir., No. 07-55951

Generally speaking, a money purchase pension plan may only receive employer contributions. However, there are yet some money purchase pension plans established before 1974 that do allow employees to defer pursuant to a 401k feature.

Nope. You have to test the MEP in segments, per control group, affiliated service group and ungrouped employer.

Sounds screwy to me too, k2retire. I.e., like a third party loan. I have not run across this, but I could possibly see how the DoL might have granted an exemption for this type of thing.

Agreed. The 4th Circuit decision nicely dissected the employee issues of ERISA plans from the tax issues over which the IRS has administrative jurisdiction.

No indications that I am aware of, but possible. Apart from the 4th Circuit 3-judge panel perhaps re-hearing, there's the possibility that the employer could request an en banc (bigger) panel of the 4th Circuit take a look, and even U.S. Supreme Court--after all, it decided a plan amendment issue in Schoonejongen v Curtiss-Wright in the 1990s.

Check the U.S. Supreme Court's decision in the DeWolff case. It had some similarity of facts.

The 4th Circuit might be wrong. Regarding reliance, it said The 4th Circuit analyzed under contract law without taking into account that the terms of an ERISA plan usually are not negotiated (CBA plans being the exception). Rather, an ERISA plan is typically a unilaterally formed contract, with its terms merely being disclosed to the EEs. That might be argued to another court on another day in another case as reason for not giving as much weight to the employees' intentions for purposes of contractual mistake (and allowing correction) as courts ought to give in the more typical situation where contracts are formed mutually.

Hi, Peter, I did not see anything in the 37 page opinion of the 4th Circuit in Cross v Bragg about the liability of the actuary/drafter of the plan document, his malpractice carrier or the measure of damages payable. Because the actuary/drafter 'fell on his sword' and confessed his error as part of the ER's effort to get a scrivener's error "bye", I suppose that the measure of damages is all that remains to be settled there.

It should not be too difficult to find a TPA who would take on the role of determining hardships under the 457(b) regs.

Facts: Plan's actuary mistakenly changed the formula in a DB plan from a 'step formula' to a richer 'integrated formula' in 1996. Plan continued calculating and paying benefits under old 'step formula' until it discovered the problem in 2002. It then applied for EPCRS correction; the IRS granted it. So in 2003, the sponsoring ER attempted to 'revise' the documents retroactively. Some EEs, who acknowledged they did not know of much less rely on the error until 2002, filed suit for the richer benefits. The 4th Circuit held that the ER had not put on any evidence of the EEs' intentions at the time of the scrivener's error, and therefore mutual mistake (a contract law doctrine) would not apply. For a unilateral mistake, there had to be some fraud by the other party. The mistake was not mutual; the EEs did not make the same mistake. The mistake was unilateral by the ER, but there was no fraud by the EEs. The 4th Circuit rejected the ER's claim that the IRS approval per EPCRS ought to allow the ER to reform the plan documents: The appeals court gave great importance to what the documents actually provided (error or not) because of the congressional intent behind ERISA that each EE "may, on examining the plan documents, determine exactly what his rights and obligations are under the plan." So it appears that a scrivener's error correction, even if allowed by the IRS, will not save the day for an ER facing claims from EEs. An ER wanting to put the matter to rest completely might want to consider a declaratory judgment action, which would require notice to all the affected EEs. Alternatively, giving the benefits as erroneously promised will solve the matter as well (with an EPCRS filing because the greater benefits were not provided when specified under the plan). Cross v Bragg, 4th Cir Docket ## 07-1699, 07-1755 and 08-1190, 7/24/2009.

I think you're okay as long as IRC sec 127(b)(3) is satisfied aggregating the benefits from the two plan, no one employee benefits more than the $5,250 limit of IRC sec 127(a)(2) and each plan separately satisfies the other requirements of IRC sec 127.

Yes, it makes sense. If she survives the leukemia, and reaches retirement, the two of you will have more expenses than if just you survive to retirement. If she does not, then her IRA balance will help you catch up (as you put it), provided you are the one she has named as the death beneficiary on her IRA at the time of her death.

Proof of the expense of a type upon which the payout is premised (and the amount of the expense) is where I require some third-party generated documentation, such as a receipt or EOB. As for whether the employee requesting the payout does or does not have other financial resources, i.e., is experiencing a financial hardship by reason of the expense, I use the 'deemed necessary' rules as explained on the IRS website and as PensionPro quoted. I do not think the passage from the IRS website should be read to allow plan administration that does not require proof of the expense (type, amount and incurrence) by way of third-party generated documentation.

Sounds like Masteff's earned a JD degree. If the little blue pill is tax-deductible, then why not Halby's expenses?

$ can be withdrawn from an HSA tax-free to pay for health insurance premiums or out-of-pocket medical expenses that meet the definition of IRC section 213(d). So, yes, most vision and dental expenses would qualify. With a limited FSA you can have more tax free dollars. By using a limited FSA while you have high deductible health plan (HDHP) coverage that makes you eligible to make tax-deductible contributions to the HSA, you end up with more tax-free HSA $ for future health expenses than if you did not have the limited FSA and were taking $ out of the HSA during the same year you are making contributions to the HSA, to pay for Vision and Dental. The limited FSA might be used to pay for deductibles, co-pays, co-insurance regarding the Vision and Dental insurance, and for vision and dental items perhaps not covered by that insurance.

When you need a tax attorney that can argue anything without blushing, here might just be the guy. Halby v CIR

Just curious, what advantage are you aiming for by replacing the nonmarketable asset with cash in the IRA (if you could--mjb points out that you cannot)?

Not only that, there were informal comments by IRS personnel about 10 years ago that the policy had to be owned by the employer sponsoring the cafeteria plan or the employee. The college coverage would not be owned by either.

In whose name and how are the accounts titled? It's been a while, but I believe nongovernmental employers that sponsor 457(b) plans cannot have a trust or separate fund earmarked for paying these benefits to the employees. Basically the same as under a 401(a) plan, but only because of provisions in ERISA section 203 that mirror those in the IRC. There should be--ERISA section 402. I don't think a "bad boy" clause is allowed.