J Simmons

Good info, mjb. Do you know if a state agency created per 42 USC 666 may not only be named the actual payee in a QDRO, but also require payment from the plan sooner rather than later? Or may the alternate payee postpone payout and the 666 agency's eventual receipt of it? (To number this provision 666, the codifier must have owed child support!)

Inquiry minds--and the ABC--want to know. It's a well drafted set of questions. I hope the IRS can draft as clear and concise answers.

Did the NHCE make any deferrals? Did the NHCE know of the opportunity?

Larry, do those regs apply to deposit accounts despite no 'product or service', or is the depositary aspect of such accounts provide considered to be the necessary 'product or service'?

Since it could be that the grant of the non-vested stock nonetheless is a beneficial interest, I would say file the Form 4, both now and when the vesting occurs, since that is when there might be a pecuniary change.

What does a plan provide if not a product or a service? Does providing a future benefit fall outside of that ambit? Or is a service provided, such as a savings vehicle and income tax deferral?

I second GBurns comment, and do not even think the 409A issue was a sidetrack. Chaz in the OP asked two questions, one was whether HSA contributions could be made to a former employee in 2010 and 2011 who terminated in 2009. The second one asked for any unique issues that the employer should be aware of. Sieve's raising 409A was a good service to Chaz, and responsive to his OP.

Why is your writing him a check/giving him cash when the two of you agree to it easier than him writing you a check/giving you cash when the two of you agree? When the two of you do not agree, he who already has the benefits keeps them. It seems to me that the even split, what your mother had in mind to do with her remaining benefits, is more equitable. That seems more complicated than easier. Are you in a lower marginal bracket than your brother? Are you younger than your brother? What is the sophisticated 'chess' game being played? This is the easier way?? Seems you're going the complicated route.

Who does? My reference to -1(b)(9)(v) was not to -1(b)(9)(v)(B) but to -1(b)(9)(v)(D) and (E) as a possibility, in addition to -1(b)(9)(iv). The HSA contributions clearly could not be under -1(b)(9)(v)(B) as those contributions are not 213 expenses. Maybe you are more 409A nuanced than you're willing to admit.

As an ERISA practitioner advising employers, I see the Kennedy decision as a gift (building on the Englehoff decision). If the employer specifies in writing a procedure for employees and beneficiaries to give clear instructions, then the plan administrator may ignore those efforts that do not follow that procedure. This type of certainty is something for which most clients yearn. This concept should apply not only to designating beneficiaries, revoking designations, and disclaiming benefits, but also to procedures for electing deferrals and directing investments, as well as procedures for handling orders received to determine if they are QDROs.

409A? Oh, yea. But for a 2009 separation from employment, HSA contributions in 2010 and 2011 might not be a deferral of compensation for 409A purposes. See Treas Reg § 1.409A-1(b)(9)(iv) and (v).

Shoulda, coulda, woulda.

Hey, Larry, I would sum up what the Supreme Court did in the Kennedy case as noting or ruling that: 1-The DoL has vacillated on whether all disclaimers would violate the anti-alienation requirement, but currently is of the position set forth in #2 below. 2-A plan may allow disclaimers of plan benefits without violating the anti-alienation requirement. 3-The anti-alienation rule would be violated if the plan honored an attempt by the disclaimant to direct where the benefits would then go (other than to the next in line under the plan’s default terms or the employee’s successive designation). 4-The plan fiduciaries are required to implement the plan as written, including specification of ‘the basis on which payments are made to and from the plan’. 5-The successor beneficiary’s claim to benefits depends on the terms of the plan, “a straightforward rule of hewing to the directives of the plan documents that lets employers ‘establish a uniform scheme, [with] a set of standard procedures to guide processing of claims and disbursement of benefits.’” 6-By giving a ‘plan participant a clear set of instructions for making his own instructions clear, ERISA’ obviates the need for any ‘enquiries into nice expressions of intent’ or assessing any ‘federal common law of waiver’, allowing the plan administrator to simply act in accordance with the plan documents and instruments—and ignore documents and acts that do not measure up to that ‘clear set of instructions’—thereby avoiding double liability. 7-The Supreme Court did ‘not address a situation in which the plan documents provide no means for a beneficiary to renounce an interest in benefits.’ Footnote 13. Which is the situation of the Corbel prototype (and the prototypes of some other document providers too). I'm wondering if you saw anything differently than these 7 points.

It depends on what the plan documents provide, but I would be surprised if they specified that an accelerated vesting for change in control applied to post-change accruals as well as pre-change accruals.

Sieve, what is the range you've seen? I've not seen more than $250, but that was just for the prototype, lead documents, not the individual adoption agreement or other documents specific to the employer.

Good observations, BG5150!

What do I think? I think that by its terms, IRC § 2518 applies to Subtitle B, Estate and Gift Taxes (IRC §§ 2001-2801), and not Subtitle A, Income Taxes (IRC §§1-1563). I think that if the Corbel document specified IRC § 2518 qualifying disclaimers would be honored by the plan, as the DuPont plan did by reference, then the plan administrator would need to honor disclaimers meeting the requirements of Treas Reg § 25.2518-2. I think that if the plan using the Corbel document does not also have adopted a written policy specifying that the plan will honor disclaimers (since it appears that the Corbel document does not mention them either way), the successive disclaimer estate planning could be thwarted by the Plan Administrator choosing to prudently ignore all disclaimers due to the lack of mention and out of concern that if paid to the next in line beneficiary, the one that attempted the disclaimer could later change her mind and or her estate assert a claim against the plan that the benefits are due and owing despite the earlier disclaimer--sort of like how the Kennedy situation unfolded. I think I would advise the estate planning client that we ought not to pin his planning on what we hope the plan administrator of a Corbel documented plan (with no written disclaimer policy) might do with an attempted disclaimer. I think I would advise a plan administrator of a Corbel plan that receives an attempted disclaimer to immediately adopt a written policy to cover the issue of disclaimers not covered by the Corbel document.

I think you are okay. The regs say 'not later than'. No front end for a timeframe is specified. See DoL Regs § 2590.606-1(1)(i).

The failure is an operational one. To correct using SCP, the plan must have had established practices and procedures designed to keep the plan compliant. If not, then VCP is necessary to correct. If the plan does have those established practices and procedures, this failure was likely significant given how many years it spanned. A signficant operational failure may only be corrected by SCP if corrected within 2 years after the year of the failure. That appears to be inapplicable and pointing also to VCP being necessary. You do have to correct both the years that are yet open and those closed by the statute of limitations. Section 6.01 of Rev Proc 2008-50.

Thanks, K2retire. Kennedy v Plan Administrator of DuPont Savings is the case where the ex-wife received payment and the daughter (i.e., the estate) sued. In that case, the Supreme Court noted that the QDRO there was a nullity because it did not award an interest in a portion of the employee's benefits to the ex-wife. The divorce order labeled a 'QDRO' did not serve as an adequate waiver of the ex-wife's interest as the named death beneficiary. That is because the 'QDRO' did not satisfy what that plan required procedurally of waivers. The Supreme Court observed that a qualified retirement plan is not required to permit waivers. For those plans that do permit waivers, the plan must not allow the waiving person to direct where the waived benefits will go. Waiving is okay, but the waiving person directing where the waived benefits would go would if honored be a violation of the anti-alienation requirement that applies to ERISA pension plans. I provide estate planning services in addition to ERISA legal services. A common technique we use to permit post-death manipulation to whom the remaining plan benefits will go is naming every conceivable possibility in successive order of contingencies following the prime beneficiary. Then we do disclaimers to the point we get the benefits to go to whom it makes most sense. The problem I have is that right now I am assisting an employee plan his estate and the plan he participates in uses the Corbel prototype. I cannot locate in it where it permits waivers (or disclaimers). Does that mean that the plan would nevertheless pay to the primary beneficiary if she survives the employee's death, even if the primary beneficiary tried to disclaim that benefit right after the employee dies? Does Corbel's new DC Prototype (EGTRRA class one) have a provision for waivers (or disclaimers)? If not, this will greatly limit the flexibility that successive disclaimers have permitted in the estate planning context if the person's benefits are in a plan that is Corbel documented. Any thoughts are appreciated, particularly if anyone can direct me to where in the Corbel DC Prototypes, GUST II or EGTRRA, where waivers/disclaimers are permitted.

The plan is obligated to pay the benefits promised by the plan. The plan may specify practical limits on the presentation and perfection of claims, and I suppose might even be able to specify when an uncashed check issued by the plan in payment of benefits would go stale. If so, that should be noted on the check itself (such as "Not valid after 180 days"). However, under 3-309 of the Uniform Commercial Code, the issuance of the check suspends the plan's obligation for the promised benefit. If the check is dishonored, the obligation is no longer suspended, and the employee/beneficiary (or medical provider) might be able then to bring legal action against the plan to enforce the underlying benefits obligation if not simply the payment obligation on the check itself (i.e., there was no legal basis for dishonoring the check). If in the meantime that the health service provider has been sitting on the old check issued to that provider the plan has paid the plan member, then the plan could put a stop payment on the old check to the provider. To prevail against the plan, the provider would have to show that it relied on promises of payment directly from the plan before providing services. Otherwise, the provider would have to look to its patient or responsible party (parent or signor) for payment.

As for whom the plan administrator would be, that is typically specified in group health policies to be the employer. Nevertheless, you should check the specific group health policy at issue, as well as any ERISA wrap document you may have. In the absence of any specification, then the plan administrator is the employer. ERISA § 3(16)(A).

The plan administrator would be responsible for providing notices that are required to be provided to EEs if the plan is subject to ERISA. If the plan is subject to ERISA, then a notice is required 'material reductions' (those changes that "independently or in conjunction with other contemporaneous modifications or changes, would be considered by the average plan participant to be an important reduction in covered services or benefits under the plan"--DoL Reg § 2520.104b-3(d)(3)(i)). The notice of a material reduction is required within 60 days of that reduction being adopted, or alternatively as part of communications provided in regular intervals of no more than 90 days. DoL Reg § 2520.104b-3(d)(1) and (2). If the plan is not subject to ERISA (e.g., governmental employer), then it would be a matter of state law and any contractual provisions between the ER and the insurer.

I've heard of ministers who conscientiously object to participating in Social Security being able to opt out on an individual basis, I think using Form 4361. But never heard of employees of a local government that opted out of Social Security being able to opt-in.

The plan might have retiree health benefits that the parent wants to make sure are honored despite sub going out of business. The parent might be absorbing some of the business operations and employees of the sub that is going out of business.