BTG

Has anyone seen any recent discussion on how the DOL is interpreting "the earliest date on which the contribution can reasonably be segregated from the employer's general assets" or what factors they look at? I have heard one factor is how long it takes the employer to remit FICA contributions. Any other relevant considerations that people have seen? Thanks. Note: This particular plan is not a small plan eligible for the 7-day safe harbor.

From a practical standpoint, I completely agree with you: Loans are an administrative hassle, administering them for non-active participants is even worse, and most alternate payees just want to take their money and run. Unfortunately, I can't advise my client to accept a QDRO with potentially problematic provisions under the assumption that the alternate payee will take an immediate distribution and they won't come into play. The first paragraph of your response prompts an interesting question though: Would it really be necessary for a plan to expressly state that an alternate payee is entitled to a loan for that to be the case? It is my understanding that an alternate payee is treated as a beneficiary for these purposes. See, e.g., Page 14.29 of Sal Tripodi's ERISA Outline Book (2009 version). Based on this understanding, if a plan were to provide for loans to "all participants and beneficiaries," without further limitation, that plan would inherently provide for loans to alternate payees. On the other hand, if my premise is flawed, then perhaps this whole issue is moot.

Presumably from the plan document and the QDRO... Am I correct, then, in summarizing your position as follows? Without the QDRO, the alternate payee does not have any rights. Therefore, the alternate payee only has whatever rights are granted by the QDRO. If the QDRO states that the alternate payee cannot take a loan from his/her portion of the account, no right is being taken away from the alternate payee, because the alternate payee couldn't have taken a loan prior to entry of the QDRO. I can certainly see the merit to that argument. However, consider the situation from this perspective: If the QDRO is approved, there will be many alternate payees with accounts held under the plan. All of them can take loans from their accounts, except for this one, whose QDRO says that he/she can't. Couldn't one argue that adherring to this QDRO provision would conflict with the plan's terms? I remember seeing some recent litigation (perhaps the Kennedy decision?) where the court found that the plan document controls over extraneous agreements between parties to a divorce. (Granted, the divorce decree in Kennedy was not a QDRO.) In addition, consider the following excerpt from DOL Advisory Opinion 89-30A: Wouldn't approving this QDRO also violate the "reasonably equivalent basis" standard by denying loans to one alternate payee?I appreciate the responses... I can see both sides to this one.

QDROphile, DOL Advisory Opinion 89-30A permits loans to be restricted to parties in interest, but surely you would agree that it does not require them to be restricted in this manner. Here, I am dealing with a plan that does not restrict loans to parties in interest. Under the terms of the plan, an alternate payee would be able to obtain a loan. The question is whether that right may be taken away by a QDRO.

I'm reviewing a QDRO for a 403(b) Plan. The Plan permits loans. The QDRO states that the alternate payee cannot obtain a loan. Is it permissible for a QDRO to prevent the alternate payee from obtaining a loan from his share of the account?

Church plans are not subject to the anti-alienation requirements of Code Section 401(a)(13) or ERISA Section 206(d). However, many voluntarily include language prohibiting a participant's benefit from being assigned, garnished, etc... Can anybody think of any problem with a church plan that generally prohibits such alienation being amended to permit a participant's benefit to be garnished in the limited situation where the purpose was provide restitution to the plan or a particpating employer for a crime? Thanks.

I don't recall anything in Rev. Proc. 2007-44 that provides a special remedial amendment cycle for church plans. It is my understanding that they file based on the last digit of their EIN like most other plans.

Has anyone seen any authority explicitly requiring an annual allocation of forfeitures in a 403(b) Plan? There is a host of authority in the qualified plan world (the most frequently cited being Rev. Rul. 80-155). I have no reason to believe the IRS would take a different position with respect to 403(b)s, but I'm wondering if anyone has seen the issue directly addressed. Thanks.

This has been resolved. See my duplicate post in the Retirement Plans In General Forum: http://benefitslink.com/boards/index.php?showtopic=47461

Update: I just got off the phone with the Office of General Counsel. Apparently, there is no official procedure for requesting an opinion letter (I find that odd). Instead a written request should be sent to: Office of the General Counsel PBGC 1200 K Street NW Washington, DC 20005 It should be addressed to the General Counsel (who is currently Judith Starr), and include all of the relevant facts and any legal authority you want them to consider. He also said that it takes "at least several months." I still find it odd that they haven't issued any letters since 2002. Also, I just got a call from another individual who suggested that, depending on the issue, it might be better to send it to the Office of the Chief Counsel, and that the two departments would coordinate. I suspect that a letter addressed to either would eventually yield the same result.

Thanks David. I did actually try both of those avenues before putting up my original post. Unfortunately, no luck so far... Still waiting to hear back from the OGC though. I did notice that there are no letters after 2002 in the archive of PBGC Opinion Letters (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/content/page15645.html). They didn't stop issuing them, did they?

Could anyone point me to guidance on the procedure for requesting an opinion letter from the PBGC? This seems like it should be a very simple piece of information to obtain, but I can't find anything on it. Thanks!

Could anyone point me to guidance on the procedure for requesting an opinion letter from the PBGC? This seems like it should be a very simple piece of information to obtain, but I can't find anything on it. Thanks!

In general, an asset sale will trigger withdrawal liability, while a stock sale will not. What if Company A sells certain assets (in this case real estate) to Company B, prior to Company B purchasing all of Company A's stock? My feeling is that this would still be a stock sale and would not trigger withdrawal liability, particularly where Company A's remaining assets at the time of the stock sale are more than sufficient to cover any potential future withdrawal liability. Of course, at some point the assets transferred in the initial transaction could be so extensive that this structure is being abused, but that seems to be where ERISA 4212© would come into play. However, I have not been able to find any example of a court or arbitrator going through such an analysis. Any thoughts?

Has anyone examined the issue of whether church plans are required to provide an actuarial increase to participants who work past normal retirement? See 411©(3) and 1.411©-1(e). Obviously, Section 411 doesn't apply to church plans. However, they are subject to the ADEA, which incorporates a number of the Regulations issued under Section 411.

Has anyone heard anything more about this impending guidance? Also, my impression has been that the notice requirement is geared more toward plans converting to church plan status, as opposed to existing church plans. Is that consistent with others' understanding?

Has anyone seen any guidance on how to handle missing participants in an ongoing defined benefit plan? I'm having a surprisingly difficult time finding any. There seems to be a lot out there on DCs and terminating DBs, but nothing specifically applicable to ongoing DBs. I would think the search methods for DC plans set forth in FAB 2004-2. However, if the participant is not found, the distribution options aren't feasible in the DB context. What should be done when missing participants start hitting their required beginning dates? Thanks!

Thanks guys. As much as I was hoping for a different answer, I have to agree with your analysis.

Assume a significant failure that goes back more than two years. Clearly the plan sponsor is ineligible for SCP, and is required to use VCP to correct. Question: What are the consequences if the plan sponsor uses SCP anyway? Would the plan technically be disqualified even though the error was corrected? (For this particular error, the substantive correction method is set forth in the Rev. Proc.)

Opinions seem to vary widely on how to properly apply Section 415 to DROP accounts. However, according to my research it appears to be generally accepted that, where the DROP accounts are credited with actual earnings, the DROP account is treated as a separate defined contribution plan for 415 purposes under Section 414(k), and is therefore subject to the annual addition limits in 415©. My question is: Would both the monthly employer contributions and the earnings credits be subject to the 415© limitations? Or would the monthly employer contributions be treated along the lines of plan-to-plan transfers, and not counted as annual additions for purposes of 415©? Alternatively, would anyone care to challenge the premise on which the question is based (i.e. that this would be treated as a separate DC plan)? Would your opinion change if earnings were credited at the entire plan's actual earnings rate? What if there was also a minimum guaranteed rate of return? Any and all thoughts are appreciated!

This question specifically relates to the definition of "eligible charity plan" in Section 202(b)(2) of the new DB funding relief bill, but I think the issue and the answer are broader than that. A number of provisions in the Code or ERISA refer to a plan that is "maintained by" an employer. What does it mean to say that a plan is "maintained by" an employer in a controlled group or affiliated service group setting? Would it be enough that an employer's employees were participating in the plan, or that the cost of those participants' benefits was charged back to the employer by another member of the controlled group sponsoring the plan? Must the employer have adopted the plan as a participating employer? What if the employer has adopted the plan as a participating employer, but only the main plan sponsor has the authority to make amendments? Any thoughts are appreciated. Thanks.

As it turns out, I found the answer to my own question. Basically, since HEART provides that individuals receiving differential wage payments are treated as employed by the employer, these payments aren't post-severance compensation at all. Thus, the two provisions don't actually conflict. (However, HEART probably rendered 1.415©-2(e)(4) irrelevant.) Sungard has a good discussion of this issue here: http://www.relius.net/News/TechnicalUpdates.aspx?ID=409.

Treasury Reg. 1.415©-2(e)(4) permits, but does not require, salary continuation payments to be included in 415 comp. Does HEART's requirement that differential wage payments be included in 415 comp negate the voluntary nature of 1.415©-2(e)(4)? Is there some difference between salary continuation payments and differential wage payments that I'm missing? I've seen a number of discussions of the impact of this HEART requirement, but none that contain any discussion of its impact on 1.415©-2(e)(4).

Found them: http://benefitslink.com/qa_columns/plan_defects/archive/ Google is truly a powerful tool.

I have a client with a similar issue. Are these Q&As still available anywhere? I didn't see a "correcting plan defects" column.