david rigby

I'll take a stab at this. Just my hunch: The third-party service provider is exactly that: third-party, not part of the original employment or NQ relationship. The responsibility for upholding the terms of the plan, and for tax withholding belongs to you, as the (former) employer, not to the external vendor. Thus, you should do whatever is necessary to make sure withholding is applied properly. If that means you run it thru your payroll, go ahead. (BTW, logistically, this should not be difficult.) Just make sure you don't inadvertently make this person an "active employee" for any other payroll-generated purposes.

At this link, http://benefitslink.com/index.html, look at "Events"

Before going to any extremes, consider whether there are other "advisors" that might be able to assist. For example, does the sponsor have an accountant or attorney that might be able to offer an opinion? Sure, this is an "end run", but it may produce a better result for the plan, and (indirectly) for the other participants.

Of course, before you resign, you did advise him of the problem, in writing, didn't you?

...in writing.

Just guessing, but it's likely the trustee is not a separate financial institution.

Here's hoping they charge DC plans an annual fee to pay for it! Stupid regulation! Stupid legislation!

While I doubt there is anything definitive, I'm skeptical that permitting such change, even if permitted by the Code, would be in the best interest of the Plan. Most actuaries will cringe at the thought of adding this to any plan. If my client asked about this, I would probably suggest that it's a bad idea. - As SoCal suggests, spouse signoff is important/mandatory. Also, the entire communication process between plan and retiree should be carefully planned. Remember: retirees don't like change, and spouses like it even less. - Don't forget to make sure this does not favor HCE's. - Finally, ask the actuary if this plan provision might lead to an increase in the plan's long-term cost, primarily due to revision of the actuary's assumptions about retirement patterns.

ERISA section 514 (29 USC 1114): http://www.law.cornell.edu/uscode/text/29/1144

I had a similar case last year. We followed the plan document. It is difficult to defend any other procedure.

A couple of thoughts: Sure typing is easy, but punctuation and capitalization are useful to the reader. BTW, if your question is a continuation of an earlier discussion, then appending your question to the original discussion thread is much better than starting a new thread.

At the risk of being obvious, what does the Plan say?

Some people might replace "leverage" and/or "influence" with "average".

Is this information you have shared with the actuary? You ask for a "strategy", but your actuary is better informed than this Message Board, assuming he/she knows all the facts you've presented here.

"Why e.g. is a 401k subject to FICA taxation?" Better answer: because we are talking about what comes out of the plan. Distributions from a qualified plan are not subject to FICA. Note that the employER contribution account(s) in the plan (in the form of match and/or other contributions) are also exempt from FICA taxation when distributed.

Good point. Probably the first task is to verify plan's effective date, which is not necessarily the same as the signature date. If it really is effective 12/19/12, what is the plan's definition of "plan year"? Is there a short first plan year?

In general, FICA taxation applies to "wages". Internal Revenue Code section 3401 defines "wages" as everything except for specific exclusions. The actual language is: "all remuneration ... for services performed by an employee for his employer, including the cash value of all remuneration (including benefits) paid in any medium other than cash; except that such term shall not include..." This section goes on to list several exceptions, one of which is qualified plans.

You have (almost) answered your own question. Distributions from a qualified plan are not subject to FICA. But, since you expressed some doubt, it would be prudent to make sure your plan really is qualified (which is more - much more - than just asking the "salesperson"). Got an accountant? an attorney?

Assuming the term "public plan" refers to a plan sponsored by a governmental entity, I think Code section 414(p)(11) will cover QDRO's for such plans, at least in some circumstances. Note that state or local statute might already require such coverage, making the Code section irrelevant. I've never seen a QDRO of any kind that addressed the question of disability; be very careful about assuming that disability will automatically change any existing court order.

Clearly, yes. The original poster might help his/her client understand that pension law uses separate provisions for "eligibilty to participate" and "eligibility for an accrual".

Generally true. However, it's possible he is thinking of a very small plan?

Yes, let's think it thru, with normal sized typeface please.

ExtremelyConcerned: you posted (essentially) the same message in multiple discussion threads yesterday. Perhaps you would like to elaborate? BTW, are you suggesting that the PA can ignore any responsibility of "acknowledging" of a QDRO in certain cases? Seems to me that's just part of the law and part of the PA's responsibility, but you might have some other thoughts to share.

If the plan is subject to IRC 411d6, that would appear to be an impermissible cutback. Is that how you read 411d6?

Intentionally avoiding a direct answer to your question, it seems proper for you to interview several auditors directly, and fees are a legitimate inquiry. You can learn a lot by interviewing, even from the firms you decide not to hire. It is not necessary to use one of the jumbo firms; I've worked with many local and regional firms; competent auditors can be found in all. In my opinion, continuity is more likely with the local or regional firms. (By "continuity", I mean that the individual auditors may change each year, but is less likely with a local or regional firm.) Experience w/ qualifed plans is very important. Location is usually not a determining factor, but auditor with closer location might produce a lower fee structure.