Fielding Mellish

Yeah, that's what they're hoping for. I understand the sentiment, but I do not agree with the practice.

My 2 cents, you're spot on with your comment. My issue is that the BOT of the Plan wants the money to go back into the Plan. I understand the desire, but I can't recommend that course of action. I just wanted to confirm my approach that reversion is what should happen. Thanks again.

Thanks for all the replies. The QDRO states that the AP can begin receiving her benefit at the time the P reaches earliest retirement age. Pretty standard language. P has not yet reached earliest retirement age, so AP couldn't have started her benefit yet. While I think there could be reasonable arguments in any direction, it's my opinion that the benefit should revert to the Participant due to the fact that the QDRO states that's what should happen and there's nothing in the Plan prohibiting that. There is arguably language in the Plan stating that the AP cannot assign a beneficiary until she starts her benefit, so I don't believe the benefit would go to AP's estate. Thanks again.

Thanks for your thoughts. Along those same lines, could it be argued that the plan doesn't have language that ALLOWS a beneficiary for an AP? When the Plan talks about benefit payments, it talks about Participants and Beneficiaries. It doesn't say anywhere that a beneficiary can also name a beneficiary (so if there's no spouse and the Participant has his mother as the beneficiary, I don't believe the mother can also name a beneficiary). So, the question becomes whether the AP is treated as a separate Participant, or simply as a type of beneficiary. And, this particular instance becomes even a little tougher since, in order to figure out what the AP's benefit would even be, we'd have to wait until the P is old enough to potentially retire since the formula for the AP's benefit hinges on how much his benefit is at his retirement age (either early or normal). This Plan has always approached it as though the benefit would be forfeited and would go back to the Plan. The Participant is stating that it should revert to him (in essence pretending like no portion of his benefit was ever assigned). I have a feeling the AP's beneficiary/estate would make a claim that they're entitled to it. *Edit* In looking at the Plan, I came across the definition of Alternate Payee: That to me says the AP is not treated the same as a Participant, but instead more like a beneficiary. The Plan language isn't right on point, but I think it can be argued with a straight face and rather strongly that the Plan does not permit a beneficiary to name his/her own beneficiary as well.

QDRO says that if AP dies before commencement, benefit goes to her beneficiary unless that's prohibited by the Plan. The QDRO then says that if the plan does not permit a beneficiary, then the benefit reverts to the Participant. The problem is the Plan document is silent to both points, both as to whether an AP can have a beneficiary and to whether the benefit reverts to the Participant. So, instead of complaining about why QDROs and Plans aren't drafted more clearly, how about contributing your thoughts on the best way to resolve this issue?

Does anyone have any thoughts on this question? I'm running into the same thing now. DB Plan. Plan doesn't really say what happens if AP dies prior to commencing benefits. Some are arguing that the AP's portion of the benefit is forfeited to the Plan. Others say that the amount reverts to the P. Neither the P nor the AP have commenced benefits since the P is still too young. And, the QDRO states that the AP's benefit amount is determined as of the date the P could start receiving benefits (so earliest retirement age). But, again, P has not yet reached that age. So if AP is treated as a terminated vested participant, then we have to wait until P could have received his benefit, then determine the AP's portion of that benefit, then distribute the benefit to the AP's estate or beneficiary. But, that's about 10 years out since that's how long it will be before the P reaches earliest retirement age. But Plan is silent as to reversion or forfeiture. Thoughts? Thanks.

Defined contribution plan that says that a Participant may take a distribution if he doesn't have any employer contributions made to the Plan for 6 months. Can a Plan provide that, upon this occurrence, the Participant may elect any of the forms of benefit offered by the Plan? For example, if the Plan offers non-periodic installments, can that be offered for this termination benefit? So if the Participant has a $100,000 balance, if he doesn't have contributions for 6 months, can he apply to take out $20,000 and leave the other $80,000 in the Plan? Thanks.

26 CFR 1.417(a)(3)-1 lays out the rules for explaining a QJSA. Does anyone have a sample explanation they use for a defined contribution plan? Is it enough to just get a sample quote off an insurance company and then tell the Participant to call the Fund Office for something more precise? For reference, the differing benefits are all actuarially equivalent. It seems like such an amazing amount of information to give to a Participant that it loses all meaning. Thanks.

Thanks for your response. 1) Say the Participant is getting a Qualified Joint and 50% Survivor Annuity. Because of the mortality tables, applicable interest rates, etc., the Participant's benefit works out to $1,000/month. If we recalculate after a year, his life expectancy, his spouse's life expectancy, the mortality tables and/or the interest rates could have all changed. So, the actuary is going to have to take all those things into account when recalculating the new benefit from the new contributions. Does the actuary go back and recalculate the entire benefit, or just add on to the existing benefit? 2) Why would the Union ever put in a suspension of benefits provision to begin with? For many plans, it's trying to keep retired guys from taking away work from the active guys. So, this could be just another way to keep guys retired. And I've run into several plans where the additional hours are essentially ignored. Keep in mind that generally only comes up when the guy is working pretty few hours during a month (stays below 40 a month). If it's more than 40, his benefit is suspended and then it's a pretty easy thing. Thanks again. I'm just spitballing here, so feel free to shoot this all down.

Multiemployer defined benefit Plan. Plan says that a Participant can return to work after retirement for up to 40 hours with no suspension of benefits (this Plan applies it to both early retirement and normal retirement). So a Participant is receiving a retirement benefit of, say, $1,000/month. He goes back to work only 30 hours a month, so his benefit is not suspended. Per the CBA, the employer is required to make hourly contributions of $6.00/hour to the Pension plan. My questions: 1) What does the Plan do with the $6.00/hour coming in from the employer for this retired Participant who is receiving $1,000/month? The administrator can't recalculate the Participant's benefit monthly because the Participant had more contributions coming in. 2) Can the Plan have a provision that says if a Participant returns to work, but for less hours than needed to kick in a suspension of benefits, that the Participant will not get an increase in his accrued benefit and, instead, the money will go into the Plan's operating fund? Keep in mind that I don't feel this is a problem if the Participant returns to work for greater than 40 hours. His benefit would be suspended in that case, so any contributions coming in would go toward an increased benefit (which would be easy to re-calculate at the time he re-retires). Thanks.

So I kind of stumbled on DOL Advisory Opinion 2004-02A. http://www.dol.gov/ebsa/regs/aos/ao2004-02a.html That's helpful in this case, especially this part:

Ok, that makes sense. The problem here is that the P is getting totally screwed. I understand his attorney should have reviewed the QDRO to make sure it had the correct segregation date, but it's just a mess for him, and frankly, the AP, too.

Thought about it over the weekend a little and just wanted to throw this out there...again. What if the AP was willing to write a check to the Plan for the overpayment, and then that amount could be deposited back into the P's account. What would prohibit that?

That's the way I'm going right now, too. The Plan does not allow for rollover contributions, so that's not an issue we'd have to deal with. I had originally reached out to the attorney for the AP with the thought that it would be ok to have a new QDRO. But I'm going to tell him my interpretation has changed as I've thought about it more and looked into it a little more. If he doesn't like that, well, that's kind of too bad. Thanks again all.

Thanks David Rigby. The Plan did nothing wrong here, you guys are right. We have no idea what the intent of the parties is when we review the QDROs. Here, the language was very clear on what the segregation date was supposed to be. I think it was just a clerical error in preparing the QDRO, but we can't know that. And I'm not about to start calling attorneys on every QDRO I get to say "this says this amount of money. Is that right? This says this date. Is that right?" Right now, I'm leaning toward saying the new QDRO is not qualified and advising the parties that they need to figure out what to do with this.

I don't know if it would violate (B) because this is actually calling for decreased benefits, not increased. But, I see what you're saying about (A). It would be like if a Participant applied for a partial distribution of $50,000, but they really only wanted a partial distribution of $5,000. Upon receiving the $50,000, they couldn't just give $45,000 back to the Plan, correct?

That's an interesting point. What about the fact that now a new QDRO has been issued that changes what the distribution "should" have been?

Thank you for your reply CADMT. I believe we can somewhat easily figure out how much the Participant has lost in earnings/interest (the Plan has a mechanism for determining this). So, let's just assume we can do that easily. My thinking is to just have the AP write a check for the amount to the Plan, and the Plan deposit it in the P's account. It would be similar to if a distribution should have been for $1,000 but there was a mistake and the check was made out for $10,000. The Plan can recoup that overpayment. In this case, the Plan was following a Court Order, so the Plan did nothing wrong. I'm not worried about that part. I just want to pick all of your brains to make sure I'm not missing some adverse consequence if we just have the P's account reimbursed.

Multi-employer defined contribution plan. I represent the Plan. I received a QDRO in June, 2014. I reviewed it and everything looked good. The QDRO assigned the AP a lump sum (let's just say $100,000 for sake of ease) as of November 1, 2010 (not the true date, but just for ease of use) plus interest/earnings accrued since November 1, 2010. I contacted the custodian and plan and told them to segregate the account per the QDRO terms, etc. Very easy and standard. The account was segregated and the AP withdrew the money. All proper. Two months later, I get a note from the attorney for the AP that, in fact, the segregation should have been $100,000 as of February 1, 2014 plus interest/earnings accrued since February 1, 2014. Considering the amount of interest/earnings that accrued since November, 2010, the AP received an extra about $60,000 in her distribution. The new QDRO that has the correct segregation date looks fine. My question is, what can the Plan do? Can the AP just write a check for the excess amount back to the Plan? Does the Plan have an issue because of a wrongful payment (even though it was following a Court Order)? What do you recommend as the best practice to make this right? To me, a problem is that the original QDRO assigned essentially $160,000 to the AP and now the new QDRO assigns approximately $110,000 to the AP. That's not an additional $110,000, but a "negative" $50,000. It's almost as if there's no use creating a new account since that would be pointless. Instead, the AP should just pay back the excess amount and everything should be ok. But that seems way too easy and logical, and we all know that dealing with these things, easy and logical usually means wrong. Your thoughts? Thanks.

Defined benefit multiemployer plan. When contributions come in to the Plan, 70% of the contribution is credited to the participant, 30% is non-credited. The participant's total benefit amount is a percentage of only the credited portion. Due to an honest mathematical error, some (not all) of the participants had more than 70% of the contributions go toward credited and therefore less than 30% put toward non-credited. This went on for about 3 years before it was discovered. Again, it was an honest mathematical error (don't worry about how it happened, I'm satisfied with the explanations I've received). 91 total participants were affected. The Plan has about 180 participants, but not all of the 91 participants were affected each year. That's 91 total over 3 years, not 91 each year. So, one year it may have been 15 affected, the next may have been 40, the next may have been 26 (hypothetical, just using as illustration). Of those 91, only 6 have since retired. The other 84 are still active and are not drawing any benefit yet. Per EPCRS, the Plan can self-correct insignificant operational failures. I would argue that this would fit into that (the Fund is about $90,000,000 and the total amount at issue here is about 0.1% of that). Specifically, EPCRS talks about correcting Overpayments. Overpayment is defined as a "Qualification Failure due to a payment being made to a participant or beneficiary that exceeds the amount payable to the participant or beneficiary under the terms of the plan or that exceeds a limitation provided in the Code or regulations." Here's my question for all my learned colleagues on the board: for the 84 people whose accounts have been overstated but have not yet retired, has there actually been an Overpayment? Or, does Overpayment only apply to ACTUAL payment (like to the 6 who have retired)? Thanks for your responses.

We ended up figuring out a workaround because of calculations we have to do for a related defined benefit plan. Thanks all for your responses.

Well, the problem with giving even representative numbers is that you have to come up with a calculation.

Defined contribution plan subject to spousal consent. When the Plan sends out the required QJSA notice, is the Plan required to give specifics on the benefit amount for optional forms of benefit? For example, the Plan offers a Qualified Joint and 50% Survivor Annuity, a Qualified Life and 75% Survivor Annuity, and a Life Annuity. They are all actuarially equivalent. Pursuant to 26 CFR 1.417(a)(3)-1, it seems that the Plan is required, in its notice to a participant, the specific benefit amounts available under each benefit option. Is that your reading, too? Thank you.

Thanks for your responses. Would there still be mass withdrawal if the employers aren't leaving the plan? Though that might be the practical end since the fund couldn't go on without employer trustees. And the employers have been looking for volunteers for some time, but to no avail.

Taft-Hartley defined benefit plan. Per the Trust, there are to be 3 Union Trustees and 3 Employer Trustees. An employer trustee passed away, but the Trust provides for equal votes on both sides, so that hasn't been a problem. However, there are a very small number of employers in this area, so the Plan can't find anyone to fill the 3rd Employer Trustee seat. And, there's now talk that the other 2 Employer Trustees want to retire soon. So, what happens when you can't find any Employer Trustees? Keep in mind, the employers themselves aren't leaving the Plan. They are still covered by the CBA and will still be making contributions. The problem is that no one wants to be an employer trustee. If there aren't any Employer Trustees, then there isn't a jointly-administered board, correct? Your thoughts?