ForksnKnives

The answer to your question is yes, as an alternate payee you are entitled to plan information like any other beneficiary of the plan. Whether the plan recognizes you as an alternate payee may be why you are not receiving information. After the court signs the domestic relations order it must be sent to plan administrator for review. If the plan administrator qualifies the order then the plan administrator recognizes you as an alternate payee and you should not have problems. If the order was not qualified then there is still work to be done to protect your rights under the plan. Contact the plan administrator or their service vendor to determine if they received the order and whether it was qualified. If it was not received or not qualified then you need to talk to your attorney. If it was qualified then pursue further with them why you are not receiving information or responses. It is possible they have a bad address for you and the info is going somewhere else.

I can only imagine what sort of absurd scheme is behind this DRO. I can't see how it's qualified. Of all the potential problems that may disqualify the order, the most likely is that it effectively makes an unknown IRA--the account itself--an alternate payee. An account cannot be an alternate payee under ERISA and almost certainly under this state's law as well. If there is no alternate payee because the IRA is owned by the participant then the order cannot be qualified for that explicit reason. Whatever the bizarre goal here is only enforceable under state law.

I agree it can be done but the spousal beneficiary should make sure an actual rollover occurs into her participant account and the money is not left lying in a beneficiary account in her name.

Of all the plans I have seen I do not recall one that allows an individual who has not met eligibility requirements to take out a loan but I absolutely agree with the responses above that the plan document will address the answers to your specific situation.

A common use interpretation suggests his retirement date is his last date of service with the company, so 12/31/13. My mindset with the retiree is to ask whether the tax implications of acting as though 1/1/14 is the correct date is so significantly different from the tax implications of acting as though 12/31/13 is the correct date that it makes sense to pay the potential cost of fighting the IRS plus the risk of paying the greater taxation on money that will eventually be taxed. I find it hard to imagine that taking an RMD for 2013 is not the cheaper route for the retiree.

It's not too late to have a DRO drafted and ordered by the court.

Request a copy of the plan document from the plan administrator. Determine if the plan accepts DROs. Non-qualified benefits do not always accept DROs but if this option plan does then the plan document should provide you the details on what the order requires. There is a good probability that you will have to engage in some enforcement action against your ex-spouse to recover what you were initially ordered. Your best option here is to talk to a divorce attorney.

First of all, you should report this paralegal to your state's bar for unauthorized practice of law. Second, the most reasonable interpretation of that language is that the equal division of the accounts is the intended effect of the language and the identification of the approximate value is merely to describe the approximate value of what is divided. However, case law in your jurisdiction may support an interpretation that limits your ex-spouse to the $10,000 value to be divided. Your best option here is to talk to a divorce attorney in your area about your options.

I couldn't agree more. It's mostly just an upsell on the same services already provided. The real mess will be what happens when participants file suit. The sponsor is going to get sued anyway and end up pointing fingers at the service provider and see that same service provider point the finger back at the sponsor. There's a great probability that either both end up as co-fiduciaries, eroding the supposed benefit of paying for fiduciary services, or it turns out nobody was performing these fiduciary duties and new claims are exposed.

I thoroughly disagree that "this is fine". As masteff pointed out, the IRS already has enforced this rule at least once even if widespread enforcement isn't allegedly scheduled to begin until next year. The IRS's choice to allocate resources to enforcement doesn't mean the IRS cannot raise the issue with you in a future audit. It will not be a defense that the IRS said enforcement will begin next year. Generally it sounds like you are trying to outfox the IRS. That's a pretty bad idea. There are other options to obtain loans and as John points out, interest rates are very low. You might be able to obtain a loan secured by the IRA in which you are retaining your tax deferred investment returns and paying a very low rate on a loan.

Before you do anything you need to get a better sense of what your benefits presently are and what the QDRO on your benefits and the QDRO on her benefits (if any) provide you. Judging by what you have written it sounds like you are not entirely clear. If you offer your ex-spouse a new deal to switch around benefits you may find that you have given yourself a bad deal twice. You may not even be able to execute an effective agreement because the plan may have no choice but to follow the QDRO, which will make all of this for nothing. Whether you can obtain a new QDRO is something you should discuss with your new lawyer.

Sounds like either the drafting attorney is trying to pull a fast one on the other attorney or just doesn't know what he or she is doing. Either way, the other participant's attorney should oppose the proposed DRO and propose one that accurately divides the accounts based on the agreement.

Why would you want to absorb the administrative burden of keeping accounts under $1000 for up to an addition 20.5 years?

The dissent's reasoning is stretching, to say the least.

The court is definitely saying Pub. 590's example is wrong. The court's discussion of the statuory language on pages 12-13 explain why. If 408(d) said "an individual retirement account" and then later used language identifying the limitation to that same IRA then the statute would make the IRS interpretation correct, but that isn't what the statute says. Court wins, IRS loses. The IRS should have corrected its guidance twenty years ago.

Unless a "stipulated DRO" has some specific meaning in your state I would take it to mean the terms are agreed-to by both parties. Some family courts will not sign off on a DRO until it is shown both parties have agreed to the language (or at least will not sign off on it without taking more steps than presenting it to the judge with a motion). There's no confusion between the language you posted. Respondent pays administrative fees to process the segregation but the alternate payee will pay the taxes for taking the distribution. Taxes and fees are very different. I would be beyond surprised if your MSA states that the respondent is responsible for paying the taxes upon the distribution of your segregated portion of his or her benefit. However, I have not seen the language in your MSA so it may well say that. It would just be highly irregular.

Just another LLC-IRA/401k-will-make-you-rich-and-solve-all-your-financial-problems-wait-don't-think-about-any-of-the-risks-involved-or-legal-liabilities-of-this-arrangement garbage investment system.

You're talking about robbing Peter to pay Paul. The distribution to pay the loan will be taxable unless somehow the participant had a way to take a loan from non-Roth funds and can then take out a Roth-only distribution, and qualifies for a tax-free Roth distribution, and pays the loan from those proceeds.

I agree. It seems strange that the AP's benefit would be subject to the participant's RMD requirement based on the way AP benefits are segregated in benefit systems to appear as a separate account. However, an AP is just that: an alternate payee. The AP is a beneficiary of the plan based on his or her interest in the participant-employee's benefit but the AP is merely a different payee of the participant's accrued benefit. An AP is subject, to an extent, to the rules applicable to the participant's benefit. I don't know the true reason why Fidelity and others let the AP's segregated account follow RMD rules under the AP's DOB. It may be that they have a good faith belief that the Q&A does not deserve deference as an interpretation of the regulation. It's probably laziness on their part to make their system calculate the RMD appropriately. FIdelity's internal group that designs systems for their retirement plans has a "it's close enough" approach to their job.

Even if you viewed that series of transactions as a "deemed refinancing" as discussed in that thread, I don't see how that would treat the two loans any differently than if the participant took the second loan out for any other purpose. It's up to the participant to take steps to pay off the first loan. The participant is still stuck with future loan availability affected by the simultaneous existence of both loans.

I believe the regs require equivalency to count 45 hours per week or 190 hours per month. If you do not have records of how many hours were actually worked then it's difficult to determine how you would know whether the employee only worked 35 hours each week or was only entitled to 35 hours of pay each week. If you can prove as much then it's questionable whether your employees are exempt salaried employees and that opens up other problems for the company. If you don't have records then it sounds like the plan administrator is making benefit determinations absent facts. That sounds like an arbitrary and capricious decision, especially if it is the first time the plan administrator has counted hours of service for a salaried employee.

If the election was valid and permitted by the plan it probably doesn't make sense to try to bend or break rules to give back some of the deferrals. It would probably be easier to (1) reduce the contribution rate going forward; and (2) process a payroll advance to the employee or a payroll-repaid short term loan to the employee.

IMO definitely a change that would be material to an employee, especially a HCE likely to be affected. I would consider it CYA to issue the SMM (along with an email or letter) to protect myself from an angry executive.

Putting the NQDC benefits on the line in a for cause termination increases the probability that the terminated employee is going to hire counsel and contest every termination in every way imaginable. It's too much money on the line to let it go easily. "For cause" could be a very nuanced term and establishing reasons for a for cause termination could cause a lot of problems. If your NQ participants are directors or other participants who work under contract, their contract likely defines what conditions permit termination by the employer and those may include more or less terms than what you are drafting into the contract. Do existing contracts invalidate the use of "for cause" determinations? For those who are at-will employees, there may be some concerns that the plan indicating specific reasons for termination is contrary to the at-will relationship and contrary to the likely disclaimer of contract in the employment handbook. Any constructive discharge claim on the basis of discrimination is going to include litigation over plan benefits. If a discharged employee can disprove cause and win benefits then every employee discharged for cause that forfeits benefits is going to file suit to try to recover the plan benefits. That's a lot of potential litigation. There's a lot of issues with that. What standards are used to determine cause? Who determines cause? Is that a plan administrator decision or a company decision? What standard of review can we apply to that decision? How much state employment law will be fit into litigating the plan? How much does the employee have to disprove the legitimacy of the cause finding? If the employees work under contract, what happens if some or all of the contract is invalidated? If the company has made employees sign an acknowledgement of a handbook that indicates employment is at-will, can that invalidate the forfeiture? Once you get through all those legal issues, then you still have to put the facts in front of a factfinder. That means each of these employment decisions is going to turn into an opportunity for judicial review of employment decisions. There's further complication if the employee brings multiple claims against the employer and the employer tries to argue employment is at-will but then these plan benefits are based on some "good cause" or "just cause" standard. The employer might prevail on all those issues but the cost of litigation and the potential judicial review of plan and employer decisions may collectively be more burdensome than paying benefits to employees terminated with cause. Some of these issues may be more broad than the terms you are drafting or the terms of the employment agreement some or all participants operate under. You may not have any at-will employees participating at any point under this plan, but there may be situations where an employee's contract term expires but work continues or the employee is terminated but later a court determines parts of the contract are invalid. The concerns raised above were intentionally broad to raise issues against the limited set of facts provided. Just some things to think about from an employee-side litigator.

If the owner is unwilling to perform his duties as plan administrator then he needs to pay somebody else to do it, whether it is an internal HR/legal employee or a TPA. Either way, as others have said, it won't be cheap to have somebody else do that much work for him. If he is that busy and the business is doing that well then it is probably an inefficient use of his time to deal with the daily operations of the plan anyway. He could dedicate more of his time to operating the business and generating more profit.