My 2 cents

QDROphile points out that control of the employer and the trust survive the owner's death, and that the appointment of a new trustee remains within the power of the employer, consistent with the terms of the trust. I would not expect a "Letter Testamentary" to affect trusteeship, but an amendment (presumably to the trust, executed by the employer) naming a new trustee should be treated as conclusive. Again, where does the custodian get the authority to decline to recognize the new trustee?

Does anybody know if the DOL has such a rule? Not a lawyer or a trustee, but I am skeptical. I thought the DOL only appoints trustees when the prior trustees have been very wicked, and I have always thought that following the provisions of the trust document is always otherwise sufficient (especially if the trust document actually provides a process for establishing a successor trustee). How to proceed? Contact the DOL, tell them that the custodian won't recognize the successor trustee you have formally named (both in accordance with the terms of the trust document AND by amendment), that the custodian told you that nothing less than a DOL-appointed trustee will suffice, and ask the DOL to intervene. As noted above, I don't think that the DOL action will consist of their appointing a trustee (but if they do, odds on it will be the widow of the owner). You are dealing with an established custodian, aren't you? To try to hold on to the assets this way makes me wonder (unnecessarily, I hope!) whether the money is actually still there.

It is my understanding that, for purposes of reporting defined benefit plan assets held in an insurance company general account on Form 5500 Schedules H and SB, contract value is generally acceptable, whether annuities are purchased (assets and liabilities both normally reported exclusive of the purchased annuities), benefits are guaranteed but not yet purchased (normally using the assets as is and valuing the liabilities), or not guaranteed (always using the assets as is and valuing the liabilities).

Right. There is no just way to do that now. The retirees performed their jobs relying on the negotiated benefits as a means of support after their working careers were over. "Contributing employers are already contributing a good chunk of change" is a value judgement. Too bad for the company owners, but the retirees have a greater moral and legal claim to company assets than the owners. Oh! You said "there is just no way to do that now". That too.

One certainly presumes (a) that the people completing the 2012 5500 noticed that their starting balance did not equal the ending balance on the 2011 5500 and (b) they are ready, willing and able to explain the reasons for there being a difference to anyone who asks. Assuming reasonable competence on the part of the preparer of the 2012 form, the IRS questioning the difference should present no problems.

Is it true that some protections against loss of accrued benefits may be lost if a multiemployer plan is in endangered status? If so, would that apply here? Still, the idea of asking retirees to absorb voluntarily the impact of plan underfunding seems wrong. Shouldn't the contributing employers be asked to step up to improve the funding (or face stiff withdrawal liability if they try to leave)? I recall that the PBGC had (at least previously) left alone benefit levels in excess of the guarantee limit in underfunded single employer plans that they trusteed for people who had been in pay status for more than 3 years. Do they still do that? What is their practice with respect to long-time retirees in underfunded multiemployer plans?

Not speaking as an expert here. It is my understanding that 501©(3) organizations generally have to comply with ERISA and plans sponsored by governmental entities don't. Isn't it essentially automatic that governmental entities are exempt from federal taxation? Why would they want to confuse things by self-identifying as any sort of non-profit?

Not a defined contribution practitioner, but I am having trouble making sense of the fact that the plan (a) requires participants to make mandatory deferrals as a condition of employment and (b) permits hardship withdrawals of those same deferrals. I have seen mandatory contributions to defined benefit plans as a condition of employment, but those plans tend to say that under no circumstances can there be any withdrawal of such contributions while employed.

First, it is too bad that your lawyer stopped practicing and can no longer represent you. Don't you think that you would be better off finding another one rather than "flying alone"? I am not a lawyer, but it would be usual for the gains or losses allocated to the alternate payee to be those from the portion of the funds assigned to the alternate payee. Gains or losses on all of the assets (including those not assigned to the alternate payee) would not all be packed up to be given to the alternate payee (assuming that you or your new lawyer would be alert enough to challenge an attempt to do so). Presumably, any contributions you or your employer made since the Valuation Date would also not be part of the amount distributed to the alternate payee.

Does the plan provide for pre-retirement death benefits if there is no spouse? If not, the only effective action in a QDRO would be to preserve status as a spouse. There could be nobody else to actively designate as beneficiary unless benefits were to commence right now. Does the plan permit the participant, with spousal consent, to designate a non-spouse beneficiary, whether for pre-retirement death benefits or under an annuity option involving survivor benefits? Some plans only permit life annuities or qualified joint and survivor annuities. I persist in asking at what point in the process does a soon-to-be-ex-spouse lose the automatic designation as the person covered by the QPSA and as the person to be the joint annuitant in the absence of an election to the contrary? And, again, is the divorce taking place before or after the commencement of benefits? The annuity form (including the identity of a joint annuitant) is usually irrevocably locked in when payments start. These may all be relevant questions, of greater significance than of a pro-forma "QDRO".

May be a problem with that! Even if you wanted to have a QDRO offering the ex-spouse nothing to formalize the absence of any rights, it wouldn't have any authority until the divorce was final, would it? And when the divorce was final, absent a QDRO granting the ex-spouse any rights, the ex-spouse wouldn't have any rights anyway. How final does a divorce have to be before the soon-to-be-ex-spouse loses rights to be the plan's beneficiary? The negative court order would not solve the problem. If the question dealt with the participant marrying someone else, the answer would be "not until the divorce is final". Why should the answer to "when can the participant drop the soon-to-be-ex-spouse as a plan beneficiary" be any different? Maybe the plan allows the participant to name a non-spouse beneficiary with spousal consent. If the soon-to-be-ex-spouse agrees to do so, no need to wait for the divorce to become final. [and if the soon-to-be-ex-spouse doesn't like that idea, why wouldn't he or she seek permanent rights to some of the pension benefits as part of the divorce proceedings?] Note that if the participant had already retired under some sort of qualified joint and survivor annuity with the soon-to-be-ex-spouse as joint annuitant, that would be irrevocable and the joint annuitant would always be the soon-to-be-ex-spouse. Any new spouse would necessarily be out of luck, empty QDRO or not.

1. Assuming that this is a normal ERISA plan and not a governmental plan essentially exempt from 411's protections, it is pretty clear that no reductions in benefits, especially those already in pay status, would be acceptable under the law and regulations. 2. Not to say that there weren't companies lulled into a false sense of security in the late 1990s into the early 2000s, but too characterize the problem as being due to benefits being paid to retirees as "very high" and to ascribe that to "a high accrual rate" in the 90's and early 2000's strikes me as, at best, disingenuous. Wouldn't the funding for those and subsequent years have reflected appropriately high contribution requirements? Wouldn't the Pension Protection Act of 2006 have set them on the road to paying off all unfunded accrued benefits by 2015 (even if they chose to lower costs for current years by electing to lengthen the amortization period)? Perhaps the problem is that the sponsor has, for years, failed to act responsibly with respect to funding the plan liabilities that it agreed to assume. 3. Is there any reason to expect the retirees to voluntarily give up any of their benefits (even if the plan could ask them to do so)? Wouldn't one of the gentler responses be to ask the current management to slash their salary and bonuses and to use that money (as well as dividends to stockholders, if applicable) to fund the plan better? 4. Who are these professionals who seem to think that it can be done? All of the above presumes that it is not possible to establish some sort of case that the high accruals granted to these retirees are the result of some sort of fraud.

According to my understanding... In the case described above (age 70 1/2 in 2011), the owner had until 4/1/12 to receive the 2011 RMD. The 2012 RMD had to have been paid by 12/31/12, etc. The RMDs for 2012 and 2013 appear to have been paid late. Don't forget that the amount payable to him as a lump sum will have to be restricted because his annual benefit is limited to the 100% of pay limit, and the lump sum equivalent must be determined using Section 415 factors (if that would be less than the amount otherwise payable to him under the plan). The 2014 RMD has not yet been paid to him, so it will have to be excluded from the amount available for rollover.

Not a DC person, but... Cash balance plans, being defined benefit plans, do not contain actual individual accounts (they are always completely hypothetical), and all employer contributions are technically unallocated until a benefit becomes payable and is paid. Wouldn't gateway contributions have to belong to the individual participants?

Certainly, an ERISA plan could not do such a thing. May be different for a bona-fide church plan. In any event, whatever issues would arise from such a plan provision, it would not seem to be a discrimination issue. Unfair and inappropriate, perhaps, but not likely to be a matter of violating non-discrimination rules. To the extent that accrual rules apply, it would be more likely to violate them. Never mind whether they could write a provision like that into the plan - why would they even want to do that?

The 2848 is solely for purposes of being designated as having power of attorney to represent someone before the IRS. You don't actually have to be a member of the bar anywhere to be authorized for a power of attorney, do you?

Just out of curiosity (this thread having been started the day after all individual tax filings for 2013 were due, some 2-3 months after all W-2s were required to have been issued by all employers everywhere): So what did employers do for 2013 tax reporting for their same-sex married employees? How did the same-sex married couples covered by health insurance report their earnings on the state income tax forms? Has anyone heard of any legal challenges to states trying to charge higher individual taxes to same-sex couples than to similarly situated opposite-sex couples? The Windsor decision, to a large extent, resulted from a challenge to the federal government trying to charge higher estate taxes to someone who had been in a same-sex marriage, a policy that the Supreme Court ruled could not be justified. It's not as though this just happened. All of those federal judges throwing out all of those state laws and constitutional provisions were, one presumes, ruling on litigation brought in 2013.

They would have to pay you the back payments with interest. You may wish to inquire how they determine the interest on the back payments. It is against the law for the plan to treat any of your payments due after normal retirement age as forfeited, especially since you are no longer an employee. So they cannot suspend your benefits and you must be fully compensated for any benefit payments not made after normal retirement age.

My opinion is that the smart money is on all such discriminatory state laws being thrown out in the not-too-distant future. There have been federal court rulings in several states now prohibiting those states from refusing to recognize same-sex marriages performed elsewhere (at the very least), with no contrary holdings anywhere since the Windsor decision. Wouldn't retroactive negation of any adverse tax actions on that basis be virtually automatic if the state's demand for extra taxes predicated on a refusal to recognize same-sex marriages is thrown out by higher courts (either directly with respect to that particular state or as a result of a decision that there are no sufficiently rational arguments to justify the disparate treatment to permit any states to maintain such laws)? Many employers are pledged to not discriminate on the basis of sexual orientation. A state that attempts to force any such employers to report higher taxable income for those employees in same-sex marriages than for people in opposite-sex marriages will force the employers themselves to file challenges to the state laws. Remember, for a state to treat two people differently for tax purposes, a compelling rational basis must be present or the distinction cannot stand.

I agree with the previous poster - investment income (regardless of the amount of skill that may have been involved in obtaining investment income) is considered "unearned income". So that would not apply to determine how much can be contributed to an IRA. But the IRS publication makes it pretty clear to me (for what that is worth) that if your earned income is more than $11,000, both you and your spouse can make contributions to IRAs (assuming that neither of you are otherwise retirement plan participants or 70 1/2).

Looking at the example above, you get 6.76% whether you round before multiplying by 85% or not. 7.9472 X 85% = 6.7551 which also rounds to 6.76%. You have to use whatever the IRS publishes in any event. You don't get to grow your own.

Speaking as a non-lawyer, wouldn't the severance agreement just preclude the ex-employee from suing the employer? Note that if the account balance in the 401(k) plan is less than what it should be, it would be the plan or the plan's administrator or trustee that the ex-employee would be suing, not the employer. Remember - the plan administrator and/or trustee have fiduciary obligations to the plan and its participants. If the employer tries to not make a required contribution to the ex-employee's account, the administrator and/or trustee would have the duty to go after the employer for required contributions that would not have been paid. Even if the employer is designated as the plan administrator, the ex-employee would not be precluded from suing the plan administrator for rights under the plan.

2014-19 says that any retroactive amendment to extend the Windsor decision back to before June 26, 2013 is permitted but Section 436 would have to be satisfied. Retroactive amendments under 2014-19 can limit what is being changed retroactively (i.e., for QJSA or QPSA purposes only) and can establish coverage limitations (i.e., participant died or retired on or after a specific date), but the effect must not discriminate in favor of highly-compensated employees. The IRS urges caution how a plan should be retroactively amended, since retroactivity can have unintended consequences (because in general, ownership of stock is attributed from one spouse to the other, and that could affect the makeup of the controlled group or who is a key employee or 5% owner). Amendments conforming plan language (i.e., definition of spouse) to the Windsor decision would not be subject to Section 436. A plan can rely on this guidance and not adopt a retroactive amendment, but that would not necessarily stop (for example) the surviving legally married same-sex spouse of a vested participant who died in 2011 from asserting his or her rights under ERISA by suing the plan for QPSA benefits, especially if no death benefits were paid to anyone.

Speaking as a non-lawyer: It is a known fact that a pre-nup release is not sufficient to stand as a spousal waiver in a pension plan subject to the Qualified Joint and Survivor Annuity requirements. When the spouse signed the pre-nup, he or she did not have standing as a spouse to be able to waive spousal rights under the pension plan. Only a spouse can validly waive spousal rights. If the second wife considers herself honor-bound to act in accordance with the pre-nup and signs a disclaimer form, that would be likely sufficient to resolve the issue.

Not a defined contribution plan practitioner, but it seems to me that participants are entitled to both the late or missed contributions (in each case with earnings of some sort) AND a share of forfeitures. What would the DOL think of the suggested practice?