jpod

I just don't see how the former spouse would have standing to sue the plan or its fiduciaries, much less a viable claim, if the surviving spouse is paid out before the plan receives a DRO, let alone a DRO that is a QDRO. Former spouse has a malpractice claim against her attorney and, possibly, some kind of equitable claim against the surviving spouse.

I am talking about the surviving spouse, who has made a claim. If her claim is honored, a subsequent DRO served on the plan will be a waste of time because the account balance at that point is $0.

The end result is not the same in my view. In our case there has been no DRO presented to the plan. Surviving spouse has made a claim for benefits. What is the legal basis for denying her claim?

QDRO, I agree with everything you've said. However, I believe Madison has stated that to this day not even a mere DRO has been provided to the plan, and now it's long past the participant's death. Given these facts/timing, I would be surprised if the law permit a post-death purported QDRO to be effective, but as I said in my one and only entry here I have not done the research. But on the other hand, if the surviving spouse has already made a viable claim for her benefits, and if the plan has not received a DRO, how can the plan deny her claim?

On the one hand, it is probably an oversight in the drafting of the regulation and it may be fair to assume that IRS will agree with Bird. On the other hand, there is absolutely no telling what a judge may say in an action brought by a spouse (or a surviving or former spouse). I'd take the conservative approach.

Whether one could defer GPs using the 409A performance-based rules is fact-dependent.

On the assumption that these benefits were earned by participants in their capacities as W-2 employees, the payments are all reportable on Form W-2 and subject to FIT withholding and other applicable tax withholdings. Note that per IRC Section 3121(v) the FICA/Medicare tax liabilities accrue and are due and the employee share subject to withholding at the time of vesting, or if later when the present value of the benefit becomes determinable, rather than only as and when payments are made. If the payor is just starting to think about all this stuff now, after payments have commenced, it needs to take two aspirin and call the doctor in the morning.

If you mean a gp as defined in IRC Section 707, yes, that can be done, but why would the other partners be interested in allowing this?

If you can't find it then you use DFVCP and pay $750 or whatever the amount is.

If the participant dies before a QDRO exists, and there is surviving spouse with statutory ERISA rights, can a post-death QDRO trump those rights? I would be very surprised if the answer is "yes," but someone will have to research the case-law. Not sure why the Plan Administrator would give a hoot about potentially tricky tax consequences if interpleader is the best risk/cost management strategy from the plan's perspective. The Plan Administrator is just going to do what the court tells it to do and the tax and tax reporting chips will fall where they may.

From the facts stated it seems pretty clear that the surviving spouse is the beneficiary as a matter of law. What would you argue in favor of something else?

Belgarath, thanks. I guess what I am wondering is what are the potential consequences of blowing the deadline, or of a notice of noncompliance for blowing the deadline, due to a single participant if the termination was otherwise error-free.

Yes, assigning sponsorship to B is no big deal, and is reported as such on the next 5500.

If the employer files 250 or more information returns it is required to file the 5500-SF electronically. Example: A partnership plan that covers only partners. The partnership is large enough that it files more than 250 information returns annually.

What are the consequences of blowing the 180-day Title IV deadline for distributing plan assets? Facts are: one participant left, she's not lost, no extension of the deadline requested. Civil penalties against plan sponsor/administrator? Can the PBGC "undo" the termination in some fashion that will have adverse tax consequences to the other participants?

It sounds like A and B are still a controlled group treated as a single employer, but only if there is still one employee of A following the asset sale. However, I don't see why that's important or relevant to anything. There is no need to guess as to the disposition of the plan. If no provision was made in the sale agreement, then the plan stays with A (or A and B) and distributions to former employees of A shall proceed in accordance with its terms. Of course there is a C, how could there not be? It may not be a new entity, but there has to be a C. However, C is irrelevant if, as most likely the case, no portion of the plan is to be spun off to C.

Years ago you could send a letter to EBSA asking for a copy of a top-hat filing and they would either send it to you or send you some sort of certification that none existed. I did this once; don't know if this is still available.

I don't remember the context but I think the DOL made one or more statements in the last 10 years or so that contradict that plain wording of the regulation, and those statements influenced many people to start filing a top hat statement for each new plan. Nonetheless the regulation has not been changed and it says what it says, so I wouldn't do anything.

Is the answer any different if it is a non-Title I plan that is required to file electronically using the S-F?

Sounds like a fairly elegant solution to me. There shouldn't be any 409A issues because to the extent anything will be paid in cash rather than deposited to the plan I imagine it would be structured as a short term deferral not subject to 409A. I cannot address financial accounting issues.

I agree with both Austin's and Peter's observations about the employer plan market. For IRAs, I think it still is or will go back to the Wild Wild West, and that's where the real abuse was (particularly with annuity products) that caused the last Administration to go down this road in the first place. The money in IRAs will explode over the next 5-15 years as boomers who have been in DC plans for most of their working lives retire.

I'll just say that if the Rule is dead, so is BICE. And no, I don't know if that is a fair statement. If you are a non-fiduciary broker-dealer, there is nothing to prevent you from giving conflicted advice or, as you put it, receiving "conflicted compensation," assuming the FINRA suitability standard is satisfied, which I understand to be a very low bar. Note the irony: If a broker-dealer's true relationship with an ERISA or IRA client is such that he satisfies the old 5-part test for fiduciary status, and with BICE gone, as a general rule his/her level of compensation cannot be impacted by the product sold.

Very unlikely that there are any BICs out there, and if there were they were terminated. Remember, temporary relief was granted some time ago which would have run through next summer that you only needed to comply with the impartial conduct standards, but didn't need to enter into a contract to be covered by the exemption.

I don't know what was said but if when they said "appeal" that included the Gov't going to the Supreme Court then what was said was true, but the Gov't still has time to petition the Supreme Court. I suppose that if that happens the rule will be technically dead but subject to possible resurrection by the Supreme Court, in which case it will only have been temporarily dead.

He may have gotten it in but the Commissioners, although appointed by whoever the President is at the end of their five-year terms, tend to act independently with heavy reliance on professional staff. While it's true that there is a 3-2 GOP advantage currently, it's a completely different relationship then, say, the relationship between the President and the Secretary of Labor.