Kirk Maldonado

I agree completely with the sentiments of RCK. When Congress learns about an abuse, they always enact overbroad legislation (which will apply to some non-abusive situations), to make sure that no abuses slip through the cracks. Thus, everybody (not just the bad guys) have to live with the new restrictions that get enacted because of the bad characters. Those guys (and gals) make life miserable for the rest of us.

I also have twins. We got a boy and a girl, so I like to say that we won the baby jackpot. Unfortunately, I'm getting divorced, so I think she'll get to keep that jackpot. The smartest thing I ever did was moving to Washington, D.C. to work for the IRS in 1978 and the second smartest thing I ever did was leaving Washington, D.C. After I left the IRS in 1981, I moved to Orange County, California and went to work for a sucession of law firms. The last one imploded and we were forced into an involuntary bankruptcy. Very expensive and ugly mess for all of the parties involved; not just the former partners. The claims by the landlords against the law firm for unpaid future rents totalled over $100,000,000. Stayed there until two years ago, when I moved to Denver. Almost all of my clients are still in California. I like to go back to visit several times a year, but I can never imagine moving back there. Denver is a much less stressful place to live than California. But, to be fair, it does not have the great weather and booming economy of southern California. We got a ton of snow yesterday here in Colorado.

While I agree with TGeer that most attorneys spend their time on qualified plans and not 403(b) arrangments, I think that the reverse is also true. Namely, the people that work on 403(b) arrangements typically don't also work on qualified plans. Thus, in my experience, they aren't as knowledgeable about the ERISA requirements as they should be. Thus, you have one group that is knowledgeable about qualified plans and another group that is knowledgeable about 403(b) arrangements but relatively few people that understand both well. That is the real reason for the high cost. But trying to save money on legal fees generally is counter-productive in the long run. I recently worked on a transaction where the client tried to save $500 or $1,000 by not getting an attorney involved in something that they did. My fees alone were more than $10,000 trying to figure out a way to salvage the situation. Both myself and opposing counsel in the deal finally concluded that the client had screwed it up so badly that it wasn't capable of being fixed, and, in the end, we had a lot more questions than answers. If the ERISA attorney is good, he or she won't need to gouge the client on fees, because he or she will have plenty of work. Accordingly, the fees should be money well spent.

It seems that the right to demand that benefits be distributed in the form of employer stock would continue to apply to the portion of the ESOP that transferred to the section 401(k) portion.

While I don't disagree with what QDROphile stated, if the client thinks you are a goat because you brought up an issue that nobody else had spotted, you are better off without that client.

Or ERISA section 510?

I recall going through an extended analysis of that issue many, many years ago and concluding it makes no sense.

Off the top of my head, I think that there can be a reversion if the trust didn't qualify as a VEBA under section 501©(9). My recollection is that ERISA permits reversions under conditions similar to those for plans subject to the PBGC. Relying upon my memory (which is always an iffy proposition), I think that you can have a reversion if amounts remain after all liabilities have been paid off

JEVD: How's this for a creative moniker: New Name? (It is still available; I just checked.)

I posted the statutory language in the hope that someone would pick up on what I think is an important issue. The statute says that the QDRO can't require the plan to offer an option it does not otherwise provide. The statute does NOT say that the QDRO can't state that an option otherwise available under the plan cannot be offerred to the alternate payee. I'm not saying that you might not have a qualification issue for not allowing a direct rollover option for the alternate payee. I'm just saying that I don't think that the order fails to satisfy the QDRO requirements simply because of that restriction. That is one reason why it would make sense to ask the parties if that's what they really want. I don't see a reason for rejecting the order under the QDRO rules, but complying with it might jeopardize the plan's qualified status. If that language was inadvertently included in the order, it might not be a big deal to get it revised.

As a diehard Firefox user, I really appreciate those tips. My favorite features of Firefox are the password manager and the tabbed browsing.

TCWalker: Don't you mean "diversification" not "diversity?" Or are you suggesting that the investments should be politically correct?

Section 414(p)(3) provides: A domestic relations order meets the requirements of this paragraph only if such order— (A) does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan * * *.

I second the comments by QDROphile.

While that is correct, the trouble is that the person automatically becomes entitled to Medicare at the end of the 29 months and cannot stop that from occurring (with the resultant loss of COBRA coverage) unless he or she repays all of the monthly disability benefits that he or she already received. In virtually all cases, that repayment is impossible.

E as in ERISA: I had a conversation very recently with a very reliable source that indicated that the Katrina-related projects were consuming so much time that there was no way that the guidance would come out in the near future. This source indicated that there was some frustration with Congress treating them like they had no other work to do other than to devote all of their time to Katrina-related projects. A cynic might speculate that the people in the administration were tired of Congress taking up all of their time on Katrina-related projects. Accordingly, they told the press that the 409A guidance and other projects were going to get delayed, knowing that the employer community would demand that they recommence work on the 409A project. The predictable outrage from the business community (about the delay) would enable those individuals to be able to tell Congress "I'd love to help you on your Katrina-related projects, but the business community demands that we much get the 409A guidance out." This is pure unsubstantiated speculation on my behalf, but my theory does explain the recent turn of events.

Jilliandiz: To amplify the preceding response, the regulations under Title I of ERISA are issued by the DOL. Here's some information for the trivia buffs: Title II of ERISA covered amendments to the Internal Revenue Code Title III dealt with jurisdiction, administration, and enforcement issues among the different federal agencies Title IV established the PBGC.

Pensions in Paradise: You are right in that the situations are factually different. But what if the two or three plans had to be aggregated for purposes of satisfying the coverage requirements. Would that change your perspective? Becky: Getting on the soapbox myself, I think that the auditors work is to examine the financial statements, not to determine whether the plan satisfies the qualification requirements. The vast majority of clients that I've talked to on this point believe that the financial audit is more along the lines of a fiduciary audit. This isn't to criticize the work that the auditors do, it is just that the public's impression of their role is much different than what they actually do. Thus, the fault lies with the public, not with the auditors.

I also just heard that they are supposed to be out next week. If that is true, that reflects a massive reordering of the priorities at Treasury, attributable, no doubt, to the outcries from the employer community about the effect of delaying the issuance of the regulations.

Boilerburm: Have you considered whether DOL Opinion Letter 79-87A would affect your analysis?

Here's a really ugly fiduciary responsibility issue to consider. Given that the trend of the court decisions (following the Supreme Court's decision in Knudson) has been to deny to plan the right to recover those payments, is it a breach of fiduciary duty to use "self-help" to recover those payments (by reducing future benefits)? (The courts have split on this point, but it seems like the majority of the decisions are now following the Knudson analysis.) I honestly don't have an answer to this because I just thought of the issue. Is there any provision in EPCRS authorizing self-help to correct overpayments? (I doubt it, but I thought I'd ask.) In any event, because the determination of whether there was a breach of fiduciary duty arises under ERISA and not under the IRC, I'm not sure how much reliance is justified even if the IRS did authorize self-help in this sitaution.

QDROphile: Thanks for taking the time to write such a thorough and thoughtful response. I think that your dual goals of (1) being focused on being efficient and (2) not wasting time on what are probably non-issues make eminent good sense in this situation. As you mentioned, in all likelihood, nothing will come of that provision, so why waste any time on it? One of the virtues of BenefitsLink is that there are respondents like you and MBozek that help to put things into perspective, and serve as the perfect foil for people like myself who, at times, get so focused on the trivia that we miss the "big picture."

QDROphile: I'm curious as to why you disregard the no-rollover provision rather than asking the parties if they really intended it to be in there or if it was inadvertently included in the order.

I'm not sure why you are so positive that they've done everything correctly. My presumption, based on over 20 years of experience, would be the exact opposite. There's an easy and free way to find out whether they've been doing things right. Check on the SEC's website to see if they have been filing the Form 11-Ks.

The answer to your question should be immediately apparent if your question is rephrased as follows: Does the law force plans to discriminate against older workers who take out loans by limiting the maximum duration of the repayment period?