Kirk Maldonado

I know it exists because I submitted a comment, but I couldn't find it either doing a search.

MBozek: I think it would be more expensive to be involved in the divorce proceedings than it would be to simply review the DRO. QDROphile: Do you have any citations to court decisions where they have awarded fees? I've worked on dozens of attempted QDROs and nobody has dared to ask for attorneys' fees. I can't imagine an attorney who obviously screwed up and drafted an order that didn't comply with Section 414(p) asking the court to order another party to pay the costs of fixing his or her malpractice, much less the court awarding it. That is truly incomprehensible. Any plan that got such fees awarded against them should appeal it. Any court decision like that is so flagrantly bad as to be laughable.

While I am in general agreement with what QDROphile says, I differ in one respect. I think that saying that the court does not have jurisdiction may be a bit overbroad. It might be a bit more precise to say that the court does not have jurisdiction to order the distribution of plan assets other than pursuant to a Qualified Domestic Relations Order. I would be somewhat concerned about unnecessarily alienating the court. Also, I can't get too excited about this issue. I don't think that allowing the plan to be joined as a party obligates the plan to comply with an order that does not satisfy all of the requisite conditions. I can't imagine the DOL challenging a plan because it didn't resist a joinder action. I think that the DOL has much better ways to expend its scarce resources.

What is the authority for not taking those participants into account in determining the amount of the PBGC premium?

This may be overly simplisitc, but wouldn't the simple solution be for the plan to file an interpleader action (because this is a defined contribution plan)?

I recall doing some research a few years ago, and I couldn't any authority in the retirement plan context that expressly required action by the Board of Directors.

When did the participant designate his mother as his beneficiary?

Don't forget about your other programs, like life insurance, disability insurance, etc. Good luck trying to get the insurance companies to cover that individual.

Chris: I don't understand why you or anybody else has to do anything. No creditor can attach the benefits under a qualified plan, so why take any effort? Anything that can be done will only hurt those people, not help them.

Here's an article that might shed some light on this topic, although it is admittedly not directly on point: http://benefitslink.com/articles/coordinat...ate011008.shtml

1. Remember that a TAM or PLR is only binding on the employer that receives it. 2. The blurb in Corey Rosen's column does not state that the TAM squarely faced the issue as to whether or not this arrangement violates 411. (That doesn't mean that the TAM didn't directly address this question, though.) 3. Getting a favorable determination letter should protect you if the language in the plan is specific. 4. I wouldn't make the plan language permissive; it is much safer to be mandatory. If it is permissive, then you have fiduciary issues. 5. I think that you are OK if you allow the participant to choose whether the account remains invested in company stock or is invested in some other fashion. The problem arises because some ESOPs require that the amounts can no longer be invested in company stock once the participant's employment is terminated.

Jon: I think that you conclusion about "perilously close" is a bit of an overstatement. If a plan offers 10 investment funds, all of which have materially different investment opportunites and are well-diversified, I find it hard to believe that a court would find including a single stock investment option (as the 11th investment choice) would be a breach of fiduciary duty.

Belgarath: The IRS determination letter, though, isn't immunity against a participant lawsuit. Even if the employer prevails, the employer will be out the cost of defending the lawsuit.

The IRS and Treasury didn't have any trouble with bottoms-up QNECS. The issue came up in the legislative history when Congress raised the Section 415 percentage limit from 25% to 100%.

I recall an ancient GCM that held that all participants who had an account balance at the time of plan termination must become fully vested, whether or not they were still employed on that date.

Micheleca: Your attorney should not need an accountant to divide the account balance (assuming that it is a Section 401(k) or similar type of plan). Typically, the order will say that the ex-spouse receives 50% of the benefit under the plan on the date of separation. The plan will tell you what that amount is. Whether the payment to you will be adjusted for investment return will depend on what the order says (which apparently hasn't been drafted yet). Remember that it is very possible that their has been a negative return on the account, so that you will receive a smaller payment if it is adjusted to reflect the investment return actually earned. You should ask the plan if they have a sample document. Many plans have a model order that you can use. If you don't make any material modifications to their form, then they will typically approve your order. The most important thing to do is to notify the plan that you are seeking an order, so that they don't pay out the entire benefit to your ex-spouse. The next most important thing you should do is to hire an attorney.

RLL: While I agree with you that there could be imputed interest on a zero interest rate loan, would that have any practical impact. other than increased annual additions to participants under Section 415? For example, because the ESOP is exempt from tax, any "additional" income caused by the zero interest rate would not be taxable to the ESOP. Also, the employer would (presumably) get an increased deduction for the deemed contribution to the ESOP (relating to the imputed interest), but it would correspondingly have increased income because of the ESOP's repayment of the imputed interest, so that there would be no net additional income or deduction to the employer. (I recognize that in some limited circumstances, this could cause the employer to exceed the deduction limitation.) What are your thoughts?

My recollection, based upon some research that I did a few years ago, is that different courts have used different methodologies for determining if there was a partial termination. You might want to see if the Ninth Circuit has taken a position on this point. (I'm not aware of any Ninth Circuit decisions on partial terminations, but I've never researched that point.)

Although I've not had a client with a withdrawal liability dispute with them for years, I've heard from third parties that it is underfunded.

Harry O: If you parse your way through the regulations, I believe it works.

I disagree with GBurns. Adopting a written plan does not automatically make the benefits tax-free. You have to satisfy all of the rules of Section 105(h) to be a tax-free benefit. For example, the plan could only cover the CEO of the company.

Mbozek: Are you saying that a single plan document could have both 401(k) and 403(b) features in it?

Harry O: I must confess that I've never had to face that particular situation. (That is why I used the particular wording that I chose.) I just wanted people to focus upon that potential issue; not to give a definitive answer.

The first thing that the plan should do is to hire competent ESOP counsel.

Don't forget that distributions from the plan in the form of employer stock can qualify for favorable tax treatment in certain circumstances.