Kirk Maldonado

Does anybody think that there is a duty to notify the ex-spouse about the transfer of the funds? The husband could argue that he no longer has to designate the child as the beneficiary because the funds are no longer held in the pension plan. (This is a sincere question; I've not got a firm opinion one way or the other on this point.)

My recollection is that the section 105(h) regulations predate the enactment of the leased employee ruels.

Gburns: You first said: If your client does not like being in the fund, they would have to either stop using Union truckers or reduce the number of union truckers. There is no law that says you have to be a union shop. There are many firms that are not union shops. Then you said: It was never suggested or even implied that the employer should withdraw from anything. I suggested that there are ways to reduce the use of union employees thereby reducing the involvement with and the impact of any mismanagement etc. of the Pension Fund. It is obvious that you don't know the first thing about withdrawal liability. If you don't know what you are talking about, don't post anything. All that most of your posts do is prove to the rest of the people here on BenefitsLink that you are ignorant about many topics, but you have such an ego you think that we want to read your drivel. I wish you would stop posting here because you are doing nothing but wasting everybody's time with your inane posts. You are lucky that this isn't a reality TV show because you'd be voted off the island immediately in a unanimous vote.

Gburns: I didn't double-check to make sure, but I thought that the proposed 409A regs take the position that non-competes are generally deferred compensation. It could be that this position wasn't stated explicitly but it was implicit in either the regulations or the preamble.

Gburns: You are also assuming that the union will acquiesce in the employer's decision to withdraw. While not all locals are wild about the Central States Pension Fund, other locals will threaten retaliatory action if the employer withdraws. Depending on the circumstances, the business disruption caused by those union activities could dwarf the amount of the withdrawal liability.

Is that what is happening, or did the participant get a distribution of stock and the company bought it back, with payments over five years?

I've never used it (or even looked at it) but RIA Checkpoint has a feature that is apparently a line-by-line explanation of the various forms.

Anybody contemplating any such arrangement needs to be sure that they have retained counsel that understands both ERISA and securities laws, because there are some nasty issues implicated in these situations.

ERISAFried: I wouldn't recommend that you apply for a job as a forest ranger. A plan which reimburses employees for premiums paid under an insured plan is not subject to Section 105(h). Section 1.105-11(b)(2).

Here is the text of the regulation: A person shall be deemed to be rendering “investment advice” to an employee benefit plan, within the meaning of section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 1974 (the Act) and this paragraph, only if: (i) Such person renders advice to the plan as to the value of securities or other property, or makes recommendation as to the advisability of investing in, purchasing, or selling securities or other property; and (ii) Such person either directly or indirectly (e.g., through or together with any affiliate) (A) Has discretionary authority or control whether or not pursuant to agreement, arrangement or understanding, with respect to purchasing or selling securities or other property for the plan; or (B) Renders any advice described in paragraph ©(1)(i) of this section on a regular basis to the plan pursuant to a mutual agreement, arrangement or understanding, written or otherwise, between such person and the plan or a fiduciary with respect to the plan, that such services will serve as a primary basis for investment decisions with respect to plan assets, and that such person will render individualized investment advice to the plan based on the particular needs of the plan regarding such matters as, among other things, investment policies or strategy, overall portfolio composition, or diversification of plan investments. Regulation 2510.3-21©(1).

The preamble to the proposed section 409A regulations provide as follows: Some commentators also requested that arrangements involving rights to payments upon termination of services for good reason be treated as a right subject to a substantial risk of forfeiture. These arrangements are common, especially following a transaction resulting in a change in control of the service recipient. The Treasury Department and the IRS are not confident that amounts payable upon a voluntary separation from service, and amounts payable only upon a termination of services for good reason, always may be adequately distinguished. Furthermore, even if the types of good reasons sufficient to constitute a substantial risk of forfeiture could be elucidated, the application of such a rule would involve intensive factual determinations, leaving taxpayers uncertain in their planning and creating a significant potential for abuse. Accordingly, the regulations do not treat the right to a payment upon a separation from service for good reason categorically as a right subject to a substantial risk of forfeiture. However, the Treasury Department and the IRS request comments as to what further guidance may be useful with respect to arrangements containing these types of provisions. I realize that this isn't exactly on point, but it does tend to indicate that they are skeptical that such a forfeiture provision constitutes a substantial risk of forfeiture. Given the fact that such forfeiture provisions are so rarely enforced, it is hard to argue with them.

I agree with QDROphile. My goal is to try to keep my clients from getting embroiled in ugly situations that the one that this tax withholding issue could easily degenerate into. Why would anybody want to be exposed to the headaches and costs (including legal fees) of getting into the middle of such a dispute?

Mark Whitelaw: Isn't the cash buildup subject to the alternative minimum tax?

MWeddell: The original post said:

gdburns: You really are seriously paranoid. I referred to CNA because you mentioned it. I had no idea that anybody else was involved in them.

I hate to ask an obvious question, but why don't you get yourself another ERISA attorney?

gdburns: You were reading something into my question that wasn't there. I have no idea why you were offended by the tone of my question; I was just posing a factual question. There was no value-laden judgments expressed or implied in it. I was just asking for sources of information about viatical settlements. I've not seen anything about them written up, other than a few short articles involving bad characters. I am always interested in accumulating more information and that was all that prompted my question. I only directed it to you because you are the only person that I've encountered that has any degree of familiarity with viatical settlements. In retrospect, I should have asked the question to everybody.

E as in ERISA: Do most recordkeeping systems include a feature that allow you to re-amortize the loan if the participant makes a partial prepayment?

gdburns: Have you seen any articles in the press or on their website that discusses CNA's involvement in viatical settlements?

Don Levit: The language you cited said the plan can't charge more for a health-related condition, but it doesn't say you can't charge more for your highly compensated employees.

I hate to ask such basic questions, but: Where is the button that says "Mark all Posts as Read? How do you delete the cookie for BenefitsLink? I know how to delete all of my cookies, but is there a feature on Benefits Link that allows you to do so? Is it as simple as unchecking the box that says recognize me when I log in again (or similar language)?

ERISA Litigator: I have always assumed that the test as to whether the amounts were paid for child support were determined under federal, not state law. Thus, if the QDRO was for past due child support payments, the QDRO would qualify, regardless of how the delinquent obligation would be classified under state law. However, I will freely confess that I've never researched that issue. Moreover, I thought the plan administrator didn't have to look beyond the face of the QDRO to determine if it was qualified; that research into state law was unnecessary. But again, other than reading some summaries of some DOL rulings and court cases, I've never researched this issue.

Don: You didn't answer my question, which is: I am looking for a specific citation in the Internal Revenue Code or the regulations that states that this arrangement violates some specific nondiscrimination rules.

PATA: If you do a search on Google for viatical settlements, you'll find that they have been in the news a number of times in the past year or so, and all of the articles that I've seen were negative. But I will admit that I've not done any research on this point; I'm just commenting about what I've seen in the press in connection with my general background reading. So you (or your client) need to do your own research because my knowledge is limited to what I've gained from skimming a few articles on the topic. Thus, my expertise on this topic is extremely attenuated.

What nondiscrimination rules are you worried about violating?