mbozek

The s/l could begin on the date the plan failed to provide an annuity benefit to the participant in accordance with its terms, i.e. termination of the plan.

Isnt the Q what is the statute of limitations under the state law in which the participant lives or the plan is administered which is closest to the claim that the employee can make for the benefits. E.g., If the closest claim under state law is a 6 year s/l for breach of contract then the participant has 6 years from the breach to file a claim for benefits.

Q has the plan been able to identify a beneficiary to receive a distribution? Or is this a case of an orphan plan benefit?

What the participant needs to do is roll the pre tax money over to a traditional IRA first and then elect to recieve the balance of the acount in a lump sum as a separate distribution. See IRC 402©(2) flush language at end.

The plan administrator can only pay benefits to a participant if the admin has the correct identity that matches a SSN. If there is a discrepancy then the benefits must be withheld untit the correct information is provided. Under IRS regs benefits due can be forefeited if the plan permits such forfeiture because the participant's whereabouts cannot be located.

First: According to Committee reports on REA, Plan administrators have discretion to treat divorce orders entered prior to 1/1/85 as a QDRO if the benefits were not in pay status on that date. According to the report the Plan administator is encouraged to treat pre 1985 divorces as QDROs to the extent consistent with REA. If there is no QDRO on a divorce issued after 1/1/85 the plan has no obligation to pay a J & S benefit because no QDRO was approved by the plan. Second: under 414(p) the QDRO must include the name and last known address of the of the AP. The plan should send notice of benefit availability to the AP's last known address in the plan's records or the QDRO. The plan has no responsibility to try to locate the AP if the AP has not provided a forwarding address but could elect to find the AP through a locator service. You need to consider the fact that many "missing" persons have changed their identities to prevent being found or died years ago. As far as paying out benefits of missing spouses who haved attained 65, IRS regulation 1.411(a)-4(b)(6) provides that the plan can forfeit the benefits of a participant or beneficiary to whom payment is due on account of the inability to locate such person provided that the benefit will be reinstated if a claim is made at a later date.

Its only silliness if you dont understand the difference between RA contracts which have limited cashout options, e.g. no automatic lump sum option, and SRA contracts which can be cashed out in a single sum if a distribution event occurs. These differences must be communicated to employees. The two contracts can be treated as separate plans if the employer wants to provide more flexibility in the non ERISA plan- no spousal consent is required for lump sum distribution or loans. It up to the employer to decide whether to have two plans or one plan, not T/C.

Isnt the spouse the owner of the employee's 457 plan account? the advantage is that the employee's estate will not be taxed on the amount of the outstanding loan balance and the spouse can roll over more tax deferred money to an IRA.

It doesnt appear that either of these plans would be subject to the DOL rules for QDROsS discussed above because they are maintained by a government employer. You may have to follow the fund's rules for getteing court approval for the DRO unless the court order the plan to wait for the QDRO to be issued.

I notice that you have initiated several threads on this QDRO going back to last Aug. According to your prior posts your husband's benefits were from his service as a NYC police detective. Public employee pension plans are not required to comply with federal QDRO regulations under the jurisdiction of the Department of Labor so the rules may be different from the rules for private employers. Are the benefits you are seeking from your ex's service as a NYC detective?

As to the Minor Q - I had the same idea, but SPD did not address and participant did not have a copy of the adoption agreement. I was able to identify it was a Corbel/PPD doc, but I know this doc does have the different options to choose, so I don't have this answer. Participant has spent the funds to build an addition to his home for handicapped child, so he no longer has liquid funds. I think this presents the plan with a quandry because under rules of equity only the funds from the plan actually in the possession of the participant when the action commences can be recovered in the event of an overpayment. If the distribution was used to build an addition to the home the plan's interest will be subject to the interest of a bank holding a mortgage. I dont know if the plan's interest in the excess amount could be traced to the home addition. I dont know if the plan's interest (if any) could be enforced as a lien on the home that would be paid when the home is sold. Even if the plan's claim is a valid lien the plan would be the last creditor to be paid.

If the participant has spent the distribution the plan will not be able to get it back. Also the plan has to identify the distributed funds that are in the participant's possession. Minor Q- Under the plan if the participant terminated in 2008 what year's valuation is used to determine the value if payment is made in 2009? 2007 or 2008?

I dont know why this seems so complicated. Assume the employer allocates a certain amount of funds for employee benefits say $1500 per year and increases all employee's pay by that amount. Employee who wants health insurance can contribute $1500 to the cafeteria plan pre tax which reduces the employer's health insurance cost by the same amount i.e., the money is returned to the employer. Employee who does not want to contribute to health plan can contribute $1500 to a 403b or 457 plan pre tax. If the employee's share of health care is more than $1500 then the employer can require the employee pay the additional amount through the cafeteria plan.

I dont think that 403a plan can be funded with individual annuity contracts because the plan assets cannot be subject withdrawal by the employee before a distribution event occurs, e.g. termination or death. If employee's benefits are held in individual contracts employee could cash out at any time in violation of rules against pre retirement distribution.

Where does the OP state that notice was not given. How is the delay a breach of fiduciary duty? In my experience uncompleted DRO filings result from the failure of a party, usually the AP, to respond to requests by the plan admin to make changes to the DRO or a dispute between the AP and another party such as AP's counsel which results in the abandonment of the DRO, only to be revived many years later when the AP finds out the participant has retired or remarried. I have seen DROs abandoned after 5 years of fruitless negotiations by the parties. One question I have for the OP is how did the DRO get in the files. Was it accompanied by a letter from counsel? One possibility is that the Plan Admin informed counsel that the DRO was not qualified and counsel failed to submit a revised DRO which explains why the final steps were never completed. I thought the Legislative history of REA made it clear that after the 18 month period expires without a QDRO being issued any benefit acrual suspension ceases and any determination that a DRO is qualified after expiration of the 18 month period is to be applied prospectively. As noted in the Senate Finance Committee report on REA the AP always has a cause of action under state law for amounts paid to the employee that should have been paid to the AP. However the participant is still employed. Since the DRO was issued 14 years ago there is a question of whether a court could issue a revised DRO. Another Q :has the participant remarried?

What are the consequences of not acting? Under 414(p)(7) there is no requirement that a plan administator resolve the issue of whether a DRO is qualified in a specified period of time. If the issue of a DRO qualification has not been resolved within 18 months any benefit amounts segregated are to be paid to the participant as if the DRO had never been issued. Any determination that a DRO is a QDRO after the end of the 18 month period shall be applied prospectively to future benefit accruals.

A 403(a) plan is a qualified plan funded by a group annuity contract instead of a trust. It is subject to all the other requirements for qualified plans including the requirement to have a written plan document. See IRC 404(a)(2). Annual reporting is required. Rollovers are permitted between 403(a) plans and 403b annuities if a distribution event has occurred. I dont know what you mean by converting to a 401(a) plan. A qualified trust under 401(a) can hold an annuity contract under 403(a).

But how will the spouse enforce her rights under 414p? The insurance company is not the plan administrator because the plan has been terminated so how is it subject to ERISA?. Is it your contention that the insurance company is the successor to the plan administrator? One thing you are forgetting is that under REA the ex spouse still would have claim to the anuity benefits payable to the employee under state law if the benefits are no longer subject to an ERISA plan. The ex's remedy will likely be in state court.

If the benefits were purchased as irrevocable commitment from the insurance company then no one is going to want to change the benefits that are being provided to the employee because of the additional cost that would be entailed unless there is a provision in the annuity contract that allows for benefits to be adjusted in the event of a QDRO entered after the benefits have been purchased. Also 414p3 provides that a QDRO cannot require that the plan pay a benefit not otherwise provided under the plan. Under procedure for terminating the plan under the PBGC regs the plan administrator is required to purchase an annuity for the participant and spouse in the form required under the plan at the time the plan was terminated.

Solves the problem for open tax years (2006-2008) but 'what to do about years prior to that' is the problem. There are two different issues: 1. The contributions by the partner and the employer are treated as pre tax under the terms of the plan, so the distributions will be treated as taxable when received. 2. Both types of contributions are reported as taxable income on the partners K-1 and the partner must claim the deduction on the 1040. As noted the s/l for amending returns to claim the deduction is 3 years. The problem for the partner is that the contributions prior to 2006 are considered to be pre tax on the plan's records if they were contributred as pre tax under the terms of the plan. The failure by the partner to claim the deduction on his 1040 is not an error which can be corrected in the plan's records. Its no different than a participant who fails to remove excess 401k elective contributions to two plans by 4/15. The excess funds will be taxed again at distribution.

Reg 1.411(d)-2(a)(1) states that upon termination of a plan the rights of each affected employee to benefits accrued to the date of termination or rights to amounts credited to his account at termination are non forfeitable. So the question is what is the amount in the participants' account balance/accrued benefit on the date of termination as defined under the terms of the plan? In order words when participants recieved a partial distribution were any benefits forfeited or were they suspended and would be restored if distributed benefits were paid back with a period of time in the future? The allocation of amounts in a forfeiture or suspense account after plan termination is determined under the terms of the plan. Some plans provide for reversion to the employer, some provde that excess assets are to be used to pay for plan termination expenses and some provide for reallocation among the participants. If you have an attorney why are you asking this board for an answer without the knowledge of what is in the plan documents that will determine the resolution of this question? Also have you looked at the IRS audit guide lines for termination of qualified plans?

The employer could certainly make contributions for 2010 for all employees making less than 110k up to the lesser of 100% of comp or 49k and non discriminatory contributions for those employees with comp over 110k. Employer contributions could be the equivalent of the match for both 2009 and 2010. Certain severance payments may also be included as comp. The NP needs to discuss this Q with counsel/tax advisor.

See Reg 1.401(a)(9)-5 Q/A-1©. Time for Distribution. The distribution required to be made on or before the employee's required beginning date (April 1 of the year following year 70 1/2 is attained) shall be treated as the distribution required for the employee's first distribution calandar year. Under Q/A-1(b) the first distribution calendar year is the year the employee attains age 70 1/2. In other words the RMD can be taken any time during the calendar year the employee turns 70 1/2.

I am not sure of what situation you are thinking of but there is an exception to the 10% premature distribution tax in 72(t)(2)(A)(vii) for payments made from a qualified plan pursuant to a tax levy under IRC 6331. But tax levies can only be enforced against benefits which are payable from a plan. There is also a provision in reg 1.401k-1(d)(2)(B) which permits a hardship distribution on account of an immediate and hevay financial need to pay federal or state taxes or penalities anticipated to result from the distribution. I dont know whether a participant could request a hardship distribution in order to pay off a tax levy which is served on the plan administrator and qualfiy for the exemption from the 10% penalty tax.

There is a big difference between an NQDC plan where the participants have no ownership interest in the plan assets and the employer has sole descretion to determine the distribution options and a 403b plan when the employees have 100% vested ownership of the assets in the plan and a separate contractual right to designate beneficaries under the annuity contract or mutual fund agreement apart from any language in the 403b plan. Under state law the amounts in the 403b annuity contract or mutual funds are non probate assets which means that they can be transferred to heirs without the need to pay for probate costs, an attorney or an executor or administrator to distribute the deceased's benefits.