Fiduciary Status?

[BTG]

Does anyone have any thoughts on whether someone responsible for determining if a DRO is a QDRO would be a plan fiduciary under ERISA? I would tend to think they would since this determination involves exercising discretionary authority in the administration of the plan, but just wondering if there is any black letter law or at least a consensus on the issue.

Specifically, we represent an annuity provider who believes they might be responsible for making QDRO determinations with respect to ERISA 403(b) plans. I'm trying to explain to them that this should be the plan administrator's responsibility and it would be a bad idea for them to do it because it would make them a plan fiduciary.

Any thoughts are appreciated. Thanks.

[QDROphile]

Yes, determination of qualification is a fiduciary function, but that does not mean the annuity provider should not provide the service. The provider can serve as a fiduciary for the limited purpose or it can provide the service under the supevision of the plan administrator without being a fiduciary. The relationship with the plan will be different because the plan administrator thinks (or should think, if the plan administrator has the ability, which is questionable becaue if the plan administrator had full ability to think, the plan adminitrator currently should be even more concerned about certainty of status than the provider) the QDRO stuff has been fully outsourced to the provider. Instead, the provider will be handling the matter and documentation subject to the approval of the plan administrator. The plan administrator will be relying on the provider as an adviser to assist the administrator in the administrator's fiduciary capacity rather than relying on the provider as a fiduciary responsible for the QDRO matters. The discussion assumes an ERISA plan.

[jpod]

I know that the statute imposes the obligation to determine if an order is a QDRO on the PA, but does that automatically make it a fiduciary act (rather than an act of reaching a legal conclusion)? Maybe it does; I don't know. I don't think I am acting as a fiduciary when I render a legal opinion to an Employer/PA client that an order is a QDRO (or advising a fiduciary that a transaction is not a PT, or any other number of examples). Regardless, implementing an order is a fiduciary act, so it probably is a breach to implement an order that is in fact not a QDRO unless the PA has a legal opinion from competent ERISA counsel that the order is a QDRO (even if that opinion is incorrect).

[QDROphile]

jpod:

To explain your circumstances under my analysis, you are not determining that an order is qualified. As you report, you are advising the PA about qualification and the PA is making a determination of qualification in reliance to some degree on your opinion. You are not determining qualification. The order is not qualified or implemented until the PA acts (makes the determination). If your action were sufficient by itself to cause implementation of the order, you would be a fiduciary. For example, if you sent your letter directly to a Fidelity or Vanguard or other service provider for creation of the alternate payee's account and the PA was not the intermediary (with ability to disregard or countermand your conclusion or direction), you would be a fiduciary.

[BTG]

In support of QDROphile's argument that advising the PA on a QDRO does not make one a fiduciary, see Tripodi at 13B.37 (citing Hatteberg v. Red Adair Co. Employees' Profit Sharing Plan, 32 EBC 1755 (5th Cir. 2003)). That case stops short of excplicitly articulating QDROphile's second assertion (i.e., that if your action were sufficient by itself to cause implementation of the order, you would be a fiduciary), but the implication is certainly there and I would agree with that position. This distinction is exactly on point, as our client IS being asked to actually make the determination and implement the order, while we are suggesting that their role be limited to advising the PA.

Thank you both. This discussion has been helpful.

[david rigby]

... see Tripodi ...

I love it when people quote Sal Tripodi.

[Guest Sieve]

Well, quoting or referring to Tripodi is not as good as using primary sources, but Tripodi is, hands down, the best and most consistent secondary source out there, and is the only one that I would recommend that a client rely on (if a client wanted to make his/her own determination). Otherwise, truth be told, there is a lot of real junk out there (not including, of course, this message board).