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Non Erisa 403(b) plan isn't following IRC 414(p)4(A)iii


Guest pdqb

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My draft DRO was deemed not approvable by the Plan Administrator. It is a private, non governmental, non Erisa 403 (b) defined benefit. To bring the order into compliance the PA demanded that that the date that I commence my plan benefit be changed from "the date on which the participant commences his or her Common Plan benefit" to "the Alternate Payee hereby elects either the last day of the month of ___, in the year ____ (but no earlier than the date that the Participant attains 58) OR the Particpant's Normal Retirement Date as his or her payment date. If the Alternate Payee elects a date that is before the earliest date stated in (a) or (b) above , the the Alternate Payee's payment date will be the default payment date. The default payment date for an Alternate Payee's benefit will be January 31 of the year following the year in the the Participant attains age 65 (or, if later, the last day of the the month the Order is approved.)

My first question is does IRC 414(p)4(A)iii apply to a non governmental non Erisa 403(b) defined benefit plan?

Thanks.

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One amendment to my question - I reread some materials. The Administrator will let me "commence my benefit" on the date on which the participant commences her benefit, but I must specify a time of payment or a "payment date" by electing the choices mentioned above.

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See Treasury Regulation section 1.403(b)-10©. Your description causes me to think that either (i) someone does not know the meaning of section 414(p)(4)(A), or (ii) the plan does not take a very practical approach to QDROs, but it is difficult to read between the lines. Is the administrator and employer person or an insurance company person? Subject to some unusual circumstances, the plan should (as a mattter of policy, not law) allow an alternate payee to receive the entire amount awarded as soon as practicable after the order is determined to be qualified. If that is what you want and you can't get it, I encourgage you to make youself such a pain in the ass with occcupying the plan administrator's time that the plan administrator gets some brains and figures out how to get rid of you by giving you your benefit.

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Thank you very much.

To answer your questions - In this process I am the one least likely to not understand the meaning of Section 414(p)(4)(A). The plan administrator is a large HR services provider (and the sub of a large risk management company). The employer is a very large organization - with a long history of dealing with the IRS for its benefit plans (and I understand they even have a letter ruling of some sort allowing the plan in question - which ruling is unusually permissive). When I spoke with the employee of the plan administrator - he was very straight forward that the employer had made the policy that blocked me and would not allow the approval. (He was going to check with their lawyers to answer my questions.)

A further question - The QDRO procedures the administrator is following state:

"The alternate payee may elect to commence his or her benefit on or after the earliest of:

(a) the date on which the participant commences her benefit.

(b) the date on which the participant would have commenced her benefit upon "Normal Retirement"

© the date on which the participant would have commenced benefits (i.e. the later of Separation from Service and the attainment of age 58) except for the participant's valid irrevocable deferral election.

The alternate payee must specify a time of payment by electing as his payment date either: ... (as described in my first posting)"

Is there any way "commencing the benefit" and starting "a payment date" differs? I don't think I was clear before - but this is a defined benefit - monthly annuity based on a percentage of the participants salary at retirement.

Thanks

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