Non-employee spouse wants to roll money into participant spouse account

[Belgarath]

Employer A sponsors Plan B. Mrs. X is a participant in Plan B. Mr. X works for an unrelated employer, and will be terminating, and wants to roll his money into his wife's (Mrs. X) account in Plan B.

We all know you can't do this, but it is difficult to provide citations. All I could think of was the exclusive benefit rule under 401(a)(2) and ERISA 401(a)(1)(A), as well as the regulation under 1.401(a)(31)-1, Q&A 3 that specifies clearly specifies that a direct rollover that satisfies 401(a)(31) is “…an eligible rollover distribution that is paid directly to an eligible retirement plan for the benefit of the distributee.” Clearly the spouse is not the distribute.

Not to mention, of course, the plan document, which naturally wouldn't allow this.

Any other easy pertinent citations that I'm missing? I'm sure I've seen something on this before, but couldn't find the thread.

[Lou S.]

Besides the ones you've mentioned, anti-alienation provisions would apply as well.

[Belgarath]

Thanks Lou. The only other thing I could find was the Rodoni case. The Rodoni case in 1995 involved an IRA, and was, I believe, a case of first impression. It isn’t directly on point here, but it does provide some useful discussion as to the right to rollover contributions being specific to the individual.

[david rigby]

Wouldn't such "rollover" have the (ultimate) effect of transferring the tax responsibility to another person?

[jpod]

Why would you need to do anything more than show the plan language that says only an employee (if not an actual eligible participant) can roll money into the plan?

[Bird]

Don't drive yourself nuts trying to prove why someone can't do something. Tell 'em no and ask them for a cite for why they can.

[Belgarath]

You are right, of course, but I understand that this is an attorney who is belligerent and argumentative by nature, and once the plan language is pointed out will then want proof that it isn't permissible under the Code/ERISA/Regulations. "Why is the Plan written this way?"

I think you are all familiar with the type. So I thought I'd look at this in advance to try to forestall a lot of foolishness.

Sigh...

[david rigby]

Q: "Why is the plan written this way?"

A. In order to comply with the statutes and regulations.

Unless this is the Employer's (or Plan's) attorney, your reference in Post #1 and the advice in Post #6 would still apply.

[jpod]

Don't let your life be controlled by bullies. If your client wants to pay you for a dissertation on the qualified plan rules, well maybe you should accept that assignment, make sure it is perfectly precise and does not cite authorities which could prolong this ridiculousness. Absent that, tell the lawyer to go have fun with himself elsewhere, if you know what I mean.

[QDROphile]

Unless it is the client sponsor who has the goal of allowing it, then "the plan says so" is a good enough answer and the proponent will put in the position of proving that the plan cannot say so. No other explanation is needed. ERISA is such a wonderful shield against belligerents that it can also be used as a weapon. The client sponsor should be easy to convince that it is not a good goal for the plan.

[Belgarath]

Good points. I like your approaches better than mine!