QDRO - alt payee's attorney questioning valuation

[JARichardson]

The alternate payee's attorney is questioning the valuations and wants a full accounting.  It's is a pooled profit sharing plan.  The client is asking if there is anything in the code that prevents the disclosure of this information as it relates to other plan participants.  I believe there is but I can't find it.  Any suggestions on how to handle this situation?

[CuseFan]

If it's a pooled account, then accounting/valuation numbers need only include the subject participant and plan totals at needed dates - where is there any need to disclose anything concerning other participants? 

[JARichardson]

We have given them that information.  Now the attorney is asking for the "complete valuation" so he can review the allocations.  The ex-spouse feels that his retirement account should be higher than it is.

[RatherBeGolfing]

Full accounting of what?  What are they questioning and for what period?  contributions?  earnings? fees?  Between SPD (or plan doc if necessary) and SAR/5500, they should be able determine whether contributions and gain/losses are correct.  

[BG5150]

Opening balance: $A

Deferrals: $B

Match: $C

Distribs: $D

Total plan earnings: $X

Earnings basis:  PARTICIPANT [BOY + .5(contribs) + adjs - distribs] /  Plan [BOY + .5(contribs) + adjs - distribs]

Total participant earnings:  Basis * Total Plan Earnings

That is all the attorney needs.

[BG5150]

And if the ex-spouse thinks the account is lower than it should be, she should get the old statements and see how they track out.  Do they think the plan was purposefully under-valuing his account all along?  Or just the most recent valuation.

[JARichardson]

The attorney is actually wanting to see the entire plan's balances and allocations going back to the inception of the plan.  The participant's father originally owned the company and retired and they are questioning what he received.  

 

[BG5150]

Are they contemplating the father's balance was artificially inflated?  For what reason?  So he could get a higher payout?  Or to lower the son's balance?

How far back does this go?

Did your firm do all the allocations?  Is the atty questioning your integrity?

Who is going to pay for all this research?

[JARichardson]

All excellent questions.   The divorce has been going on for 8 years.  We have not had the plan that long so our records only go back so far.    I don't think they are questioning our integrity but certainly that of the owner(s) of the company.  We have already charged them for several hours of research just on what we do have.  The client is hoping to put an end to it by telling them they can't have all this information.

[Belgarath]

I'd strongly recommend that the client (whether or not they are, in fact, crooked) seek ERISA counsel.

[Catch22PGM]

The 5500 filings, SPD, and the participant's statements should be all the attorney needs.  The math, as BG5150 pointed-out, is simple enough once they have those items.  I don't see any circumstance, outside of a subpoena, where a plan sponsor should divulge a full valuation report that contains data for participants that are not part of the QDRO.

With that being said, I don't know of anything specific in the code that addresses this.  Generally speaking there is a fiduciary duty of the plan sponsor to protect participant information.  There may also be a privacy policy in place that would be violated if a full valuation is provided.  I would start there and if it becomes contentious, follow Belgarath's advice and recommend your client seek ERISA counsel.

[JARichardson]

Thank you all!

 

[CuseFan]

If someone is questioning what a former owner received from the Plan then they can sue - if they have standing - for that sort of information. Otherwise, what has been noted above is more than sufficient (subject participant statements, plan totals and relevant calculation formulas. And, until there is an actual QDRO, I don't think the estranged non-participant spouse has any standing to sue any more than you or me.