FAQs

Full Question

“My employer (small business) is offering health insurance, ten (10) employes signed up. I am personally being charged double of what my quote given from Humana by said employer. Out of the ten employes my quote was less then the rest of the group being the least at risk and age. Feeling like I’m buying tickets for the ball game from a scalper..”

Harley’s Advice

Health insurance is expensive. Small group plans are heavily regulated and the cost will vary with your age and the risk of the group. Go on-line and get quotes from ObamaCare and compare. The rates will probably be better from your employer than an individual policy from the website.

Full Question

“In 2009 I was convicted of embezzlement by my previous employer. I served 22 months in state prison. Since my release I have been trying to get my 401K contributions cashed out, rolled over but my previous employer refuses to release them. I was told that they had an attorney trying to get them to release the monies to the company since I owe them restitution but that was back in 2012. I looked into it today to see if my 401K account was still active and it was. It has been almost 11 years and they wont release the account. What could I legally do or where can I turn for help? I was thinking of the CA Labor Commission Board but don’t know if that’s in there area of expertise. Or should I just let it go. Please advise.”

Harley’s Advice

While it depends upon the language of the plan, they may hold the money until you reach retirement age. If they are distributing money to other participants, you may be able to allege discrimination.

On their attempts to get restitution, their lawyer clearly does not know how to do that or the restitution would have been done long ago. I would call the local Department of Labor office (EBSA) and ask them to enforce you getting your hands on the money. If they will not act, make a claim to the plan for a distribution of the benefit. This will force their hand as to why they are not distributing the money.

Full Question

Our health insurance is charging $45 bi-weekly extra for smokers. However my employer is charging $20 above and beyond that with no explanation of what the money is for. How can they do this without charging everyone that smokes not just those that have health insurance?

Harley’s Advise

Being a smoker is not a class of employee that is protected under the law. They may charge you more, but the extra charge must be non-discriminatory among all smokers. Ask them to explain in detail what you are being charged, why you are being charged and have them verify that you are being treated the same as all smokers.

Full Question

I’ve been working with a company for 6yrs 2010 – 2016; and currently employed with same company. I recently found out that year 2014 the company that handles the company’s 401k plan didn’t recognize me as an employee although the company was deducting my 10% contributions and the employer’s 2% as well. 1) what happens now? 2) would/should more monies be added into my 401k retirement account for the deductions being made? Based on the current dollar amount in the retirement account how would i know it is accurate? Thank you!!

Harley’s Answer

Call Human Resources. They made a mistake and need to clear it up. Have them provide specifically how they fixed it and what amounts they put in. All corrections must be retroactive to when they should have been put in and must include lost earnings. It is their obligation to make sure that they demonstrate that the correction was done appropriately, so ask a lot of questions and make sure you are convinced they did the correction properly.

Full Question

I’ve been working with a company for six years and have had a 401k plan since 2010. I recently found out one of the years (2014) that I wasn’t recognized as an employee by the 401k benefits plan although they were deducting through my paycheck my contribution to the 401k plan during the year they said I wasn’t employed. I’m still currently employed with the company.

Harley’s Answer

It is clearly a mistake. Call Human Resources and have them fix it. They will have to reinstate the amounts withheld, any match and earnings on both items.

Full Question

 My mother in law passed away a few months ago. She named me a beneficiary on a life insurance policy she had through work. An issue has come up with the claim, because apparently if you are inactive at work for six months, the employer is to notify the benefits center so they can offer private benefits to the employee. Well the employer made an error in notifying the benefits center and the life insurance is investigating on whether or not to pay out the benefit.

Harley’s Advice

I would press your claim. The employer did not do what the policy required them to do, but that is not your problem. The employer promised your mother a death benefit. If they messed up the terms of the insurance policy they purchased to pay the benefit, it does not change their promise to your mother.

Full Question

My uncontested divorce becomes final on 10-28-16. My husband carries the health benefits. I was on his plan. Do my benefits end at the end of the month or when his employer submits the paperwork to the insurance company?

Harley’s Answer

Health benefits always end at the end of the month.

Full Question

I will be leaving a large company and the new company will not offer 90 days. Can I wait to sign up for COBRA benefits until I need them? Let’s say I get sick 45 days after I receive the COBRA letter. Can I then sign up and expect to have my medical needs covered?

Harley’s Answer

You have sixty days to sign up for COBRA. The sixty days starts to run on the day you lose coverage (which is usually the last day of the calendar month in which you are terminated. As long as you pay the full premiums back to the day you lost coverage, you can elect COBRA on the sixtieth day. So, you can spend 59 1/2 days looking for other coverage and then enroll in COBRA if you wish.

Full Question

The employer terminated the pension plan after it was transferred to Fidelity over 90 days ago due to a merger. We were notified that the pension benefits were frozen and ceased as of the date of the merger closing but we have not been provided anything other than that they will offer a lump sum cash out of the full benefit amount. We have tried to contact our employer and Fidelity, both refused to give any information except a document with our monthly pension payment from 2013. Fidelity refuses to provide any account information, values, amounts, etc., and it is going on over day 100 since the pension was terminated. We have no way of obtaining any information about our pension and want to know what recourse or options we have?

Harley’s Answer

It takes time to terminate a pension plan. It is not out of the ordinary for the process to take six months to a year. There are government approvals and benefit calculations that have to be made. Do not worry, however, as your benefits are fully vested and must be fully funded through the termination. Asked to be updated as the termination progresses. They are not ignoring you, they just have nothing new to report.

Full Question

I went to pay my insurance last month. The lady at the counter stated she didn’t have change. I said OK because I was in a hurry. This month I owe the same amount so. She took my money told me she didn’t have change then didn’t put it on my next bill. Is that legal.

Harley’s Advice 

So your premium was $X.38. You gave the legal representative of the insurance company $x plus $1. The representative did not give you $.62 back? The 62 cents should have been credited to your account for the next month, if you can prove you did not get change. When you tender cash for a payment, the recipient must account for the change (either they gave you change or credited the remainder to your account). If you got a receipt or can get the person who took the money to admit they did not give you change, they should give you a 62 cent credit on your next bill.

Full Question

If one receives private disability payments, are those payments taxable? Can no longer work due to an accident and receive disability through insurance policy from employer.

Harley’s Answer

It depends upon how you paid the premiums. If you paid the premiums after tax (your employer paid the premiums, but you reported the amounts paid for the premiums in your taxes) the benefit is not taxed. If your employer paid the premiums and you did not report the amount paid as premiums as taxable income, the full amount of the disability payments is taxable.

Full Question

I’m diabetic and work for a company that gives full time employees full coverage health insurance. I’ve been enrolled in there insurance since January 2016 and well its June now and my manager or managers manager or the guy who has been handling our forms can’t tell me if I have insurance yet as well as several occasions of going over my 6 hours without lunch and no compensation. I really don’t won’t to be penalized on taxes 2017 for not having insurance.

Harley’s Answer

There is no preexisting condition exclusion for health plans anymore. If you work for a company that has a group health plan, elected coverage and they are deducting premiums from your account, you are covered even if they choose not to pay the premiums. There should be no mystery here. Call the insurance company to verify if they are paying premiums. If not, contact the U.S. Department of Labor EBSA.

Full Question

After my mother passed away I contacted her 401k and retirement system in order to request her death benefit that was left to me. I received a check direct deposit for what was left after taxes of $17,000.00. 2 years later today I am being threatened garnishment by the irs because I “failed to report an early disbursement ” not knowing what this was about I contacted the 401k provider and after several phone calls to them they finally researched and found that instead of sending me my mother’s $798.00 death benefit they withdrew $17,000.00 from my own 401k and deposited it into my account in error! The money of course after two years now has been spent, now my 401k is depleted and all along It was presented to me as a death benefit. I can’t afford for my income to be garnished. The company is saying that it was in fact their mistake but that they can do nothing to fix it. This just doesn’t seem fair!

Harley’s Answer

You have some very inconsistent facts. You received and spend $17K. You did not notice that your 401(k) account dipped $17K for over two years? I note that it is not legal to take a distribution from your 401(k) account unless you have specific circumstances (e.g., hardship, attainment of age 59 1/2), so under what authority did your plan send you the money? Did you both work for the same company with the same 401(k) plan? How else would they get mixed up? Something else clearly happened so it is difficult to respond.

Full Question

I rolled over most of my 401k from my previous employer into an IRA and requested that a small amount be direct deposited into my checking account. A representative from my former employer handled everything over the phone (on a recorded line). Everything went fine with the IRA, the funds transferred and everything was setup correctly. I should have received the rest of the funds 3 weeks ago and have not, they have somehow misplaced my money. Their recorded line proves that all the information was given correctly yet somehow they deposited to the wrong account. I have talked to the same rep and her manager as well as the manager of my bank several times and no one knows where the money is, the bank says that they never received it and the funds administrator says that they can’t give me the money until the bank returns it???

Harley’s Answer

Funds are misplaced all of the time. Ultimately the money will be found. Absent a wrong account number being provided, the plan will ultimately owe you the money as they had a duty to deposit the money in the correct account. Be patient. Sometimes these things just take time.

Full Question

I worked for a company with a tiered vesting schedule (yr 2 = 25%, yr 3 = 50%…). The company merged with another company who communicated that any employee who worked for at least 2 years if fully vested, both in the old plan and the new plan. I separated from employment and they are now telling me the previous plan’s tiered schedule is in effect for those funds so I am only 25% vested instead of 100%. I have emails and texts from my employment that said I was 100% vested. The problem is there is a new benefits person who dug into the paperwork to find out that the tiered schedule should be applied although this was never communicated to staff. If I had taken our my funds under the earlier benefits person, I would have received 100%. This leads me to believe there are other employees who left before the full vesting period was up and they received 100% of the employer matches while I will only receive 25%.

Harley’s Answer

The plan vesting schedule is the plan vesting schedule regardless of what anyone tells you. This is to prevent an oral amendment of a plan (only a writing can amend a plan). There are actions for miscommunicating plan terms, but these are generally tough to win and they are law suits against the individual making the misrepresentation, not the plan or the plan sponsor.

Full Question

I took out a 401k loan against a new home, and failed to make the payments in a timely fashion due to misunderstanding on my part and lack of address updating on the plan holder’s part. My first indication that anything was wrong was after I received notification that the loan had defaulted.

After the default, our nearly useless plan administrators told me that the only remedy was to file for a VCP correction with the IRS. I gave the go ahead, and they sat on it for nearly a year. Then they came back and said I was ineligible for a VCP correction because I am a highly compensated individual.

I have tried to read the relevant IRS docs, and I can find nothing to support this. The plan administrators are stonewalling me saying that I could not possibly understand the complexities of the situation and I just need to believe them.

Are there compensation tests or other limits to who can file for a VCP correction?

Harley’s Answer

No, VCP is an encouragement to get things correct. There is not exclusion for HCEs.

Full Question

I am looking to start a business, however, falling short with the seed capital. Was investigating a possibility of funding the business using 401K. Have been reading a lot on the internet and had in person consultations with 2 accounting offices specializing in small business taxes/law. I am getting a very contradicting information – some say it is possible to open a business using 401K plan: 1) open the business 2) create 401K plan 3) roll my 401K there 4) use the funds to purchase shares and my seed problem solved; some say it won’t work as IRS would not allow it as I will be operating this business.

Harley’s Answer

Using your 401(k) to fund a business is an urban myth. Plans that do that have a name, employee stock ownership plans. Using a 401(k) balance does not work, no matter what all of the pundits say on-line. Like all shams, it will eventually be tracked down and stopped by the IRS/DOL or both. When you use qualified plan assets for your benefit, it is the equivalent of a distribution to you and it is taxed as such (ordinary income tax as well as early withdrawal excise tax).

Full Question

My Dad belongs to a Self-Funded health plan through his Union. He was in an accident and had to be transported to the ER that was unfortunately out of his network. His insurance is still negotiating his bill with the hospital but says that he might have a big liability beyond his usual co-pay and deductible. I know balance billing is illegal but that is a state regulation. Since Self-funded health plans are not regulated by the state, does he have any rights to limit his liability since he couldn’t pick his ER when he was unconscious.

Harley’s Advice

When it is an emergency, most plans provide coverage out of network for emergencies. It will depend upon what the plan says, but I would push the union to fight for your father’s coverage.

Full Question

That’s right, I’m angry. Since 2008, too-big-to-jail banks deserve neither my respect nor courtesy. My pension is MY earned money, but new laws say banker scum are gods who can do no wrong. Don’t feel like paying my pension? They don’t have to. The third month after my pension started, in 2012, they tried to “forget” to pay, gave me a run-around for three days until I threatened a lawsuit which made the “problem” immediately vanish. Now it’s happened again. Last week of every month, I get a mailed statement showing the next automatic deposit is pending. No statement came end of December, and no pension deposit Dec. 31 or Jan. 1. Don’t try to tell me someone “forgot,” it’s automatically computer-generated unless someone decides to stop it.

Harley’s Answer

Call the local branch of the EBSA for the U.S. Department of Labor. They will help the bank recall your payments. Missed payments happen, but repeated violations can be punished by penalties.

Full Question

I do not work and the money in both accounts, PERS and Deferred Comp, was earned by my x during our marriage. Since I do not need the money at this time and I will begin receiving monthly checks from PERS, can I have the monthly pension checks deposited into the deferred comp account? I understand that you can only put earned income into these accounts, and it is earned income, but I personally did not earn it.

Harley’s Advice

In general, you may contribute only “compensation” that is earned from your employer into a deferred compensation account. That definition most likely excludes distributions from public pensions, qualified retirement plans and deferred compensation plans.

Full Question

What protections do i have from creditors for Solo 401k and IRAs in California?

Harley’s Advice

They are both outside of the Supreme Court case Patterson v. Shumate (which protects O.J. Simpson’s pension). California state law provides a protection for “retirement benefits” up to $1 million. If you get one employee in the Solo 401(k) you get 100% protection like O.J.

Full Question

I have maxed out my 401k to the federal maximum of $18,000 this year but my company contribution is only about $3,200. The company matching policy is as follows:

“CompanyX will contribute 50% matching funds up to 4% of pay, vesting over 3 years.”

Using a hypothetical, my understanding of this statement is an employee making $100,000 per year would get a maximum match of 4% of their annual income if they contribute $8,000 or more to their 401k. In other words, the company would contribute $4,000.

When I questioned my HR department I got this response:

“The way the statement was written is confusing, indeed.

If you contribute between 0 and 4%, we will match 50% of whatever you contribute. Another way to explain would be that we will match 2% of your salary if you contribute 4% or more. ”

The company matching policy and the statement from HR definitely say two different things.

Harley’s Advice 

It is not confusing to me, but they are matching correctly. The IRS and the United States Department of Labor require extensive testing to prove that the employer is not discriminating as to the match. I assume by your example you make $160K each year. They match 50% of your elective deferrals up to 4%. 4%of $160K is $6,400 and they matched 50% of that or $3200.

Full Question

My ex-wife is asking the court to utilize Pension Appraisers, Inc for our QDRO. Can you explain this process. How is this carried out and what benefit will it serve me to go through this service? If you need any additional information for me to provide to properly answer my question, I will be happy to provide that information. It does not state in our PSA to utilize such a service.

Harley’s Answer

I do not know who Pension Aggraisers, Inc. is, but I assume it is a company that puts together QDROs. A QDRO is a legally defined agreement signed by both spouses and the court directing the retirement plan as to who gets what portion of the benefits being held by the plan. Federal law allows the parties to assign anywhere from 0% to 100% to each spouse. It is best to hire a professional to prepare the QDRO as they are often prepared in a manner that does not meet the statutory definition. The benefit of a company is that they will charge a fixed fee and keep at it until the QDRO is approved.

Full Question

She does not work. I have been moved out for over 3 years. I have two kids who live with her. She let the one drop out of school in 10th grade. She has money from a lawsuit and I give her child support. There is no shared property between us. Is she entitled to my pension?

Harley’s Advice

It is not a pension law issue, it is a state marital law issue. The 401(k) plan provides that your wife is your beneficiary of the benefit unless you designate someone else and she consents to that designation. You can get the family law court to provide your designee as beneficiary through a qualified domestic relations order.

Full Question

My former employer is requesting that I pay back monies owed for an educational reimbursement program. My concern is with the amount that my employer is requesting me to pay back. There is no signature of me agreeing to their “terms” and the reason behind there being no signature is because it is a company policy. Can someone provide me with insight of whether or not I have a case to get the amount that I owe reduced? Also, my former employer would not agree to a reasonable payment plan.

Harley’s Advice

They are most likely blowing smoke to scare you into paying it back. Read the policy. It is a contract. Did you not finish the class? If you completed the class and they paid you for the tuition, absent a clear statement that you have to do something else in the policy (like stay employed for some period of time), they probably have no case. Remember, it costs them $15K to file the action against you. Small tuition amounts most likely will never be pursued.

Full Question

I was divorced in 2010. I was awarded half of his 401K. He kept telling his attorney he was going to pay his fee of the QDRO report but he never did so I payed along with my half to my attorney to do this. They did the report but were waiting on him to submit his paperwork on the 401K. Long story short he pulled it all out & spent it. It’s been 5 years. What I need to know is how much a lawyer is going to charge me to take him back to court in Florida for my half of the 401 K. Please help. Cecelia Petty

Harley’s Advice 

Make sure you name the Plan Sponsor. When the Plan Sponsor became aware of a pending divorce, they must freeze the account. ERISA provides attorneys; fees and they fell down on the job. Do this right away as the statute of limitations maybe a problem.

Full Question 

My partner is eligible for health insurance through his employer, but all of their options would make it financially difficult for him to get the care that he needs because all of the plans have unreasonable deductibles. Can he request, of his employer, that they pay the same contribution amount that they pay towards the plans that they offer, only on a plan from the marketplace and we’d pay the difference as a premium?

Harley’s Advice

Under ObamaCare the employer need only offer the coverage they offer and satisfy the requisite levels of coverage and cost. Your partner can accept that or go to the exchange and purchase another policy. The employer is precluded from providing the same payment for another policy.

Full Question

I resigned from my previous employer on October 15. I am now working for new employer. I think I qualify for health insurance via cobra, but what about continuing my STD & LTD insurance until my benefits kick in at my new employer? Thanks

Harley’s Advice

No, COBRA applies to health and dental only.

Full Question

We were married 37 years. We married in 1953. We divorced in 1990. My husband died in 2000, he was receiving his pension at the time of his death. He never remarried. Should I be getting his pension?

Harley’s Answer

Did your divorce allocate the pension to him? You had entitlement to a portion of the pension based upon your time in the marriage. If you did not get a qualified domestic relations order (a court order that you are entitled to a portion of the pension), he may have used all of the pension before he died. Call the Union and explain your situation. They should be able to give you some guidance. You may have been named a beneficiary, but they do not know where you are.

Full Question

He had a lawyer write up an agreement indicating that I agreed to sign it back over to him for a dollar amount we both agreed to which I didn’t but he harassed me so much that I ended up signing the document so when he retired I wouldn’t get any of his retirement pay. He didn’t say that I would not be entitled to receive it if he passed away, he just wanted to receive his entire pension payment when he retired without sharing it with me, but he said that if he passed away before me, I would be able to receive the remainder. Am I entitled to his pension once he passed even though I signed a release which I never got a legally filed copy of. He passed away in June 2015. Do I have any legal recourse?

Harley’s Answer

It sounds like you agreed to a qualified domestic relations order (“QDRO”) that gave 100% of the pension to your ex-spouse. That same document could have said, however, that he or she gets the retirement benefit, but, if he or she dies, you get the remainder of the benefit. If it did not, you are probably out of luck. The QDRO is required to provide who the beneficiaries of the divided benefit are, so I would take a look at the QDRO to wee what it says.

Full Question

I left my company and went to work as a contractor for one of its subsidiaries. When I checked with the retirement plan administrator to see about doing a rollover to a new plan, they told me it couldn’t be done because the system showed me as being “employed” by my previous firm. Upon contacting the old company, they said that was correct. I could add funds to my account, but could NOT rollover or do any withdrawals except for hardship purposes. They emailed me the plan page that said (paraphrased): special rule – if you leave their firm to become a contingent or contract working for a firm providing services to their firm, you may not receive a distribution from the plan until age 591/2 or contingent/contract work ends. Never heard of this before! Can anyone shed any light on this?

Harley’s Answer

Qualified plans have many Draconian rules that don’t always make sense. You are subject to what used to be called the “same desk rule.” When you work for a company, you cannot have access to your account in the 401(k) plan because the IRS does not like allowing employees to randomly determine when they will be taxed on their benefits. You changed from being an “employee’ of the company to being an independent contractor of the company. You probably, however, have the same job and do the same tasks your did as an employee. The IRS does not want you to gain access to your retirement benefits until you have what is called a “separation from service.” A separation from service is a termination of your employment with your employer. A subsidiary is treated as the same employer as the parent company.

This one is coming from the IRS, not your employer. You can quit your job, take a distribution and then get rehired as an independent contractor.

Full Question

united health care representative changed my insurance from medicare drug coverage to united healthcare with out my permission

Harley’s Answer

To answer your question, no they cannot. I would suggest, however, that a company like United Health Care would almost always provide you notice of a pending switch before they did so. It could be that the old coverage was no longer being offered or that you do not qualify for the old coverage or many other circumstances. They usually say in these notices that you are about to lose the coverage and, if you do not contact them, they will automatically switch you over to another policy being offered that closest suits your circumstances that you qualify for. Call United Health Care and ask for an explanation. If you do not understand what happened, keep asking questions until you do, even if it means multiple phone calls.

Full Question

My health insurance was wrongfully terminated retroactively. After leaving a job and waiting for insurance from my new employer to begin, I bought coverage for a month, utilizing the NY health marketplace. I began the new job, and my team was laid off after 3 or 4 months. I decided to be self-employed full-time, again utilizing the marketplace to purchase insurance through the same company I had used previously during the earlier one month gap in coverage. About 2 weeks ago, I was sent an email the day the coverage was terminated. I was able to prove that I’ve had 2 change of life situations, and marketplace decided my coverage was wrongfully terminated. The insurance company then “unpaid” my medical bills and did not refund premiums I paid out of pocket. Now, I have no coverage.

Harley’s Answer

You did not really ask a question. You mentioned life changing events which is usually a COBRA issue, but you did not mention whether you went on COBRA. I assume that your reference to NY health marketplace is the NY ObamaCare website. The website does not have the same rules as COBRA. Your policy was most likely terminated because you did not pay the premiums (while you were covered by the new employer’s plan). In this case you would have to reapply and could do so only in very specific circumstances. You lost coverage, but you would have to demonstrate that to NY health marketplace before they would issue you a new policy.

You do not have the option to retroactively reinstate the policy four months down the road. You will get your premiums back, but I would re-apply instead of filing a lawsuit.

Full Question

We are a small business. We had to discontinue offering employee health coverage as of January 2015 because the cost became prohibitive. Recently we have been told that the company could pay for executives health insurance because we have less than 50 employees. Although I don’t believe their would be any overt discrimination, the coverage would be for employees considered highly compensated. Can we do this? Or can the company pay premiums directly for individual health insurance premiums? Thank you.

Harley’s Advice

It is illegal under ObamaCare to discriminate in the provisions of health care. How discrimination is defined and how it will apply are not yet clear as we do not have definitive rules yet.

Full Question

i.e., employer is taking the Insurance Allowance benefit away from me…

employer offers a fixed dollar allowance benefit (IRS 125) that can be used to acquire health insurance and etc.
employer has been paying me the full amount of that monthly Allowance as my health coverage is through my spouse’s plan/employer.
employer is telling me i am not going to receive the allowance benefit any longer
employer will continue to offer the allowance – but only to those employees that acquire the health insurance – with the difference being paid to the employee if less than the insurance cost.

i.e., employer is taking the Allowance away from me but continuing the Allowance for others

the cash portion of the Allowance has/is always subject to taxation, etc.

Harley’s Advice

I think you are asking the following. Prior to now, your employer offered to cover you for a fixed monthly amount taken out of your paycheck. In lieu of that, you could take a cash payment of $X every month as long as you were covered on your spouse’s plan.

The employer is now taking away the $X payment.

It depends upon the size of your employer. If your employer must provide health care, the employer need only offer you coverage at less than or equal to 9.8% of your pay. You may take it or leave it, but the employer no longer has any incentive to pay the $X.

If your employer does not have to provide you health care, your employer no longer has any incentive to offer the $X as ObamaCare provides that you can buy your health care on the exchanges.

Full Question

New some one who knows about ROBS, retirement funds to make a loan to start a small business.

Harley’s Advice

ROBS are an urban legend that are really prohibited transactions that result in the disqualification of the IRA holding the assets. IRAs are supposed to invest funds not operate a business.

Full Question

My new Deferred Comp. company (VOYA) is telling me my emergency does not fall within the scope for taking money from my account. How can I gain access to my own money?

Harley’s Answer

You have not provided enough information. When you say “deferred compensation” I can only assume that you mean a non-qualified deferred compensation plan provided for top-hat, highly compensated employees. Deferred compensation plans are not mandatory, so employers may design them any way they wish within the requirements of the law. The employer may permit a participant access to the funds for emergencies, but they do not have to. If they do, Internal Revenue Code Section 409A restricts when and what type of emergencies would permit the employee access to the funds.

Full Question

My current ‘separation benefit’ would be about $30,000.

Harley’s Answer

It is possible, but highly unlikely. Defined benefit plans like the WRS rarely allow participants to take out loans. Check with your employer or the SPD for the plan.

Full Question

My employer is taking my 401k contribution out of my paycheck but I have to beg them to deposit the money in my account. They keep coming up with excuses why the money is not in my account. The company is less than 100 people.

Harley’s Answer

The Company has a very limited amount of time to deposit amounts withheld from your paycheck. While it will vary from employer to employer, it is generally five days for a plan with less than 100 employees. Call the local Department of Labor office (EBSA). They will get results for you.

Full Question

I am old enough to retire but still working. When I turned 70 1/2 I got a notice from Lockheed Martin who handles the retirement for the company I work for saying that it was mandatory to start paying me retirement and they did. But my retirement comes from two different sources and I have not heard anything like this from the other source. Is this something that is mandatory for all retirement sources?

Harley’s Answer

It is mandatory for each individual and it must be satisfied from one or all of your retirement plans.

Full Question

Full Question

This should be a pretty basic straight forward question that any attorney with basic ERISA knowledge should be-able to easily answer. If properly requested above ERISA required documents, that must be provided from written request but the employer never provides the correctly identified one’s to you, but others that you can prove were never covered under. Can you do it in an appeal while still before the Company and prior to ERISA suit or would you be required to wait and only be-able to seek the ERISA daily fines up to $100.00 per day after the appeal and would have to file Fed ERISA suit as only means to seek the ERISA penlaties for the violations and if had been couple well over 2-years never provided the correct ones? i am preparing company appeal and wondering if can include them?

Harley’s Advice

Full Question

Can’t afford to pay couple tho. for attorney to prepare my appeal with my employer. Disabled on P. Dis, not receiving proper amount provided wrong life Ins. & death benefit can verify all with Documents. Original employer gone company merged now refuses to provide benefits set forth by original employer prior to merger which happened months after my disability. Doc, verify to provide medical for life at no cost to me, but they stopped .Would one seek all in Appeal & provide documents or is some legal wording to include all by reference, or to provide if hearing with them on appeal? Or to be-able to preserve right for ERISA suit to present all? Is A UNDERSTANDING ATTORNEY NOT AFTER ONLY THE ALL MIGHTY $ WILLING TO PROVIDE SOME INFO SURE WOULD BE APP &BE NICE INSTEAD OF CONSULT ATTORNEY!

Harley’s Answer

Full Question

Could only afford medical for myself and not family. I am paying almost $600 per month. Lost dental and life insurance. The medical provider has screwed with my deductible and out of pocket. I met both in March yet they keep changing my ded and out of pocket to family, which is higher. I have spent hours and months on the phone trying to clear up. I have been charged for medical bills and prescriptions I do not owe. I have not been reimbursed. I was not able to purchase medication because pharmacy tried charging me $300. Also on Xmas Eve, I received a bill for life insurance premium from 8/2013 through present due 1/15/15. Can my employer make me pay my own benefits while on Work Comp? Can they make me pay all back premium on life insurance? I feel I am being penalized in process

Harley’s Advice

Most employers have policies. When you went out on workers compensation, they probably have a policy that says they’ll cover you for six months and then you go on COBRA. The same is probably true with all of your benefits. Instead of guessing, call you employer’s Human Resources department and ask them what they are doing. They have no interest in hiding the ball, but you will lose your coverage if you do not pay.

Full Question

ex-wife receiving part of ex-husbands retirement (divorced after 10 years). Now she wants him to sign paper to leave her portion of his retirement to her beneficiary after she dies.

Harley’s Advice

If the ex-wife was given part of her ex-husband’s retirement benefit, it is her property and she has the right to do with it anything the retirement plan permits her to do. Call the plan sponsor and request a beneficiary designation form for the benefit. If the property was divided by a QDRO, the ex-wife has already designated a beneficiary, but she may change it.

Full Question

I have been separated for 4 years and now doing my own divorce. No minor children or real estate. My Ex has agreed to only take 50% of my Maine public employees retirement from the beginning of our marriage to when we separated, which was 4 years ago. The form I am required to fill out and have the Judge sign keeps asking for the divorce decree date as the ending date. We both have agreed to make that date 4 years earlier. Is there a legal way to do this, that will reflect the date we both have agreed on? Does this form get brought to the Judge the day of the divorce hearing or do I have him/her sign it and mail it in at a later date, closer to my retirement time? Thank you so very much for the help.

Harley’s Advice

The reason we have lawyers is that they have the expertise to complete filings required under our legal system. There are not always forms that accomplish tasks like the one you describe above. Splitting a pension is a complicated task, even for an attorney. If you want it done correctly, spend the $1,200 and have an attorney prepare the order for you.

Full Question

In July I added my domestic partner to my health insurance plan. I belong to a cafeteria plan and my portion of the plan is deducted from my paycheck pre-tax. I was just informed by my employer that my partner’s plan cannot be taken out pre-tax and that they will be adding the value of his plan to my W2 as income. At no time was I told that it could not be pre-tax. I work for a municipality and they have no Human Resource Dept. The Finance dept handles insurance, etc. Shouldn’t they have known about the IRS rules prior to putting him on the plan?

Harley’s Advice

Your employer is merely following the law. Domestic partners do not get the same tax breaks that spouses receive. You are merely being taxed on money paid to you as wages, just like if you did not make the election.

Full Question

Our business and the health insurance policy we have with our broker starts 90 days after first day of employment. Is there any way to speed this up so I can provide her medical and dental coverage early. She is an excellent employee and is leaving her current job for our position and I would really like to provide her with family coverage so she does not have a lapse.

Harley’s Advice

There is no requirement that they wait 90 days. When your broker signed you up, he suggested you use the 90 days. Call the broker and tell him you want to put this employee on early. There is no legal impediment to you doing so.

Full Question

21 yrs ago i was divorced and there was no QDRO my plan admin tried contacting my ex wife but she has never responded. Now I am close to retirement and am told if i don’t get one i can not retire and get my funds. Further my ex was supposed to cooperate with signing an 8332 form for me to claim 1 child for taxes she never would. Isnt that a breach of contact therefor making the agreement null and void and she would not be able to collect on the retirement funds . even with a QDRO

Harley’s Answer

If you are not married to your ex-spouse and there is no domestic relations order pending (served on the retirement plan by your ex-spouse) your employer must distribute your benefit to you in the manner you direct. The only exception would be circumstances where the plan fiduciaries have determined that your ex-spouse has some sort of interest in the benefit (e.g., she called them or her attorney called them) and, as fiduciaries, they have determined that they are required to contact your ex-spouse to notify her (and this would be a very rare execution of one’s fiduciary duties). If she does not respond, in a reasonable period of time (a couple of weeks), I would ask the plan officials to put in writing the basis upon which they are refusing to pay your benefit.

Full Question

A default final judgment of divorce was sign in 2007 (I was defaulted). Nothing was said as to my husband’s retirement plan. Can I reopen the case to ask for half of my husband’s retirement plan? Is there a time limit to do this?

Harley’s Answer

Unless the property settlement specifically divided the retirement plan, you have a right to challenge your right to the retirement plan. The biggest problem you have is whether the court maintained jurisdiction over the property settlement agreement. If the court did, you re-open the case. If not, you will most likely need to engage counsel to get a court to review the issue. Generally there are statutes of limitations in ERISA, but retirement benefits usually turn on when your ex-spouse has a distribution event.

Full Question

My dad passed in 2007, my mother was contacted by his pension as to what she wanted to do with it( ie: payment plan, lump sum, ect.). They provided her with what my fathers pension amount would be. After she decided to defer it ( she is 60 years old), the pension company told her that she shouldn’t have received the amount of what my father had saved up. They then proceeded to send out new paperwork advising my mother a new amount to the pension. This amount was CONSIDERABLY less than what was shown in what my father had saved. My question is what are her rights as a beneficiary? Is she legally eligible for the amount my father has saved, or is she only entitled to the amount the pension updated and provided to her?

Harley’s Answer

Both you and your mother have an absolute right to understand why and how much the benefit was reduced. Under ERISA, they may not cut back an “accrued benefit,” but sometimes the survivor benefit is less than what your father would have received by the way the plan is designed. Make the Plan Administrator educate you as to what happened between your dad’s death and today. In my experience, it is rare for a plan sponsor to try to reduce benefits without a legal reason. You may not like their response, but they must explain their computations in plain English.

Full Question

I am divorcing a Cal PERS member after 13 years of marriage. I know how much of my ex’s monthly pension benefit I am entitled to but don’t know how many years I should expect to collect. What is customary?

Harley’s Advice

In general, CalPERS offers a variety of choices as to how benefits are paid to the person entitled to that benefit. These payments are usually monthly payments paid over a person’s or two person’s life time or a fixed number of years.

How much of your ex-spouse’s benefit you get is up to you and your ex-spouse. Like your house or bank accounts, pension benefits are an asset. You and your spouse agree to divide up all of the assets and all of the liabilities that make up the marital estate. What ever portion of the CalPERS pension that you get, you will be provided options by CalPERS and you will get to determine when and in what manner the benefit is paid.

Full Question

I have worked for the same employer for the past 10 years, I was automatically enrolled in their mandatory 401k plan and participated on a regular basis. Last year I switched to a new position within the company. As part of this new position I had to join a union, and now my health and retirement benefits are administered through the union. My 401k with the company was suspended and I was told I cannot roll over my 401k to my new retirement plan with my union because I am still technically a company employee. If I had come to this new position from an outside company I would have never been enrolled in the company’s 401k in the first place. The money will stay invested, but I am frustrated and would prefer to roll over that money and join it with my new account. Do I have any recourse?

Harley’s Advice

All 401(k) plans preclude the plan from making distributions until you have incurred a Separation from Service as defined in the Plan. In essence, you incur a Separation from Service when you are no longer employed by the company. You are still employed by the Company, so you cannot get a distribution. There are other ways to get a distribution while you are employed, but they are strictly limited to a few specific circumstances. These include attaining age 59 1/2, disability and death. You will most likely have to terminate employment to get your funds to be distributed.

Full Question

I requested in writing that I be provided an appeal of prior Pension Claims that I was allowed to appeal several years ago, but because of major health problems at the time I requested additional time till my health allowed me to do the appeal, and the Review Unit stated in writing no hurry take your time, and do it when you can. I recently requested I now be allowed to do the appeal and the Claims Review Unit, informed me in a letter that I was granted the appeal now. Can they change their mind if I present written argument that appeal doesn’t include all the issues prior appeal allowed, and they get upset over my letter? Once they make the commitment that I may appeal isn’t that binding from them? And their duty is to protect me and my interest in the plans isn’t it?

Harley’s Advice

You seem to be asking whether the Review Committee can change their mind if they do not like what you are telling them. The fact that they have given you time to respond shows that they are interested in hearing what you have to say. They are fiduciaries and they owe that, the highest legal duty, to you. The problem I see is that non-lawyers look at these things differently than lawyers. The Review Committee has to consider your appeal, but often times, non-lawyers do not understand what kind of evidence they need to produce. this is why you should take them up on appeal, but I would recommend that you have an employee benefits attorney either represent you or assist you in preparing your appeal. Some of the things that you think are unimportant, may be very important because of how the plan is written.

Full Question

I’m 63 yrs old I’ve worked there for 42 yrs I was injured in dec 2013 had a hernia operation about 3 wks ago & now I’ve been told the area where I worked no longer exists. I followed the rules never asked for a raise I made $11.50 an hour & now I may get fired because of an injury & the president of the company has become very angry with me because of my decision the deal was favorable to the Co. It wasn’t that much money for me to make it to my retirement at 65. Can you help me resolve this issue I don’t want to quit but I feel they are going to make it extremely difficult for me. They could treat me like Joe but I don’t know if they will I hope they do.

Harley’s Answer

Full Question

Another employee ask & they can get when they , the company, has some borrowed money paid off ???? Can I not get money from or sell stock when leaving a company???

Harley’s Answer

They can do whatever the plan document says they can do. Get a copy of the plan (and a summary plan description if they have one) and read it. After you have read it, discuss your rights with the person in Human Resources who administers the plan. No one has an interest in hiding the ball from you.

Full Question

When I switched from full time to part time at my job, I was very specific about retaining health insurance. I was told if I worked 20-32 hours a week I would remain an “HL2 coworker” and could keep the insurance offered. I was trying to adjust my schedule again, and was told to be an HL2 I needed to have availability of 48 hours. I explained I don’t currently have that, but am still HL2. I then contacted HR and was informed that they had switched me to an “HL1 coworker” which offers no benefits, despite the form I filled out listing me as an HL2 coworker. I was working for 4 months now, without benefits, and without knowledge of this.

Harley’s Advice

What you were told is irrelevant. Benefit plan eligibility and coverage must be in writing. Companies are legally permitted to categorize who does and who does not get insurance. Get it in writing. If they have a written policy, they will be held to it. They can also change that policy. You will get much more mileage out of going to HR and explaining what happened.

Full Question

She is required to keep health care for the child. Can she still take me to court , and could she win?

Harley’s Answer

Why would you want your child not to be covered? A court will always make sure your child gets coverage. If you want to fight over who pays for it, add attorneys fees to the new cost of coverage. Either you or your wife will pick up the difference and both attorneys will get paid. My guess is you’ll get hit with all three.

Full Question

I missed my enrollment period through my employer last year. My wife has been in and out of urgent care centers and emergency departments this year (all at my cash expense). She was referred to a surgeon by the emergency room doctor and has major surgery scheduled at the end of January. She will need a colectomy and several hernia repairs. Will insurance cover those expenses. Neither the insurance company nor my employer will say one way or the other. The no restrictions group policy is a no restrictions for pre-existing conditions. Also, are insurers required to provide policy holders with written policies so we can read what is specifically excluded. It used to be if it was not specifically excluded, it was included, but without a writing how can anyone tell? Thanks!

Harley’s Advice

Pre-existing conditions have mostly been eliminated with ObamaCare. They will have to let you and your spouse in the policy at open enrollment and they will have to cover the surgeries. The employer must provide you with the terms of the policy and will do so at open enrollment. I would call the company’s insurance broker to discuss the coverage. He or she is earning a commission and should be able to help you with what and how much will be covered.

Full Question

Make him aware that you want your assets transferred to your common stock fund at another company……and you give him 14 months to do it and it isnt done so you put in the request to transfer through your agent of your common stock fund…all ar…

Harley’s Advice

You don’t give a trustee time to execute orders. The trustee will execute a participants directions as soon as is practical. The insurance company will do as the trustee directs as the insurance company most likely does not have discretion over the plan assets.

Sometimes it can take more than 14 months to do what the trustee is asked to do. If the trustee wants to, the trustee may choose not to execute the pre-death request, but it sounds like the trustee has already completed the transfer. The beneficiaries may request that the transfer not occur, but the trustee does not have to honor that request.

You have used conflicting terms. Defined contribution plans are funded annually. Pension funds are funded over the participant’s lifetime. If the plan is a defined contribution plan, the funding is due by the time the company files its tax return. If it is a pension, funding is irrelevant with death. The entire benefit must be available to pay the death benefit.

Who is the beneficiary depends upon what the participant did before he or she died. If your mother is a spouse, she is the beneficiary at death unless she agreed to name someone else. If your mother is not a spouse, the deceased participant can name whomever he or she wants to be the beneficiary and your mother has no say whatsoever.

Full Question

The issue comes down to whether or not irrevocability is inherently an unalienable right of the grantor. The beneficiary can only sue as an interest holder , however grantor is a creditor creditors must take priority over debtors (trustees) they owe me the money not the other way around.

Erisa has provisions for this under sections 502a however, I think a state court of equity would be more sympathetic to this pleading.

Maryland (the situs of the plan/trust) trust law states that the grantor cannot revoke a trust at will, however I feel that’s only surface level…..as anything can be argued/overturned.

Harley’s Answer

ERISA preempts state law and you will never succeed on a state court action. Preemption means that state law may not regulate plans governed by ERISA.

Full Question

My husband retired at the end of May.Nothing was said by his former employer about the continuation of our health insurance. So, I bought a policy for the both of us, starting in June, on the Obamacare health insurance policies exchanges that give us tax credits to help us afford the premiums. The news now is that we can have health insurance through his former employer that he will pay for out of his pension.Both the employer sponsored insurance and the Obamacare plan offer mediocre coverage. Which one should we drop and how do we go about doing it legally so there will be no misunderstanding or violation of a contract?

Harley’s Answer

In general, group plans are cheaper than individual plans. This is because the group plan generally has a larger pool of participants. Also in general, ObamaCare plans have very poor benefits and, due to negative selection (only sick people are signing up for these plans), renewals in 2015 will be eye popping. I would drop the exchange policy, but would carefully discuss the coverage you are getting from the employer. As a retiree policy, it may be a secondary policy with Medicare which makes the benefits look worse. Secondary policies usually cover only what Medicare does not up to the coverage the regular health plan at the company covers. contact the HR department and get a clear understanding of what you have before you cancel any policy. Good luck getting a clear understanding of what you have on the exchange plan. Service is generally awful.

Full Question

Affordable care Act allows parents to offer coverage up to age 26 . But that is optional. When do young adults take the responsibility for them selfs. Is there a minimum age required by law for parents to provide Insurance till.

Harley’s Advice

The age 26 limit is a voluntary coverage of the child. Most states cut off the parents obligation at age 18. Between 18 and 26 you can cover the child if you so elect.

Full Question

My employers is stating they didnt have record of me updating that even tho my paystubs and tax deductions reflect married, Also My husband is my federal tax dependant. After further research i shouldnt have been taxed this being that he is dependant and i claim him on my taxes.(in the event he was listed as a domestic partner and not a spouse) However we are legally married and have been for 2 years now, and the total amount for 2012 and 2013 that i have been taxed is a little more than 11,850.00 after escalating this information up in my company i have been denied any resolution, which would be corrected w2s or a refund, i was told becasue my husband was not a same sex partner the refund wasnt disbursed to me back in 07/2013. What do I do?

Harley’s Advice

Get your employer a copy of your marriage certificate. At the very least, it will fix withholding in the future. You have an absolute right to challenge the W-2 as being incorrect. If they refuse to correct, you can still file an amended return with the IRS. You need to file amended returns for both years and claim the premiums as pre-tax contributions for a spouse.

Full Question

Will be getting a pension from Wa St LNI, But how much will it be per month ?My time loss amount was $3700.00 . Also I already receiving $1650.00 from SS DISABILTY. I understand that amount will be reduced as a off set. So can any body tell me what I might be receiving for a pension?
THANKS FOR YOUR HELP

Harley’s Advice

You can get the number from the state. They will give you various choices depending upon what the plan offers. You could hire an actuary to calculate the amount, but they will need data from the plan and will charge you for the calculations..

Full Question

I am going through a divorce, and my ex WAS a government employee, with a federal pension.
If I am on SSD, 55 and my alimony is minimal to live off of, can I collect my share of his federal Pension, before retirement, and would I be penalized for requesting a distribution monthly, and what is their distribution limit?
I need the money now before retirement.

Harley’s Advice

Government pensions are tricky. You need to contact the plan and determine what possibilities you have. They will work with you and your attorney and provide what you are entitled to and will often give forms to help get the correct qualified domestic relations order to provide the appropriate option to you. You often have to wait, but it will depend on the terms of the plan.

Full Question

My mother recently retired from working and she has been trying to get into her 401 K but, “they,” keep saying her retirement money is on freeze. She keeps calling the bank every day hoping they have released her funds but she has be denied numerous times. My mother wants to know why she has been told to wait and that the 401 K she worked hard for has been frozen. The only explanation she has been receiving has been, “President Obama has told the 401 K holders to freeze every account until further notice.” Is this true about President Obama asking the 401 K holders to freeze all 401 K account? And if this is true, when will the money be released?

Harley’s Advice

The plan is violating the terms or ERISA and the plan document. Retirement assets are sometimes frozen, but usually the freeze is because of a change of third party administrators which is mandated by Sarbanes Oxley. You are being fed a very unbelievable story. Get a retirement attorney to have them give a real reason. The President would never do that. If a freeze were called for he would have either the IRS or the Department of Labor order the freeze. Either of those agencies might freeze the other assets, but a retiree would still have their funds released.

Full Question

Can he drop me from his health care plan while we are still legally married?

Harley’s Advice

Health care coverage for dependents are voluntary. At each open enrollment, he may drop you, unless you get a court to direct him not to drop you. Get a divorce attorney to get such a directive.

Full Question

I was on her original beneficiary list. Her son who is a drug addict and omitted per the will (which I sent them a copy of with her death certificate) changed her info online which they did not make any effort to contact her of this change. Since 1955 she had NEVER changed anything on it. They keep telling me it is in legal and have not furnished me with any thing I have requested. I have asked for what steps they took to assure she was the person making the changes as she was not aware of the change. They have failed to respond back to me in writing. Do I have any other way of going about getting these funds as it is about 5k which is suppose to cover her funeral. This is a California Teachers I live in Boise Idaho.

Harley’s Advice

Pension plans are contracts. All pension plans provide participants the right to name a beneficiary. Many pension plans have provisions that say the beneficiary is the person designated by the participant, but, if no beneficiary is named, the beneficiary will be the people on the list (usually spouse, then children then parents then the estate). When your situation does not fit in the language in the plan, the determination of who is the beneficiary is sent to legal. Legal usually wants the person seeking the benefit to get a direction from the probate court and most probate courts will not provide such a statement. You really need to get counsel who can put pressure on CalSTRS. You are caught in a circle where everyone points to the person on their left for who is responsible.

Full Question

I was fired 2 month ago , but I need to pay for medical bills and others bills. Can I withdraw from my 401k while collecting Unemployment benefits?

Harley’s Advice

Most 401(k) plans permit a distribution when your employment terminates. Call the plan administrator at the company and tell them you would like a distribution of your benefit. It is possible that they do not permit distributions on termination of employment, but, if that is the case, they will tell you.

Full Question

New company that is a for profit.

Harley’s Advice

What are your damages? You have a contract. You work for your employer and he will put in a 401(k) plan. He breached the agreement. You cannot enforce a plan that was not adopted, so you would have to file an action that will be expensive to pursue (six figures in most California courts), but you will not get attorneys fees.

Meet with the boss, tell him you will do the leg work to hire someone to put the plan in place if he will pay the person putting the plan in place. Don’t threaten to sue, find a way to make him agree to do what he promised to do.

Full Question

My husband’s disability retirement was approved retroactive back to 2009 through 2013. He received the retroactive lump sum payment in 2013. Now we have to show the entire payment as income for 2013 and have to pay $33,000 to Fed/State. He didn’t have any income during the time we were waiting for his disability retirement, so it seems to me like we should be able to amend our tax returns for those years.

Harley’s Advice

You need to talk to your CPA. If you are cash basis taxpayers (which almost all individuals are), you received the money in 2013. There may, however, be some ways to income average based upon the lump sum payment for years that are still open (2011 closes April 15, 2014), so check with your CPA now.

Full Question

My parents will be getting social security pension in a month, which would equal to $2,300/monthly combined. Both have 401K plans worth $70,000. My question is how much can they take out from their 401K plan per month in order not to pay the tax on it? They heard that the combined social security + 401K needs to be $54,000 yearly for them not to pay tax. I wanted to double check on this because they are in need of money and would like to save the $21,000 (approximate) they might get taxed on if they take out their 401K money all together. Thank you in advance.

Harley’s Advice

All distributions from qualified plans are taxed as ordinary income.

Full Question

The company that I used to work for will not allow for former employees who participated in their 401k or profit sharing plan to touch the funds in their accounts for 3 years. Individuals can’t even role the money over into a new account. this company id UHP Pruitt Company.

Harley’s Advice

If the plan provides, the company can hold your account until you reach retirement age. If the plan provides for a three year delay in payment, it is legal to delay payment. Get a copy of the plan document or the procedure that the employer has adopted permitting the delay and read what it says.

Full Question

I would like to consult with an attorney familiar with Rollover as Business Startup.

Harley’s Advice

If you take a taxable distribution from a qualified plan, you may use the money for whatever you want. If you are asking whether you can use funds in a qualified plan or IRA to invest in a company there are very complicated rules involving prohibited transactions. It can be done, but you have to structure the transaction appropriately.

Full Question

After probationary period I enrolled in 401k plan and specified my deferral amount which the plan provider acknowledges. The employer deferred too little (substantial) for 2 pay periods and says they cant correct those because already processed. However they got the deferral accurate in my final pay although now I’m a consultant to the company and no longer a full time employer.

Harley’s Advice

It depends on what tax years are involved. If the error was in a previous calendar year, your employer is required to put in the correct amount plus earnings under the Employer Plans Compliance Resolution System. If the error occurred this year, the employer may deduct the correct amount from your pay or the employer may just make the contribution themselves.

Full Question

We reside in the same house but haven’t been sexual for at least 3 years. I just can’t take the verbal abuse anymore but I am not in the best of health and am looking for a way out.

Harley’s Advice

You may remain on his plan with either separation or a divorce, but that does not mean he will keep you on. You can make arrangements with him to keep you on, by for example, paying your share of the coverage, but I would get an attorney to mandate he keep you on the plan. These types of circumstances do not lend well to your ex-husband being a reasonable person and you may need the protection of the courts.

Full Question

I was contacted by my father’s employer about that there may be additional payments due from his retirement plan. They want me to furnish Letters Testamentary or Administration. I never got these because my father died without any kind of asset in his name. They then asked me to send a letter stating he had no assets. I have no idea what to write.

Harley’s Advice

They just want a copy of the death certificate which you can purchase from the County where he died. Send it with a letter indicating that your father died with no assets. Indicated that as a result, his estate was not probated.

Full Question

MSA (Judgement) indicates that retirement accounts will be equally divided. I know that DRO/COAP will provide instructions to OPM to divide the monthly basic pension annuity. I will also receive monthly FERS Supplement for social security. Can my former spouse request a division of the FERS Social Security Supplement via the DRO/COAP?

Harley’s Answer

Full Question

Lets say she wants the house, and I have a $200k balance in my 401k. If she is entitled to $100k of the tax deferred retirement account, but decides to give up that claim in turn for keeping the house, how is that $100k valued in an offset situation like that? If it was converted to cash today, it would incur a significant early withdrawal penalty and taxes — so would the value of that $100k claim be less than $100k? Or is it worth more because the tax benefits are significant if held to distribution age eligibility? If that was the case wouldnt u have to take into account the appreciation potential of the house? or is it too complicated for that? We are both 25-25 years from retirement age.

Harley’s Advice

From the pension lawyer’s prospective, let her have the house. The division will be done on the basis of the fair market value of the house and the fair market value of the plan assets. The two assets are very different. The house value will fluctuate with the economy as will the plan assets. The house requires mortgage payments (which have a tax benefit) while the plan assets do not require future payments (although you may continue to contribute to the plan). The plan assets most likely have a myriad of investment choices while the house is real estate. If you can predict which will do better over 25 years between real estate and the stock market, you are better than most professional advisors.

Full Question

Chevron provided my husband with a print out of what his retirement would be if he took it at certain time. They sent a letter which I have. Then when I was awarded half in the divorce they only gave me about one-third of what I should get. I am out $200,000.

Harley’s Advice

Pensions are usually based upon how long you work for the company. In a divorce, you are typically entitled to only the portion of the pension earned while you were married. So, for example, if you were married during the first 20 years your ex-husband worked for Chevron, you’d be entitled to half of the pension he earned during those 20 years. After you separate, your ex-husband will continue to accrue benefits under the pension plan. If, for example, he works another 10 years for Chevron, he’ll accrue a total benefit based upon 30 years of employment with Chevron. Your part is just one half of the first 20 years. When the final math is done, your 30% interest is not too surprising. You might, however, want to check their math, as errors are possible. The Chevron plan will have an actuary who will provide the computation of the benefit and you can hire your own actuary to check the math.

Full Question

2008 divorce doc states defendant to pay equitable settlement of 401k dollar value as of specific date via QDRO, followed by “together with any interest, dividends, or other earnings or losses from that date forward.” At time of dispersement by defendant’s employer, (30 to 45 days after date on document) market losses were gross. Allowed value available for 401k withdrawal was less than judgment $ value. 5+ years later claimant wants balance of actual $ value stated. Is defendant liable to claimant for difference?

Harley’s Advice

Full Question

My husband cashed out his 401k and moved out the day it deposited to his account, then spent it all. He did this without my knowledge or consent. Can he get the funds without my signature?

Harley’s Advice

It will depend upon what the plan document says. Legally, as long as the plan provides that the surviving spouse is the beneficiary, plans may distribute benefits without spousal consent. Get a copy of the plan (not the Summary Plan Description) and see whether it requires spousal consent.

Full Question

I am separated from my husband, I was on his health insurance and he had me removed, can I do anything about this? I do have Medicaid for myself but would of course rather have the coverage through his employer.

Harley’s Advice

You can get a family law court to order your spouse to put you back on the plan, but, absent an order, your spouse has the right to add or drop coverage in accordance with his employer’s plan.

Full Question

I was downsized from a company after 15 years of service.I had one cancer surgery in 2008 to remove a nodule in my left lung.I was customer service manager so I worked from my desk on phone and computer.In 2010 another ct scan showed another nodule had came up in the same area.I was let go 4 days before my second surgery.they paid my cobra as part of a sever-ens package.The ESOP law states that you are able to take out some of your stock and put into IRA between the age of 55 to 60 they have let me move 25% of my money into an IRA.What is the national Law that governs DISABILITY I am 58 and I want to get the rest of my stock!! Is there a law that governs this ??

Harley’s Advice

There is no disability definition under ERISA. Most plans use the Social Security definition of “Disability,” but the Plan may use any definition they wish. The Social Security definition is the hardest to qualify for. You should check with the Company to determine the definition they use under the ESOP. You may qualify for Disability distribution.

Full Question

Owner of a small co. with MPP and PSP defined benefit plans
My Broker changed companies and had me open up accts with LPL
Accounts were at AG Edwards in Prototype Plans who handled submitting compliance paperwork
LPL did not have Prototype MPP or PSP Plans, though they labeled plans as such.
Hence, LPL did not make proper filings as new laws were passed for the Plans.
The IRS says the plans were out of compliance due to non-filing of compliance paperwork
There were no illegal contributions or withdrawals.
Just no filings of paperwork to maintain Pension Plan eligibility
IRS is imposing $4,000 in sanctions for the MPP and $4,500 for the PSP
Should I agree to pay the IRS sanctions?

Harley’s Advice

Full Question

The office manager came back with my insurance card and explained the insurance coverage that was approved and we negotiated my co-pay as they were eager to do the work. Seven months later I get a notice from MetLife that the proceedure was not approved and the Will Not pay the remaining $1385.70.
I was either mislead by the DENTALWORKS staff or they were mislead by MetLife. Either way I am in between jobs and would not ever considered having the work done (the dentist idea not mine) if there was going to be any additional cost. I borrowed the co-pay from my parents as it was.

Harley’s Answer

Full Question

My husband and I have been separated for many years. I was on his health insurance and he moved to maryland and I live in PA. I recently asked for updated insurance information and he advised me on January 3, 2014 that he dropped me off of his policy. Is this legal to drop me and also to drop me without any notice for me to either check into or get new insurance? I take prescription medication and need to see the doctor every 3 months and require insurance as I am not working. Also am I able to file for spousal support ? I need help with this …Please? Thank you

Harley’s Advice

Full Question

I recently took a hardship withdrawal out of my $401k to fix my flooring ($10k+ 30%W/H). I ended up not using the contractor that provided the proposal (which was used as justification for the hardship withdrawal). I decided to fix the flooring myself (with the help of friends) which allowed me to save a great deal in expenses. My concern is that I don’t have much of a paper trail in case I am audited, what are the repercussions (if any) if I can’t provide proof?

Harley’s Advice

Full Question

This was listed in the marital settlement agreement along with the 401k company that she signed and was approved by the court. She has not yet separated out her 113,000.00 into a separate account. Is she entitled to any interest or just the original 113,000.00 settlement? She is trying to say she should get 245,000.00 since his 401k has done well and is threatening to take him to court.

Harley’s Advice

Unless the QDRO provides that she gets exactly $113K without any earnings, she is entitled to all earnings on the $113K. The QDRO will typically give her $113K as of a specific date (usually the legal separation date) and then she will get all earnings pro rata on that money from that point forward.

Full Question

I have tried emails, phone calls and so has my 401k program.

Harley’s Answer

If someone at your employer wants to, they can delay paying you for a very long time. Legally, they may make you wait over a year to get paid.

Be nice and contact HR and tell them you need the money and seek their assistance instead of demanding payment. You can also put in a call to the third party administrator for the plan and tell them you want a distribution. They will need to be directed by the employer, but, if you are nice, often they will help push the transaction along.

Full Question

I work for a small company (5 employees, with an absentee/passive owner). I do not have any retirement plan options. How do I know if the owner/employer has his/her own but not offering/disclosing any benefits to the employees … please advise, thank you.

Harley’s Advice

No law requires your employer to provide retirement benefits. If the employer has a plan and you are not covered, you have the right to know why you are not covered. There are many legal forms of discrimination and many smaller employers use these rules to exclude some, but not all of its non-highly compensated employees. If the employer does not respond, call the local Department of Labor EBSA. They may choose to assist you in finding out why you are excluded and whether the exclusion is legitimate.

Full Question

This was ordered by the judge. I was contacted and asked by my attorney ( after the divorce was final) if I wanted to move forward with a QDRO. I didn’t have the money to be able to afford it at that time. He soon took early retirement as well as all of the money in the 401K account.

Harley’s Answer

The Court ordered a QDRO and you chose not to get one. Qualified plans have eighteen months from notice of a pending QDRO to wait for the parties to do one. If they do not, the plan is not constrained from treating the entire benefit as the employee’s property. You will need to go to state court and see if the court will grant you property rights in the pension. Courts do not tend to award a lack of diligence, so I think your battle will be difficult, but not insurmountable.

Full Question

Divorce finalized July 2012.
Ex Husband finally signed QDRO’s in December 2013. Papers were at his lawyers office for several months.
He earned profits on these accounts during the Economical recovery. I missed out on these earnings, since the money had not been transferred to me. He earned money on the full face amount.
It will still be a couple of months until the monies are transferred into my name. So basically I’ve lost or will loose approximately 6 months of earnings.

Harley’s Answer

You have not lost anything. A QDRO tells the plan to split your ex-husband’s account into two different accounts, back to the agreed upon date of separation (usually the same date your two legally separated). One account holds his benefit and one account holds yours. Usually both accounts are invested the exact same. Whatever his account gets, yours does also.

Full Question

HAVE BEEN UNION LABORER FOR 19 YEARS 100% VESTED TOLD BY SPINE DOCTOR THAT I HAVE SPINAL STINOSIS . CAN NO LONGER DO THIS TYPE OF WORK. WILL LIVE WITH THIS THE REST OF MY LIFE. CAN I DRAW MY PENSION EARLY W/OUT SOCIAL SECURITY DISABILITY

Harley’s Answer

It depends on what the union plan definition of disability is. You need to contact your union representative and understand what disability means. Many times the definitions used in the plan and Social Security are tied together, but it up to the individual plan. If you can do other types of work, Social Security does not typically consider you disabled, but your union plan may.

Full Question

Employer wants to include the Executive in the company’s non-qualified defined benefit plan and Executive wants to participate. In fact, the plan has been in place since 2011; however, Executive has never signed his plan document and refuses to do so. Is there actually a plan in place for him without his signature? If so, does not having his signature create a 409A violation? Can you cite the regulation that states it would create a violation?

Harley’s Answer

There is no legal requirement that an Executive sign the plan. Many deferred compensation plans are adopted by the employer and never signed by any participant, so there can be a plan without a participant signing it. In order for the executive to participate in the plan, he or she may need to sign enrollment forms, but that will not stop the plan from being adopted by the employer.

Full Question

They received the cashiers check (have Fedex receipt) at 10AM on 12/31/13. The letter they sent me says ( “If payment is not received in our office by 12/31/2013 your loan will default” ). Their records show receipt of the cashiers check & that it had been “scanned” on 12/31/13. However they would not” process” until 1/2/14, thereby defaulting the loan & causing to to be reported as a distribution to IRS. This is despite the fact their own records show they were in possession of full payment on the due date!! Is it legal to have a bank default a loan for which they have in their possession full payment on the loan’s due date because they choose not to or claim their “process” cannot post until a later date? They also claim they could not post because “the stock market was closed”

Harley’s Advice

It is New Year’s and everyone is closed. I seriously doubt someone at the bank was waiting to take a default this morning. Delivery of a cashier’s check is payment. Communicate what happened and give the employer a few days to correct the problem.

Full Question

A third party administrator has processed a claim under an ERISA health insurance plan, but is not releasing payment because the employers account has not been funded. Due to the size of the claim (>175,000) it would be near-impossible to collect from the patient (which the provider contract allows for in this situation). Does the provider have any recourse against the employer, insurance, or administrator? More specifically, can the provider sue for a breach of fiduciary duty, or should they bill the patient, and hope the patient does? There is no other reason why this claim has not been paid, all premiums are up to date, the claims have been approved for payment, but the TPA will not release the payment until the employer funds their account.

Full Question

I was married for more than 20 years to a civil service employee who retired on disability approximately 18 years ago and passed away about 3 weeks ago. I have read much of the related information online, but do not understand how to get the process started to find out if I am entitled to benefits. Thanks for your assistance.

Harley’s Advice

First you must look at your property settlement agreement to see if it gave you any rights in the pension. If it is silent, you may need to petition the court to see if you have any interest in the benefits. If it does give you rights, those rights have to be communicated to the employer’s retirement plan through a Qualified Domestic Relations Order. If that has not been done, get an attorney to help you prepare a QDRO. If a QDRO was done or is being done, the employer’s retirement plan will provide you with information as to your rights. I would recommend that you explain your situation to the employer’s HR department to see whether there is anything there. The fact that he has died may have terminated any rights in the pension, as they do not always have a survivor benefit.

Full Question

I have insurance through my employer. In Oct of this year, they changed their health insurance policy. A new policy was suppposed to take effect the day after the last one ended. The ins. Company had sent me new cards, I have my enrollment packet. They have been taking my share toward the premium out of my checks since Oct. But my health insurance company is telling me that my plan has been cancelled, and all my coworkers, without any notice to us, because my employer has not been paying the health insurance company. The money is coming out of my checks but I was never notified about this and I’m not sure if anyone else even knows about this.All these people paying for health insurance, but unknowingly had their policy cancelled cause the employer didn’t hold up his end, what do I do?

Harley’s Advice

ObamaCare has created confusing, difficult times for many people. It is not legal for your employer to not pay health care premiums they have promised to pay. More likely what is happening is that between your employer, the old insurance company, the new insurance company and your Company’s insurance broker, the left had is not letting the right hand know what is going on. I suggest you calmly call HR and explain what is happening. They will look into it. Eventually, you will be provided with the promised coverage. When you report a problem it takes time to determine its cause, so be patient.

Full Question

They have informed me that I am eligible to receive cash payment for my stock, however it hasn’t shown up. Communication with them has been difficult at best. I opened a IRA account at my bank and the funds haven’t shown up. It’s been over a month.

Harley’s Advice

One month is a very short time in the world of ERISA. ESOPs hold very little cash. For this reason, they make distributions usually once each year. I suggest you call the HR department for your former employer and ask when they usually make distribution payments. Distributions are part of a process. The stock has to be purchased by the Company and you will get a cash distribution of the proceeds. This process can take up to a full year. I am sure that HR will give you a better idea of when you can expect the distribution if you give them a call.

Full Question

My employer says it is up to me to solve the problem although I have provided all my pay stubs and 401K statements. The managing company states the money was not deposited. Do I need a lawyer or the labor board? I will surely lose my job and already I am getting the cold shoulder. Three other employees contributions in full were never deposited for 2 years. and I, alone, know this. I have pushed to have it rectified but I don’t think it has been done yet in the 1.5 months since I brought it to their attention.

Harley’s Advice

Call the local DOL. It is their attitude that will get them into trouble. They are fiduciaries of your money and they should be tripping over themselves to resolve this matter. One call to the DOL will have an examiner in their office the next day.

Full Question

On November 4th I requested a loan from my 401k. I started to request the loan online but saw they had my old bank account on there that I did not use anymore. So I decided to call them to request my funds over the phone so I could change my bank account information. I requested the loan and she advised I could change my bank info but it had to be on file for 7days in order for the funds to go into the account. I said OK never-mind that send me a paper check. The representative said OK let me verify your address. I advised again the account on file was not valid and don’t deposit the funds.. Rep assured I would receive a paper check within 14 days.. The rep ended up depositing the funds into my old account and now says they can’t reverse the transaction and I’m stuck. Loan amount$1045

Harley’s Advice

Full Question

Also, there may be other accounts that I am the beneficiary for, how do I find them. I have his SS# and other basic information. He worked for General Building Laborers’ Local Union No. 66, Melville, NY. His surviving family member will not give me a copy of the death certificate. How do I obtain one? He passed away in the Township of Huntington, NY

Harley’s Answer

Pension plans mandate that a person’s surviving spouse is his or her beneficiary unless the person elects otherwise. If your ex-husband was married at the time of his death, his surviving spouse will be his beneficiary unless he named you as his beneficiary and his surviving spouse consented to you being the beneficiary. If your ex-husband was not married at the time of his death, if he named you the beneficiary, you will be the beneficiary.

Full Question

I am appealing an order entered by Circuit Court because the Order is not compliant with the divorce decree. The amount awarded to the ex-wife was about $58K. The Judge in Circuit court ordered that a supersedeas bond must be entered along with security. The only place that I have that sort of funds is the very same TSP (401K) that is trying to be divided. How do I use these funds as security?

Harley’s Answer

It is not possible. Assets in a qualified retirement plan may not be used for security for a bond. You could get a loan (plans may loan up to half of your account) but you would have to pay the loan back through payroll withholding or you might qualify for a hardship distribution. Check with your Human Resources department.

Full Question

Also If you have an outstanding loan, and you need more money because of illness can they refuse ? to give it to you?

Harley’s Answer

You are using two terms that represent different types of distributions. A hardship distribution is a distribution from your account that is due to specific types of difficult financial situations. Hardship distributions are not loans and cannot be repaid. A loan is a distribution from your account that is a loan of money. Loans must be paid over periods not to exceed 5 years (unless it is to buy a house).

Some plans do loans only in the event of a hardship and your plan may be one of those. If it is a loan, it usually must be repaid through payroll withholding and, unless the plan has a quicker payment requirement, the loan duration can be up to 5 years.

You usually cannot default where your loan is repaid through payroll withholding, but if you did, plans will do default that become deemed distributions from the plan and you will get a 1099-R representing the amount you should have paid.

Full Question

Do the above assets all qualify as community property, if they were acquired during the marriage of the decedent and surviving spouse?

The assets in question are 401k/monthly pension/lump sum pension (account name is that of the decedent, beneficiary name is that of the surviving spouse), CD accounts (joint accounts and single accounts, both still community property?), mutual funds (joint accounts), stocks (joint accounts), and a home that was bought by the decedent and surviving spouse during their marriage.

If these assets are all community property, does that guarantee the surviving spouse will receive all of these assets? Is a probate necessary? If it is not a guarantee, what actions can be taken to guarantee that the surviving spouse receives the decedent’s entire share?

Harley’s Advice

Full Question

My divorce judgment reserves my right to his pension however I haven’t filed a qdro yet due to unforeseen challenges, am I entitled to the back money from when he started collecting which is 2009? the judgment does not state any dates for when my portion starts. what is the law on this?

Harley’s Advice

Full Question

I’m talking to accountant about the tax issues and ways it will effect me. But I will need cash to move away and start my new life. But I can save more of the 401K if I roll the remaining over to my account instead of cashing in all of it and loosing lots of money. Im 58. He has not worked for that company for many years. I want to leave as soon as papers are signed. I can’t wait for divorce to be final and then QDRO goes into effect and I have to wait for the part I’m cashing out?

Harley’s Advice

Full Question

We both know there will be taxes and penalties. But I’m moving to another state as soon as we file. We’ve agreed on everything and this way I will have cash to take with me instead of waiting for divorce to be final and waiting for the qudro

Harley’s Answer

It depends upon whether your husband is still employed by the company. Your husband cannot typically get any money out of the 401(k) plan as long as he is still employed with the company. There are exceptions. Hardship and loans are examples. A QDRO is another exception. So, if you two agree that you should get a distribution of all of the money and your husband is still employed, you will need to get a QDRO to distribute the funds to you while he is still employed.

If your husband is not, he can simple request a distribution of his benefit and give you the proceeds. The federal goverment will mandate a 20% withholding for taxes, but he can get a cash distribution of 80% of his account and hand you the money.

Full Question

I quit my job of 8 years last November. I did not quit on the best terms but nevertheless I was vested 100 percent in a company paid profit sharing plan through BB&T. I knew I would have to wait until after 9/30 of this year to receive because thats the way the plan year runs. With my W-2s in January I did receive a letter stating what was put in the plan and whether I wanted it cashed put or rolled over. I wrote back cashed out. I have tried since Oct to find out whats going on and no one will return calls. Is this legal and if not what should my next actions be?

Harley’s Advice

This delay is not unreasonable. They will eventually have to pay the benefit, they have to be able to process the payment. Sugar gets better results than vinegar, so be patient and be respectful to the HR department and the administrator for the plan. Call them and request the status and ask for an estimate of when the payment will be made. Try to be non-combative as, If you give them grief, they may delay the payment a little longer.

Full Question

This was noted on the initial 401K paperwork. The administrator of my 401K plan never saw this and 10 years later I am being told I have to fund my current and ex employees 401K. HELP!

Harley’s Answer

You have a real problem. Many companies have fallen into this trap and it is as much your fault as it is the administrators. Are the leased employees part of an employee leasing company? If so, did you provide retirement benefits to the leased employees through that company?

If not, you need to consult an ERISA attorney. There are many safe harbor corrections, but it will depend on your plan and whether these employees are considered employees under ERISA.

Full Question

I am a full-time employee. Our company was recently purchased by a new owner. During the initial time of signing up for the benefits, I specifically asked how much would be taken out of each check. After getting my answer from the rep, I choose to get medical and dental insurance. Now that the new company is taking the premiums out of my check, the amount is twice the amount that was quoted during the sign up period. I also did not elect for life insurance, and the company is taking that out of every pay check also.
Please help me. No one within this company is helping to rectify this situation. Is what this company doing legal? They are taking a large part of my paycheck and as a full time student, I need every dollar of my paycheck in order to live.

Harley’s Advice

Full Question

Left employer in 2010. According to plan summary, company will pay out in 5 equal installments. Recd 1st disbursement in oct 2011. 2nd disbursement recd October 2012. No disbursement in 2013 as of yet. Multiple email requests sent but no answers provided by plan supervisor, CFO or chairman of board. How do I get the companies attention to ultimately get disbursements?

Harley’s Answer

When the company agreed to pay you out in installments, it was required to do so by federal law. The ESOP is operated by fiduciaries. If the fiduciaries do not pay your installment on time, they are violating ERISA and are personally subject to liability for that failure. Write a letter to the President of the company via certified mail. Inform the President in that letter that the fiduciaries for the plan are violating Internal Revenue Code Section 409(o). If they do not pay the money immediately, you will engage an attorney and will seek reimbursement for attorney’s fees and sanctions for breach of fiduciary duty. That will get their attention.

Full Question

Ex was City employee and at the time of divorce on disability. now that disability reverted to a regular retirement and he started collecting but before I could get DRO in place he died. Do I have any recourse against the City?

Harley’s Advice

You may be out of luck. It really depends upon what your ex elected. In all cases, contact the city and tell them your circumstances. Your failure to notify the city that you have an interest in his benefit is what may make you unable to get a benefit. That being said, still contact the city, explain your situation and then see if you have any rights. If your ex took a benefit that terminated with his death, you may be out of luck. If he elected something with survivor rights, you may have a chance.

If he took a survivor rights benefit, you will need to get the divorce court to issue a QDRO to enforce your interest. Get an attorney. Yours is a completed case, but there is a possibility you may recover.

Full Question

Married over 15 yrs, and he was working all that time at the same job. I never worked. I’m getting ready to file for divorce. No other issues.

Harley’s Answer

Pension law does not dictate how much of your husband’s retirement benefit you will get. State marital law does. As far as the pension and 401(k) plans are concerned, you may get as little as 0% and as much as 100% of you ex-husband’s benefits. Do two things: (1) seek advice from a divorce attorney as to how the benefits are divided under New York law and take your best shot at getting the maximum from the benefit plan; (2) notify your ex-husband’s HR department that you are filing for a divorce and that the pension and 401(k) plans are going to be divided. The HR department will freeze his account for 18 months pending the qualified domestic relations order whereby the divorce court will divide his pension benefits. This way he cannot borrow or distribute any benefits pending the divorce.

Full Question

I had a 401k with an employer in TX, who I left in 2009. In 2010, the company was acquired by another public company. In 2011, the acquirer was acquired by another company. I had left my 401k plan with custodian – Fidelity – who I requested to roll over my plan into an IRA in 2013. Fidelity said the plan is blocked and I cannot do that. I contacted the company who acquired my previous employer. They said the plan is pending termination due to their acquisition and has been held in-definitely awaiting an IRS determination. It’s been a year. Now they say I cannot contact them and fidelity is not answering questions. I need the money for urgently for college expenses for children. Need attorney.

Harley’s Advice

Full Question

within a year how may times can I draw on it?

Harley’s Advice

I will assume that you have retired and you have an account at your former employer’s 401(k) plan. there are many options a plan may provide for, but most permit you to take a lump sum (the entire account all at once). You may roll this over to an IRA and take distributions from the IRA whenever and as often as you wish.

If you cannot do the rollover, it depends upon the rules adopted by the Plan. Call the HR department and find out what they allow. There are no mandatory distribution rules (except after you reach age 70 1/2), so the HR department should be able to provide you with your distribution options (if you are retired, they should have already provided your distribution options).

Full Question

I am 61 now and i realize penalties may be involved, but desperation takes over, how much will the penalty be?..Thanks

Harley’s Advice

It will depend upon what your plan says. In general, you are not allowed to withdraw amounts from your 401(k) plan while you remain an employee of the plan sponsor. There are, however, exceptions. Most 401(k) plans permit a person who has attained age 59 1/2 to take distributions of his or her elective deferrals at any time. Check and see if your plan allows this. If not, your plan may have loan provisions which will allow you to borrow the purchase price (you can typically borrow up to 50% of your account with a $50,000 cap).

The distribution will be taxed as ordinary income at your current tax rate. the Plan will typically withhold 20% of the distribution. there will not be an excise tax because you are over the age of 59 1/2. The loan is not taxable, but it will have to be repaid by payroll withholding from your paychecks.

Full Question

because he did not pay the bill

Harley’s Advice

If you have paid your COBRA premiums timely, your former employer will be responsible for the coverage. The former employer either did not pay the premiums (in which case the employer will have to pay your medical bills out of its own pocket) or they paid the premiums and there has been a delay in the insurance company putting you back on the policy. The COBRA process is often slow because most companies now out source COBRA to companies in the Midwest. When you lost your job, the former employer told the insurance company you were terminated. The insurance company usually drops terminated employees from coverage, but reinstates them once the COBRA election is filed. Sometimes it takes some time to put you back on the policy.

I would contact the carrier and tell them that you have elected and paid for COBRA. If they have no record of the employer paying the premiums you will want to get a lawyer. Do not delay. The insurance carrier will let you back on the plan for a few months, but after five months or so it is rare that they will let you back on the policy regardless of paying back premiums.

Full Question

1. Their divorce was finalized 16 years ago.
2. There isn’t a QDRO, just one sentence that say “Wife will receive 50% of husbands 401k”.
3. She hasn’t attempted any court action to enforce payment.
$. There is a statute of limitations. (http://www.legislature.mi.gov/(S(w50p4x55jpzswk45rhwmpn3u))/mileg.aspx?page=GetObject&objectname=mcl-600-5809)
Thank you for your time.

Harley’s Advice

Your husband’s ex will usually get 50% of his account, plus earnings as of the date of separation. You should check to verify what the property settlement agreement says, but the courts usually give half of the amount contributed while they were married. She will get that amount, plus earnings on that amount, but, she will not get any of what was put in after the date of separation.

Full Question

Same Question.

Harley’s Answer

I assume you mean dividing the pension in a divorce. You and your spouse usually decide who gets how much of each marital asset. It is permissible to give the entire $20K in a 401(k) plan to one spouse and give the other spouse the savings accounts worth $20K.

Retirement plans usually divide benefits 50%/50% for all benefits accrued while a couple is married, but that is usually because they have been directed to do so by a QDRO. The Plan Administrator can typically provide projections of the benefit based upon how long you were married and how long the employee spouse worked at the company. These estimates are usually provided by the plan sponsor.

Full Question

I was looking thru my ex paperwork i see my name as 100% benefiicary so once the divorce goes thru then he can change it even tho i want it to stay?

Harley’s Advice

Yes. Absent a QDRO keeping you as the beneficiary, he may change the beneficiary at any time if he is not married.

Full Question

I left money in a former employee’s 401k plan when I changed jobs about ten years ago – which admittedly was not a smart thing to do. The company recently decided to terminate the plan because of diminishing participation and roll the balances into IRAs. The fund manager sent out a final quarterly statement that showed that my asset balance being transferred had been reduced by about 40% because of a huge unforseen deduction for record keeping expenses. The plan had been inactive due to a company restructuring and it turned out that they had not been paying the manager who kept sending out statements. I was never made aware that these expense liabilities were being accrued or that the plan was in trouble. Could a case be made against the administrator for neglecting his fiduciary duties?

Harley’s Advice

Full Question

I work for a well know insurance company and there policy has always been that you must take the health insurance that they offer. Is this legal? I can get cheaper and better coverage with another insurance company.

Harley’s Advise

An employer has a vested interest in the health of its employees. Many employers mandate that you either take their benefit plan or demonstrate that you have coverage elsewhere. Just like the federal government, they cannot force you to get insurance but they can make it a requirement for working at their company.

What you may not know is that most employers heavily subsidize their health plan premiums. So, for example, while you may pay $100 for HMO coverage, the premium may actually be $500 and your employer pays $400. If you go out and get insurance elsewhere, some employers give you some of the subsidy (e.g., $50 a month), but rarely do they provide you the entire subsidy.

Full Question

Filed for divorce but did not proceed with it since husband is very sick with stage 4 cancer. Do I need anything drawn up by lawyer in order for me to collect pension upon his death.

Harley’s Advise

If it is a pension plan (as opposed to a 401(k) plan), the surviving spouse must be the beneficiary. To designate someone else (including an estate planning trust) the spouse must consent to the new beneficiary. Just to be sure, I would contact the HR department at his company and make sure you are the beneficiary.

Full Question

Can I have my ex go half with me in paying for QDRO expert?

Harley’s Advise

You may agree to anything. Any plan costs are allocated to the account so however you split the account the plan expenses will be born pro rata by the size of the account you each receive. Many people take their property settlement to an attorney specializing in QDROs and have that person draft the QDRO and share the cost.

Full Question

I understand that 401K must have qdro, IRA not needed it can be rolled over, but what about deferred compensation benefits?

Harley’s Advise

Deferred Compensation benefits will depend what the plan document says itself. Well drafted plans will have provision for the division of benefits in a divorce, but not all plans have them. Contact the employer and ask about doing a QDRO equivalent for the deferred compensation plan. They will tell you if it is available and whether they have forms for doing one to help your divorce attorney. You can typically divide the benefit however the two of you agree (0% to 100%) as far as the plan is concerned, but it must be ordered by the court with jurisdiction over your divorce.

Full Question

With the new health law – company plans vary from state to state – looking at health plans in several states … is this legal or does the health benefits have to be from the state where it’s domiciled (EIN filed)??

Harley’s Advice

The employer mandate does not go into effect until at least 2015, so employers are not obligated to provide health care under federal law. Since health care is voluntary, the GA Company is not obligated by federal law to do anything. Whether the GA Company has an implied or actual contract with its employees is a different matter (the Company may have agreed as part of the terms of employment to provide health care). Often health care insurance is purchased based upon locality, but often it is purchased nationally or over many states. It would be very unusual for GA to require the employer to purchase health care plan benefits by domicile.

Full Question

Full Question

Only did it so my ex would not bother me.

Harley’s Advice

I am not sure why you lied about your age, but coming clean is always best. Age can many times effect how much you pay for premiums, as in life insurance or some health plans. Likewise, defined benefit pension plans use age to determine funding levels.

The only thing I can think of that might have happened is If you told the employer you were under 18, but were over 18. Many benefit plans do not give credit for service before age 18.

If you tell your employer your actual age, they will have to give you credit for what you worked based upon your real age. They may, however, have grounds to terminate you for being dishonest. Without all of the facts, it is hard to think that the incorrect age could have such a significant difference in benefits, but it is always best to be correctly inform your employer before a benefit triggering event occurs.

Full Question

He is living in another state now. And can I get a court order to get my medical ins back? he quit his job.

Harley’s Advice

It all depends upon what your divorce decree says. If the 401(k) plan is divided in the divorce, he can change his beneficiary (as long as the divorce decree says he can) with respect to his share of the account. He cannot change the beneficiary for your portion of the account.

To make sure he does not play games, call his company’s HR department and tell them you are seeking a QDRO. The employer will have to freeze all changes (no loans, no distributions, no beneficiary changes) to the account pending the QDRO.

Full Question

I didn’t walkout an now they talking about 6 years until I get 20 percent then 20 percent every year after.

Harley’s Advice

See my previous answer.

Full Question

I didn’t walkout an now they talking about 6 years until I get 20 percent then 20 percent every year after

Harley’s Advice

There is just not enough information to answer. ESOPs have specific payment provisions. In general, when you terminate, your entire account can be paid. Some plans delay the payment until you reach retirement age, some do not.

If you are in pay status, there are other provisions that may delay your payment. If the plan has borrowed money to purchase company stock, the plan does not have to make distributions while that loan remains outstanding.

If you are in pay status and your account is more than $100,000, the plan may make your distribution over five years. 20% in the year of distribution and 20% over each of the next four years.

Full Question

My assets includes: 1) IRAs & 401(k) combined total is about $100k, 2) combined stocks/mutual funds/savings about 20k. I ‘ve been convicted a felony criminal case about 12 years ago to a minor. I want to protect all my assets in case the victim file suit against me. What shall I do? Shall I set up a trust?

Harley’s Answer

Assets held in a 401(k) plan are completely protected from creditors. IRAs have some protection, but not complete protection like a 401(k) plan. The difference is that 401(k) have a spend thrift provision which specifically provides protection from creditors. IRA protections vary from state to state and have a dollar limitation. Like OJ, if I wanted to protect my assets, I would roll my IRAs into the 401(k) plan.

Full Question

I am covered under my spouse’s employer’s insurance plan. I want to contact the insurer to let them know about the divorce proceeding so that they know not to take me off his plan until divorce is final. Who should I contact? Also, if I contact his insurer, can they take me off his plan based on me telling them we are going through divorce? I don’t want to cause any damage to my situation by contacting them but I do want the insurer to know that there is divorce pending and there is an order to keep me on his policy, and also so that they will know to offer COBRA once our divorce is final. How do I go about doing this?

Harley’s Advice

Contact the Human Resources Department at your husband’s employer and tell them that you are going through a divorce. Provide your contact information and ask them to keep you apprised of any changes in any of his benefit plans. When an employer knows (or should know) that an employee is going through a divorce, they will typically prevent the employee from making benefit changes until the divorce is finalized.

Full Question

Full Question

Have emails from Plan Administrator indicating my being missed and an earlier note from a manager trying to get me healthcare. Have note from manager telling me to clean tanning booths w/o gloves. Cleaning solution provider states wear gloves.

Harley’s Advice

Mistakes often happen. Generally, the insurance company will correct the error retroactively as a favor to the employer for up to three months, but they do not have to. If you do not have a large amount of claims during the 6 1/2 months, I would be surprised if the insurance company did not retroactively reinstate you for some, if not all of the 6 1/2 months. If you have a lot of claims, expect a fight.

If you are not offered retroactive coverage by the insurance company, your employer should be responsible for paying what you would have had covered by the insurance, had they not made their mistake. If they know it was their mistake, they should work with you to find a reasonable resolution. I would contact the HR department to assist in righting this mistake.

Full Question

Recently I signed up for COBRA (5-1-13 to 10-1-13) , I sent monthly payments, also more for the reto active portion then they canceled for not paying the last month in full, it was just over $2200 or so for the 5 month period,I only used it once to buy insulin, I have type one diabetes, and I might need to have a expensive procedure for my ulcerative colitis. They excepted the other late payments for the retro active portion.

Harley’s Answer

COBRA is very specific. You must pay your premium by the thirtieth day after the premium is due. If you do not, your COBRA rights end. Some employers will give you some leeway, particularly if there is a good reason for the delay, but most don’t.

Full Question

married 18 yrs, we both agreed on a settlement from is pension plan, I had a QDRO pre-approved by his Plan Administrator. Now court states I need to file a stipulation to modify the Judgment naming the plan in the papers. I’ve done this all without a lawyer, but now I’m stuck.. can I file a stipulation myself?

Harley’s Answer

California law requires you to join the plan as a party. Retirement plans almost always consent to being named as a party and rarely appear at hearings. There is a form by which the plan can consent to being a party in the action. You can file that yourself, but you need the plan to consent to the joinder by signing the form.

Full Question

The decree says that he has no rights to my retirement benefits, but it does not say the same for him. I simply didn’t check that box. Does this mean I need to contact his employer to make sure that I get my half of his 401k, or is it just something he won’t be able to cash out with out my permission? I’m not sure how this works.

Harley’s Answer

Under federal law, you can get 0% to 100% of your ex’s retirement plan. How much has to be ordered by your judge. If you notify your ex’s HR department that you are seeking a QDRO, they must freeze his account for eighteen months pending the QDRO. You will need to produce a QDRO because the employer will not pay anything out that is not a QDRO. Ask your ex’s employer if they have a sample QDRO (some do and some don’t). If they have one follow it as close as possible or give it to an attorney to help you. If the document does not fit the statutory definition of a QDRO, you’ll not get paid. I agree with those below. Get a specialist.

Full Question

I came to the US as a child and my parents brought me illegally. I have been working with a SSN that is not valid and does not exist with the Social Security Administration. I worked for a large corporation that offered a pension plan and was recently laid off. My profile was flagged as ‘Bad SSN’ and they are asking for proof, a copy of my social security card before I can cash out my pension. I continuously receive letters from Fidelity asking for this information because they want to pay out my pension…

Harley’s Advice

You admitted to defrauding the U.S. Government and your employer. You now want a licensed attorney to help you get pension money? Be careful who you tell this story to.

Full Question

QDRO was recently submitted to ex-husband’s company where he has 401(k) plan. I recently received response from company stating that QDRO cannot be accepted. This is because my ex took full distribution of his vested balance prior to QDRO being received. It is in divorce decree that I receive 50% of his 401(k). I have asked ex what he did with 401(k), but have not received an answer.

Harley’s Advice

Your attorney should have notified the plan that a property settlement was pending. When a plan is informed (in California you have to serve the plan as a party), it must freeze the account pending the QDRO. No loans. No distributions.

Your ex could not get his hands on the money unless: (1) he claimed a hardship; (2) he terminated employment; or (3) he was over 59 1/2 or had reached normal retirement age.

You are not getting the full story from anyone here.

Your ex has clearly and intentionally violated the terms of the property settlement. Your attorney needs to seek sanctions against your ex. He knew what he was doing and he knew it was not permissible.

Full Question

I am going through a divorce and my STBE is 50 and I am 35. We both have pension and 401K. I am wondering when it is divided via QDRO, when we will each get the retirement share? Do I wait till I retire to get his share or I get it when he retire?

Harley’s Advice

Way too many variables to answer fully. It depends upon what each of the four plans involved provide. Pensions rarely make lump sum divisions. This means that the non-employee spouse will typically get a monthly payment commencing when the employee spouse retires. 401(k)s are more likely to permit a division of the account pursuant to a QDRO and the non-employee spouse will typically get paid as soon as is practical.

Each spouse can provide that the other spouse gets anywhere from 0% to 100% of the marital benefit depending upon the other property owned by the marital estate. Do yourself a favor. It is usually easier to divide 401(k) accounts than pensions. If you can divide other assets (as opposed to pensions) do that. If you have to divide retirement benefits, try to limit the division to the 401(k) plan. If you have to divide the pension, make sure you get a lawyer to do the QDRO for you.

Full Question

I was terminated on October 2. my company is charging me for the whole month of October for health insurance along with the portion that they usually pay. I don’t want their insurance. They said by law they have to cover me and I have to pay their portion.

Harley’s Answer

Health care premiums are paid in advance. The employer typically agrees to pay the full premium for all employees employed on the first day of the month. You were terminated on the 2nd of October. On the first, you were an employee. When that premium became due, you, as an employee, paid something less than the full premium and the employer paid the rest.

They chose to terminate you on the 2nd. Once coverage was paid for on the 1st, you are covered for the entire month. Under COBRA, you lose coverage on the 1st of November and you have the right to elect or forego COBRA coverage at that point.

Your employer is being very aggressive. I would refuse to pay the premium amount normally paid by the employer. Contact a local labor attorney. Someone this aggressive probably has not consulted labor counsel and they may be doing other acts that are not appropriate or legal.

Full Question

I’m 43 years old and work in a factory with a nice size 401k. I also farm. I was thinking of retiring from the factory job and farming full time. Can I take my 401k money and buy farmland without paying a penalty? I know I would have to pay taxes on it.

Harley’s Advice

It depends upon what the 401(k) plan says. You can typically take a distribution upon a separation from service. It probably will not be on retirement (because plans usually require at least age 55), but if you stop working for the factory after your retirement, it will be a separation from service. If you take a distribution from the plan on separation from service, the amounts you do not rollover will be subject to both regular income tax and the pre-59 1/2 excise tax. The only way around the pre-59 1/2 excise tax is to put the money into an annuity that pays the funds over your lifetime (if you do this you will not have money to buy the farmland).

Full Question

Out of pocket to meet that was suppose to be thru 12/31/13. I have met all but $900 of the out of pocket and am now being told as of 11/1 I have to start it over as a $2500 deductible with my new plan.Is this common?

Harley’s Advice

The only people that win lawsuits are lawyers because they get paid. While they may legally do what they are doing, most employers would be terrified to do what your employer is doing. I say “may” be legal because ObamaCare has created more confusion than result. The employer is jumping at an early renewal to your detriment. They can legally do that, but do they really need to? If your child is due between November 1 and December 31, 2013, I would certainly question your boss and ask whether they really intend to put you through that kind of economic stress while you are out on disability so they can save a little money. Either someone is not thinking too clearly or they really were unaware of how it would effect you. Don’t be threatening. Tell your boss you just want to make sure that you are getting correct information. I have to believe that they could find a way to fix this without heading down the road to a lawsuit.

Full Question

Ex-husband is to carry insurance for our 2 kids. He is now remarried and has 2 more kids. He is calculating insurance as his total premium divided by 6. I think this is incorrect and that it should be calculated as him+spouse – cost to add kids. That difference should be divided by 4 and I should pay that quarter.

Harley’s Advice

The fact is that it costs him nothing to cover your two kids. Most employers have a single rate, a a single with one dependent rate, a married rate and a married with dependents rate. Based upon your description, your ex pays the same if he has one kid as he would with 100 kids. You can ask the insurance company the cost of covering your kids.

The correct answer is to be reasonable. He is not being reasonable and any court would probably agree. Dividing by six is his way of sticking it to you. Instead of fighting about it, come up with a fair way that is economically feasible for you and fair to him. The judge will be more likely to agree with a rational division than his clear attempt to stick you with more than 1/2 the cost.

Full Question

EX HUSBAND IS RETIRED OHIO FIRE FIGHTER. MARRIED FOR 17 YEARS. DIVORCED FOR 31 YEARS. PENSION NEVER MENTIONED IN DIVORCE.

Harley’s Advice

Most courts retain jurisdiction over property not divided in the divorce decree. I would contact a divorce attorney and ask the attorney to make a petition to the divorce court. Most retirement plans would allow you to get a portion of the pension based upon years married to total years accrued.

Full Question

Termination date 7/1/12. We did not receive anything from employer, we contacted them and left 2 voice messages, no return call. We used the insurance. They canceled it July 2013 retro to July 1, 2012. I have contacted them 3 weeks ago and am still waiting for information. They said they sent out one letter to our old address, we did not get it but our mail was being forwarded. What, if any recourse do we have?

Harley’s Advice

As the other responder said, not everyone has to give COBRA. Since they claim they sent you a COBRA notice, I assume they must provide COBRA. The law requires them to send it to your last known address. If you moved, you have to give them the new address. If they did not give you COBRA notices, you still have a right to elect COBRA coverage retroactive to August 2012 (if you were terminated on July 1, 2012, you probably lost coverage on July 31, 2012, which is your COBRA notice date). You will, however, have to pay the retroactive premiums back to August of 2012. If you really need the coverage, complete the forms and send them back. You will have to pay the full cost (which is always much higher than the amount you were paying as an employee) which can be a big number after a year. If you do need the coverage, the premium cost may not deter you from getting the coverage.

Full Question

I retired at first of June taking early retirement from Kroger store management. Middle of June i received papers to feel out and return. They said it would take 90 days to process. I thus expected to receive check at first of October. When I had heard nothing from them by middle of September I called benefits administrator which is a third…

Harley’s Advice

While ERISA puts limits on how long someone can take to do things, those limits are far beyond the time you believe to be unreasonable. The practical answer is be nice and communicate your need. People who complain get bad service. Those who are persistent and nice get service. Ultimately they will pay you the money, you can speed it up by being nice about it and communicating that the longer they take to pay you, it will have a negative effect on you. Nothing precludes this person from processing and paying your benefit the day you retired, she just has no motivation to do so. Give her that motivation.

Full Question

This is something new for 2014 for my employer’s medical benefit requirements for employees. We must sign a ‘tobacco use affidavit’ stating if we use tobacco or do not. If we are a ‘user’, it will cost $5 more a week for medical benefit coverage than non-users. A ‘non-response’ automatically adds the $5 per week surcharge. I understand their intentions, but this feels like a form of discrimination against tobacco users. If this is a legal action for my employer to take, what is next, a medical surcharge for people with high cholesterol if they eat fatty foods? How about alcohol users? Shouldn’t their be a medical surcharge for them? Of course we do live in Indiana and employers can make up their own rules and get away with it, ‘legally’.

Harley’s Answer

Get used to this. Smokers, people with mental disorders and obese people are benefit hogs. They use much more benefit money than people without those characteristics. The problem is that both mental disorders and obesity are protected or close to being protected classes. The United States Supreme Court protects mental disorders and is very close to calling obesity a protected class. Your employer has chosen smokers because they are not a protected class. People will not quit smoking because it is bad for them. They will quit if they are paid not to smoke. That is what your employer is trying to do. Improve your health by getting you to quit smoking.

Full Question

The adviser set up a number of funds for our retirement. When asked about a downturn in the market, he told us that he and his company would adjust their investments. When the market turned down , he advised us to not make any changes. After losing about $50,000, we called him and wanted him to give us advise how to protect our investment. His said not to make any changes. Our funds went down from $350,000 to $165,000. I instructed him to move our funds to a federal bond fund. He did so but advised us that was not a wise decision. We stopped losing money. Later he told us there are better funds available. Took his advise and lost about $65,000. We now had only $98,000. We took our money out but the damage was done.Were they were “selling short?”. What can we do?

Harley’s Advice

He was actually giving you good advise. Retirement plans are long time investments. Your age and risk tolerance will dramatically impact what you should or should not do. For example, if you are 30, you have 35 years of investment before retirement. If you are 60 you have 5 years.

I am a benefits attorney and not an investment advisor, but I sit on hundreds of pension boards. In October of 1987, the stock market lost around 30% in one day ($100 was worth $70). Many people pulled their money out of the market and put it in bonds. By November of 1987, had the $70 been left in the market, it was up to $110. The $70 in a bond fund was worth $71.

The point of this example is that you should always look at your investment horizon and financial advise in making your retirement investments. I do not recommend that people change those investment choices unless a major life change (birth, death, divorce, health issues) occurs. You should periodically revisit your choices (say at least annually) to make sure that your decisions properly reflect your risk tolerance. The stock market is volatile, but over longer periods of time, it provides a much higher rate of return, with much higher risk.

Your loss is difficult and I know many people who have had similar experiences. Much of your loss was, however, most likely caused by your choices. You can check by asking your advisor to calculate what your $350K account would be today if you never moved the funds from where they were invested.

Full Question

My divorce was final last year, and I was a housewife without job(but had assets from my parents), my ex was supposed to continue my health insurance through his work for 2 years on the divorce settlement. (until 2014. Aug) When I felt bad 4mos after the divorce, I asked my ex about my health insurance, and he told me he forgot to continue my health insurance. I couldn’t afford to pay medical cost so that I had to go back to my country to take medical exam etc as the flight tickets and medical costs in my country was cheaper than US. That delayed to find my cancer. When I wanted to go to the hospital it was Dec 2012, and found cancer on July 2013. My cancer is stage 3 now, wish could found earlier. I wanted to stay in the US for my kid and go to hospital in the US. Can I sue my ex for this?

Harley’s Advice

Your question is very complicated because it depends upon what actually transpired. I believe you want coverage (as opposed to monetary damages). When you get a divorce, the employer rarely gets notice of the pending divorce. When you are being dropped from coverage, however, the employer must give you COBRA notices. If they did not, you still have COBRA rights and you may be able to reinstate the policy back to when your were dropped (but the past premiums would have to be paid, presumably by your ex). Often, an employer will give the notice to your ex and he fails to give it to you. I would call the employer and speak with someone in Human Resources to determine what happened. Your ex agreed to provide coverage for two years and to the extent he failed to do so, he is responsible, but I believe it would have to be through the family law courts. The employer will either have provided COBRA notice (and after sixty days) your rights are extinquished. That being said, you could get a court order forcing the husband to get you covered there or elsewhere. If the employer did not give COBRA notices, I would pursue getting coverage reinstated retroactively.

Full Question

every thing else is settled

Harley’s Advice

As far as the Plan goes, she can receive anywhere from 0% to 100% of your account. Like your house or your bank accounts, it is typically a community asset (if WV is a community property state) and the parties can decide how they want to divide the asset. Federal law does not mandate how the benefit is divided.

Full Question

Division of his retirement is in the divorce papers. Divorce has been final for almost 1 year. He’s in NY, I’m in NJ.

Harley’s Advice

Contact the Plan Sponsor. If you provide them with notice that you intend to get a QDRO, they will normally provide you with information about the benefit as long as you can show that you are the former spouse of your ex. Once they get notice of a pending QDRO, they will put an 18 month freeze on the benefit. Even if they do not give you what you ask for, it will prevent him from borrowing or taking a distribution.

Full Question

I worked for my previous employer from January 2010 to September 2013. I was fully vested in the money purchase pension plan. Upon leaving my employment, I chose to cash out the plan. When I received the check, it was for the amount that was deposited before January 2013. They made a deposit in my individual account in April 2013 which the employer said I forfeited by leaving prior to the end of the 2013 calendar year. They typically don’t deposit during the year, but did in this case; I was under the impression that if the money has been deposited in to your individual pension account, the employer can’t withdraw from the account. Are they within their rights to pay out based on January’s statement rather than the most recent statement (June 2013)?

Harley’s Advice

You need more information. You indicate that it is a money purchase pension plan. As such, you accrue the right to the 2013 contribution once you complete 1,000 hours, unless the plan has a requirement that you complete 1,000 hours and be employed on the last day of the plan year. Get a copy of the SPD and see what it says about a requirement that you do both 1,000 hours and be employed on the last day of the plan year. If they do not have the last day requirement, by May of 2013 you completed 1,000 hours if you were employed full time.

Full Question

My dad died one day after his divorce was to be finalized. His ex took out a 30 day extension knowing he wouldn’t live that long. She left him 16 months ago. He wasn’t allowed to change his pension beneficiary without divorce decree, although he tried. In a new will, he left her nothing and stated all monies go to myself and siblings. Is there any loop hole to make her ineligible as beneficiary since he tried to change it and has a new will? He just ran out of time.He found out he had cancer and passed away within 3 months. He even paid extra to get a divorce without property settlement. He just wanted to be divorced so he could leave his pension to us.

Harley’s Advice

This is a very common problem. Retirement benefits are contractual. Like life insurance, benefits are paid to the appropriate person based upon the terms of the contract. In general, under the Internal Revenue Code, the surviving spouse must be a participant’s surviving spouse unless the surviving spouse consents to the designation of another person. Some plans provide, “the beneficiary is the surviving spouse, unless …” Others say the beneficiary is the person designated by the participant. If the participant is not designated the beneficiary is the the following person and then provides a priority list always starting with the surviving spouse.

As was said in the prior attorney comment, the retirement benefit is part of the marital property. Had your father and his former spouse agreed to a property settlement where she was not the beneficiary, you might be able to convince the State Court that they act in equity to make you the beneficiary. He did not. That requires the trustee for the plan to pay the designated beneficiary who unfortunately is the suriving spouse. Wrong kind of Cinderella story, but it is the way of the system.

Full Question

The information in the regulations states that a parner in a partnership is not considered an employee….but should a distinction be made between equity and non equity partners?

Harley’s Advice

I could write a treatise on what is and what is not an employee. It is a facts and circumstances analysis and, if you believe the U.S. Department of Labor, the I.R.S. and most State Labor Departments, will be heavily examined by auditors in 2013 and later.

That being said, a partner in a partnership, whether equity or non-equity, is a partner and not an employee. There are rights and privileges that follow each category and in the health care arena, a partner has less valuable rights than an employee (e.g., non-inclusion of employer provided health care applies to employees and not to partners). The “large employer” designation you are referring to is related to ObamaCare provides an analysis that is reiterating what I said above. It is possible that the government could change their response via regulations, announcements or rulings, but they have not yet, to my knowledge done so.

Full Question

I am considered part time, but work over 40 hours now per week, every week. I have asked for benefits, insurance, paid vacation and sick days, and have been told I would have to work over 30 every week for an entire year (no vacation) for my employer to legally be obligated to give me benefits. Is this true?

Harley’s Advice

For years both the IRS and DOL take the position that a person who works at least 1,000 hours (which is 20 hours per week for 50 weeks) must be treated as a person eligible for retirement and health benefits. This applies only to those benefits which are governed by ERISA. State law will govern all other benefits like vacation. Even if you meet the 1,000 hour requirement, they may legally exclude you, but they will have to satisify some discrimination tests. The label an employer puts on you is irrelevant (part time, seasonal, etc.), if you do 1,000 hours they have to cover you with other “full-time” employees or prove that excluding you does not discriminate. I would add up your hours of service in the past years and ask the employer to explain why they can cut you out of benefits. If they do not explain, call the U. S. Department of Labor.

Full Question

Was a sr. exec in a publicly-held co. who was laid off last fall. I participated in a Deferred Comp Plan set up as a Rabbi Trust. Back then, the company was solid. Now it is in Chapter 11, & possibly may be sold off in chunks to the highest bidder. My questions:
1) I know it’s considered a company “asset” for creditors, but is that an automatic thing? Like, if the creditors are accepting “pennies on the dollar” for settlement of liabilities, is a portion of the “pennies” my deferred compensation balance?
2) I have been told by the planholder that there are “Federal guidelines” that preclude me from getting my balance paid until 7 mos. after my separation. Is that true?
3) In court, since I’m considered a “creditor,” who is “in front” of me? Bondholders? Bank? Shareholders? Thanks

Harley’s Advice

(1) What you had was a “top-hat” deferred compensation plan. The company held your benefit and the assets set aside for your benefit were transferred to a third party trustee who presently holds the funds. You left off an important fact in determining your benefit. Were the funds sets aside in the plan from your wages or were they paid by the employer. Likewise, you have not provided whether you were a very senior executive (e.g., a CFO, CEO or a COO) or a lower level executive (e.g., one of one hundred vice presidents). These two factors influence bankruptcy courts. If you had say a $200K salary and you put $50K in the plan (leaving you with $150K of salary) the courts see the benefit as being paid by money you already earned as opposed to a situation where the employer put $50K in the plan and you still got your $200K salary.
The bottom line on your first questions is that it depends on the facts and circumstances. A chapter 11 is better than a Chapter 7 as a Chapter 11 is a debt reorganization as opposed to a liquidation as you have in a Chapter 7. You need to put in a claim as a creditor and if you are not a more senior executive and the contributions were out of your salary, I would encourage you to hire counsel to educate the court as to why you should be entitled to a preference on this benefit. The bankruptcy courts do not give senior executives a break. they see them as the persons who ran the ship onto the reef. Less senior executives tend to be “employees” with less control over corporate financial decisions. Likewise, bankruptcy courts are much more inclined to protect lower level executives who paid money out of their salary that they could have received years earlier but wanted to save for retirement, especially where the executive is older and retirement is around the bend.
(2) I can only surmise that your source was referring to Section 409A of the Internal Revenue Code. Section 409A is a section that was adopted after the Enron Scandal to restrict executive’s abilities to pull assets out of a fiscally insolvent business. There is a requirement under Code Section 409A that certain highly paid employees cannot take a distribution from a top-hat deferred compensation plan for six months after a distribution event. The application of these rules are very complicated, but, in general, these delay rules apply only to the senior executive types I described in (1) above. If you are not one of the senior executives the rules do not apply to you.

Full Question

I worked for a construction company who was a contractor for kentucky department of highways and he has not been depositing the workers 401k benefits into the employees accounts like the requirements of his contract calls for Can he legally do this?

Harley’s Advice

Based upon the fact that you were working for a state, I am assuming that you are talking about Davis Bacon Act payments. Under the Davis Bacon Act, companies must pay “prevailing wages” to all of its employees that work on a public job. In general, the employer can (1) give everyone a higher salary or hourly pay rate; (2) put the extra money in a 401(k) plan; (3) pay for health benefits; or (4) any combination of the previous three. Ask your employer what they did. These extra benefits are non=negotiable. Sometimes there are delays in when the money is set aside in a 401(k) plan, but they must explain what they are doing to you. I note that an employer can change its mind and, for example, give more wages and less retirement contribution, so see if your employer did so.

Full Question

I work for a employment agency, they told me I could buy COBRA, but I cannot afford the coverage. I had a cateract on my eye, had surgery and now insurance will not cover. I did con tinue to work for this company, looks like they did deductions on my paycheck. But I do not know what period this covers. Please help, do I have any resitution regarding this? Eye clinics and ansethesialogist are wanting payment.

Harley’s Advice

COBRA is designed to cover your specific situation. Where you cannot get coverage on a new employer’s plan for a condition that was diagnosed on your former plan, COBRA, while generally expensive, permits you to continue coverage with the plan you were on when the condition was diagnosed. When you turned down COBRA you turned down the coverage that would have covered the procedure. I note that COBRA can be elected at any time within the sixty day election period. If you are still in the election period you can still elect to get your COBRA coverage. While your facts are a little vague, if you were covered under a new employer or a new plan for the same employer, ObamaCare may preclude pre-existing condititions on the plan and they may be required to pick up the coverage. Try making a claim under the current policy.

Full Question

I learned on dec 18 through my dr office that my insurance had been denied on a recent claim. I called anthem and learned that my insurance was terminated on nov 2. I was not notified. My company during my leave of absence invoices me separately I paid timely and I have been invoiced for both nov and December and paid in full — the payment was accepted. I was not aware I didn’t have coverage until dec 18. I have several dr visits during the terminated period — which I was not aware that I had no coverage

Harley’s Advice

More likely than not, you are just caught in a glitch that often happens. Employers are billed separately by the insurance companies. As employees are added or dropped, it may take a couple of months to get straight who is covered by which plan. Based upon your response, you are on leave and the company has agreed to continue to keep you on the plan, but you have to pay the premiums (as opposed to being put on COBRA). Your name may have been dropped from the insurance roll by accident or by an act of an employee because your status was changed to being on leave. Call the company and tell them you have paid the premium, but the insurance company does not have you as a participant. They will straighten it out. This is a common problem and should be correctable with a few telephone calls.

Full Question

I have approx $8k left in my retirement account. The Plan is mandatory contribution for Union UA members. On Wednesday $1650 owed for rent. Part of June stil due. No food, No car (stolen) fighting false charges from “LUCIFER HIMSELF RE-INCARNATED INTO THE POSSESSED BLACK SOUL OF MY EX-WIFE! Landlord done being cool about it. Eviction anyday, Family of six honestly in critical need. The deep sickness in my gut knowing the money to help us up thru this is there, its mine, i earned it, im entitled to it, and yet told COLDLY cant touch ity by Plan Administrators. Only Divorce ( Lucifer stole my $10K Portion under Contract in exchange for community property) Otherwise a year after last contribution ( 4-23-12 ). Will and can court order? Im trying everything I can think of here. Any suggestions

Harley’s Advice

An employer does not have to adopt a retirement plan. When an employer choose to adopt a retirement plan, they may provide for hardship distributions or they may elect not to do so. There is absolutely nothing you can do to force the employer to add hardship distributions.

Full Question

During our thirty year marriage, we put all of our savings into his 401K. We were advised that because he made over the limit for us to have both a 401k and an IRA., that we should put our savings into the 401K because a lot of our contribution was matched by his company. I knew that in Texas in case of a divorce or his death I would be protected and receive at least my half. Now, we are retired and I am wondering if I have the right to leave half of the 401k to my adult daughter(previous marriage) in my will. The other option would be could the 401 k be put in a trust for half to go to my daughter upon his death (presuming I died first) He has no living relatives.

Harley’s Advice

401(k) plans are governed by ERISA which is a federal law. Regardless of what state you live in, with certain limited exceptions, the spouse of a participant is the beneficiary of the participant unless the spouse consents to naming someone else. If you divorce, you are generally entitled to half of the account. As a non-employee spouse, you may be able to name your daughter as beneficiary of your interest, but check with the employer. If you want to clearly delineate who get what where either of you die first, you can do so through a living trust.

Full Question

I worked for Honeywell for 12 years before hurting my back. They fired me and now they won’t let me have my pension?

Harley’s Advice

All pension plans are a voluntary undertaking by an employer. As a result, they can design the plan to limit when individuals can access their retirement benefits. Age 51 access to retirement benefits is actually quite liberal, as most employers make you wait until at least age 55. You said you hurt your back. You might want to try disability as disability benefits are typically available regardless of age.

Full Question

The Business Acquisition Compliance & Support Solution (BACSS)The Employee Retirement Income Security Act of 1974 (otherwise known as ERISA) and the Internal Revenue Code firmly establish that retirement funds may be used to acquire or invest in a new or existing business as long as the transaction complies with IRS and ERISA rules and regulations.

Harley’s Advice

That is like saying you can do something that is legal as long as it is legal. Literally thousands of times I have listened to new ways to invest in a business through a qualified plan or an IRA. In general, it can be done in certain very limited situations, but it is always a complicated, expensive endeavor. I have not heard of BACSS and when I searched the IRS and DOL websites it had no hits. this meands that BACSS is probably an acronym created by a salesman to sell services or products. If you really want to invest in a business through a qualified plan or IRA, go see a reputable lawyer who has experience in this area and, more importantly, malpractice insurance.

Full Question

I was laid off and I kept my Fidelity employee retirement account with Fidelity but it is now in a “Rollover IRA” . I have not changed the accout, added to or subtracted from the funds. Is the “Rollover” 401(k) IRA goverened by ERISA laws?

Harley’s Advice

ERISA is a statute that regulates the relationship between an employee and an employer. Since the funds were transferred out of your former employer’s plan, your former employer no longer is responsible for your IRA rollover, but will be responsible for your benefits when they were in the employer’s plan.

Many 401(k) plans adopt a forced rollover provision. When an employee terminates with the company, his or her account is transferred to an IRA with the same or similar investment opportunities. This is what probably happened to your account. Your funds are not in a qualified plan, they are in an individual retirement account with Fidelity as the trustee. the source of the funds is a qualified plan and you may rollover the funds to another qualified plan or another IRA. Depending upon the state in which you reside, protections afforded assets in a qualified plan are different than the protections afforded an IRA.

Full Question

I was working at WCA and quit 10-31-11. I had a dentist appointment on November 12. On November 10, I recieved my last paystub which had the medical+dental decucted from my check. I asked the secretary how long is my dental coverage until. She stated “30 days”. 2 weeks ago i recieved a letter from my old insurance company stating they will not cover my dental visit even though the dentist said my insurance is active and was charged $200 copay. I spoke to HR department at WCA and they told me that the insurance is covered until the end of the month which means the day i quit was the last day, the best we can do is send you a check of $16 that was deducted from your check on November 10th. I told her I am sorry but i paid for health coverage and what I need is what I paid for. Am I liable?

Harley’s Answer

Dental insurance covers on a monthly basis. Where you pay the premium, coverage lasts until the last day of the calendar month.

You terminated on October 31. The November paycheck probably covered wages earned before October 31, and so the final dental premium was probably paid through October.

WCA withheld $16 from your last paycheck representing the employee coverage cost for November. The premium for the dental coverage is most likely something much higher than $16. While you are employed, WCA deducts $16 from your paycheck and WCA pays the rest of the premium for you. So, for example, if the real dental premium is $50 a month, WCA pays $50 for you each month and WCA pays itself $16 when it is withheld from your paycheck.

Here, WCA withheld $16 and did not pay the November premium. WCA does not want to (and probably does not have to) the extra $34 for your coverage. They know better and have failed to refund wages to you which typically has state labor law punishments associated with the failure to pay wages after employment terminates.

You may also have the right to COBRA continuation coverage. There are both state and federal COBRA statutes that require an employer to prevents lapses in coverage just like this. In essence, you pay them $50.50 (in my example above or 102% of the normal premium for the coverage) for the dental coverage and you can continue the coverage for 18 months or more. I would ask the WCA HR department about your rights. If they have not provided COBRA documentation, there are penalties for failure to do so.

Full Question

Part of these funds are in an ESOP and part are held in a 401k account. I am 57 and I don’t wish to hold this money in that privately held stock, can I be forced to continue to be invested?

Harley’s Answer

In an ESOP, the primary purpose of the plan is investment in employer stock. However, once you turn 55 and have completed at least 10 years of service, you can force your employer to either permit you to invest the stock in things other than employer stock (usually done through the 401(k) plan) or distribute cash to you for investment elsewhere (e.g., an Individual Retirement Account). You can request up to 25% of your total account each year.

The 401(k) plan side is different. Usually 401(k) plans that have investment in employer stock are typically limited to the matching portion of your account. Federal Securities laws make it difficult for employees to invest their elective deferrals in employer stock, so it is not done all that often. Where your assets attributable to matching contributions are invested in employer stock, usually, the employer will not let you choose how those funds are invested. If this is the case, there is little you can do, short of requesting a distribution of your entire benefit (assuming you do not work for them anymore).

Full Question

Sent in April and May payments but they were returned. There is a letter stating since I missed April payment they were dropping me. I am elderly and live alone.

Harley’s Advice

Get a note from your doctor demonstrating you were hospitalized. Send premium payments for April and May with the doctor’s note. They should reinstate you. There is a case that provides an excuse for termination of COBRA where the individual is disabled.

Full Question

Law firm has a long term disability plan. Partners pay for their coverage and the firm pays premiums for associate attorneys. An associate has filed a claim under the policy. My understanding is that because the firm payed the premiums the payments to associate will be taxable.

Harley’s Advice

If the employee pays the premiums with after tax money, the benefit is tax free. If the employer pays the premiums or the employee pays the premiums with pre-tax dollars, the benefit is taxable upon receipt.

Most LTD policies have a qualification period to be considered “disabled.” It might be three or six months or some other period of time. Have the associate request to pay the premiums right away with after-tax dollars. As long as the premiums are paid by the participant at the time the benefits commence, the benefit is after tax.

You will want to check with your tax attorney to make sure that this will apply in your specific situation.

Full Question

My ex employer failed to pay health ins. Life ins. Employee flex pay and 401k plan or loans with the money collected from employees when they were supposed to be paid and we would wait months at times to receive payment for flex spend claims. My 401k loan payment has not been paid for 2 months even though it was deducted from my check. The 401k fund I am in did very well last quarter but my money was not paid into it untill after the qtr ended if it has really even been paid. What can I do now that I’ve quit?

Harley’s Advice

Assuming that your employer has less than 100 employees, he or she has five business days to deposit amounts withheld from employee payroll. Call the United States Department of Labor. They will visit your ex-employer promptly. They will force him or her to put in lost earnings for you.

Health premiums are usually paid by the employer directly and your contributions usually just repay the employer for premiums already paid.

Slow reimbursement from a flexible spending account is very normal and has nothing to do with your employer. Even if your employer is delaying deposits into the flex plan, your entire reimbursement account is available at all times. One month delays are not acceptable, but tend to be relatively common, especially in small plans. I suggest you make sure that they have everything that they need to process the claim and get a description of how and when they process claims.

Full Question

For 14 years I put money into the state deferred comp program. After, 12 years I realized that the money that I had put in was taxed. I asked my public employer and deferred comp what I should do about the 12 years of being taxed and they have no clue. I have recently changed jobs and am taking the money out but now I am being taxed again. What do I do? I put in $360 a year and it was taxed – school, local, state and federal for at least 12 years then when it was brought to both parties attention it was then tax deferred. I know it may not be much but I do not want to be taxed twice. When I filed out the paperwork to get my lump sum def comp made me sign to have federal taxes 10/20% taken out. Wouldn’t I get interest on the money that went towards taxes all those years?

Harley’s Advice

I would first talk with your accountant to see which is the best method to pursue: (1) Get refunds on the taxes you paid; or (2) take the money out on an after tax basis. Depending on what your accountant says, then you might want to talk to a tax attorney about (1) above. I am assuming that the program was a Code Section 457(b) plan. You can go back and get refunds for years that are still open (there is a three year statute of limitations unless the amounts exceed 25% of your taxable income and then it is a six year statute). I suggest you get a tax attorney, because there is a relatively obscure set of rules that allow taxpayers the ability to open closed years because the inclusion or exclusion of tax in a previous year will impact the taxation of the item in a later tax year.

First, figure out if it makes sense to take the funds out without having the distributions be taxed. If that does not make economic sense, get a tax attorney.

I also note that you may have an action against your former employer for negligently reporting your income to the state and federal government.

Full Question

Insurance company is requesting reimbursement from me per the provider wrongfully billed them as out of network. Provider in fact is in network and rebilled claim. Insurance company requesting payment for paying the out of network cost. Provider is refusing to reimburse me so I can then in return pay back the insurance company so they can pay the claim properly. This has been ongoing for over 2 years and I have yet to recieve a bill from the provider or the billing company they are outsourcing to, even after several requests and attempts from myself. Also I have provided copy of the signed over cleared check paid to provider.

Harley’s Advice

Welcome to black hole of medical plan reimbursement. You are very unlucky, but if you do not do something, it will never get fixed.

Legally, the insurance company does not have to seek reimbursement for an improperly filed claim from the provider. They can get the extra money from you. Take whatever communications they give you seriously. If you continue to work as the middle man with the provider, most insurance companies will not sick their collection team on you. Keep them posted and give them periodic up dates.

Legally, the provider is responsible to you for getting too much money. They have already spent the money. They do not really care about this and want to move on. You need to make this a priority to them. If it is not too much money you can file a small claims action (usually capped at $5,000) against them. This will get their attention. They have no defense to keeping the money. They are just taking their time paying you. Otherwise, call them twice or three times daily and check the status fo the refund. You will most likely have to wear their resistance down.

Full Question

Can a company that manages your flex spending plan put a hold on your card when “they say” that they have not received an explaination of benifits? They are saying they notified me by mail & after 30 days of no response, put a hold on the flex spending card. I claim to never have recieved anything by mail from them. They have both my e-mail address & phone numbers, but made no other attempt to contact me. If I were to try & fill a life saving medication at the pharmacy, but couldnt because they were holding my flex plan money, and then I were to suffer life threatening injury because I couldnt obtain my med, are they liable for my injury (ie: diabetes medication).

Harley’s Advice

There are two answers to your question. Could the third party administrator freeze your card and delay getting it reinstated and mandate that you provide an explanation of benefits? Yes. Would the entire process be expedited by you cooperating and giving them what they are requesting? Yes.

Sugar works better than salt. Even if they did not contact you, they are required to get substantiation of claims. They can expedite the process if you cooperate and work with them or they can drag their feet and make things difficult. Your actions will very often dictate how this goes into the future. I can see that you believe that you were treated badly and would like to get back at them, but it is a bureaucracy and they will wear you down.

Get them what they want and they will lift the suspention.

Full Question

Two years ago, I took out a 401(k) loan, and began making payments on the funds via payroll deduction. Three months ago, my employer switched providers for the 401(k) program and moved my loan to the new provider. I did not sign new papers. After receiving my first quarterly statement, I see that the new company is taking out part of each payment as “administrative fees”. These were not being charged with the original provider, and were not part of the loan documentation. This has effectively changed the terms of the loan, since it will take more payments from me to cover the difference that is now being taken as fees. Can they do this? What can I do,if anything, to make them honor the original loan agreement?

Harley’s Advice

Your employer does not have to offer loans under their 401(k) plan. They have chosen to do so and they may alter the program as often as they see fit. In addition, they may change the third party administrator (“TPA”) whenever they see fit.

It appears that after your employer changed TPAs, the TPA assumed that your employer was charging loan administrative fees to the participant. It may have been that the former TPA was charging you administrative fees and just not disclosing it on the statements.

The bottom line is that the employer may (and in most circumstances does) charge administrative fees on participant loans to the individual account.

That being said, you have an absolute right to know what is transpiring. Ask you HR department what happened. Where an employer changes policy and charges administrative expenses on loans to the account, they usually will grandfather existing loans. See if this was a change in policy or a change in showing the charges. If it is the later, you really don’t have any place to stand. If if is the former, I would urge the employer to reconsider charging you these fees.

Full Question

In May 2011 I resigned from my former employer to resume my full time IT Consulting business. She agreed that I could pick up coverage on my wife’s insurance plan (whom I lived with) from her employer thus the only reason I would have left my former job which offered insurance.
We signed & had notarized a Common Law Marriage Affidavit of South Carolina confirming our status as Husband/Wife and I have held coverage under her employer ever since.
She has since obtained her own apartment and no longer lives with me and has contacted me saying I will not be covered under her policy as of May 1, 2012. Noted that it is ins. fraud if she kept me on policy since we do not live together anymore.
No legal separation has been filed nor have I received a policy cancellation notice to date.

Harley’s Advice

Health care coverage is a contract between an employer and an employee. In general, most employers let employees add or drop coverages of dependents at open enrollment or upon the occurance of certain designated events. It sounds as though your separation might be one of those events.

I do not practice in South Carolina, but I do.not think a separation has to be “legal.” If you are not living together, you are separated.

Even though your spouse is free to add or drop you as her employer permits, you could ask a court to order your spouse to continue covering you. Family law courts have jurisdiction over the relationships and rights of spouses and the court could mandate that she cover you, but you will need to demonstrate a reason why the court should.

Full Question

MY EMPLOYER IS BASING ILLNESS FOR THE AMOUNT OF COVERAGE THEY WILL ALLOW DO TO EXISTING HEALTH PROBLEMS. IS THIS ALLOWED AND CAN THEY HOLD EXISTING HEALTH PROBLEMS FOR MEDICAL COVERAGE?

Harley’s Advice

I assume that you mean that your employer is offering you health care coverage, but is requesting health information for you or one of your dependents.

You indicate that your employer is requesting this data. I am sure that it is the underwriters for the insurance company that are requesting the data. Your employer negotiates with an insurance company and the insurance company tells the employer what premiums will be. It appears that here, the insurance company is concerned about the health condition of you or someone in your family. They appear to want a better understanding of your situation before they will agree to cover all of the employees of your employer.

Do you have to give the information? No, but you most likely won’t be covered (and it is possible that the insurance will deny covering your employer’s employees unless they can exclude you). I would work with the underwriters to explain the circumstances, as the last thing you want if someone is really sick, is the insurance company declining coverage.

Full Question

I retired in December and they had a fund for employees who were employed for 5 years or more. I have ask for this and still have not revieved it. I have written letters, called many times, gone to the office to talk to them, and ask the office manager to help. They have told me several times that they would get it. I do not have anything in writing, but have several people that know about this. What can I do?

Harley’s Advice

There is no such thing as a qualified retirement plan that makes anyone wait 5 years for benefits. The longest waiting period for a qualified retirement plan is two years.

If a retirement plan exists, it is either a non-qualified plan or just a promise to pay (whether written or oral). The fact that your former employer is not answering is not a good sign. Employers often want to be nice guys and offer retirement until they see how expensive it is.

If they give you information, take it to a benefits attorney to review.

If they do not respond or provide information, you probably need to get an attorney. I would attempt to get anything that substantiates the promise (e.g., witnesses, writings, affadavits of receipients, etc.). Retirement benefits can be created by an oral promise, but, they are more difficult to prove.

If your former employer does not provide information regarding the benefit, you could also contact the United States Department of Labor.

Full Question

My husband and I had a very amicable divorce and filed our own papers. The only thing I’m getting is a lump sum out of his existing 401k and we are not at retirement age. I found a legal form website that I can purchase or his plan administrator can offer a sample. I’d rather not spend the money having someone else draft and I understand that this type of distribution is fairly straight forward. Thanks and I look forward to hearing back.

Harley’s Advice

You don’t need a lawyer to prepare a qualified domestice relations order (“QDRO”). First call the Plan Administrator and see if they have a suggested form QDRO. If they do, use it. If not, send a copy of the completed legal form to the plan administrator before you have a judge sign the order. It is the Plan Administrator that determines whether the document satisfies the requirement of being a QDROas defined in the Internal Revenue Code. If there are defects, they will tell you what they are. Judges don’t like to re-sign documents.

Full Question

I am paying restitution to the goverment and from time to time the US Attorney’s office will request financial info. I just started at a new job and that offers 401K with excellent matching from the company. Is it worth even joining or can the goverment take it from me down the road?

Harley’s Advice

In general, the federal government has broad powers to reach even assets that creditors may not reach. Assets in a qualified retirement plan are protected from creditors under the Supreme Court case Patterson v. Shumate.

Notwithstanding Patterson v. Shumate, the IRS may reach benefits in a qualified retirement plan (like a 401(k) plan) in certain specific circumstances. Your restitution appears to be with the US Attorney’s office. In general, I do not believe that the US Attorney’s office would attempt to reach your retirement benefit unless it was to defraud them of getting your restitution.

The best approach is honesty. Tell them you would like to put in $X into your 401(k) plan. See how they react. I would be surprised if they did not approve your saving for retirement.

Full Question

I signed up for my first 401K with my employer in July 2011. I have left that permanent employment for a contracted role with the same company. Now that I am not a “permanent” employee, employer says I’m not eligible to contribute to my 401K, empty it, or transfer it. I spoke with bank and they said that the decision is my employer’s. My money is just sitting there. It’s only about $700, $600 of which I contributed personally via my paycheck. Is this really okay? They said if my contracted assignment were to end, and in turn my employment with the company, I would be able to do whatever I need to with the account. How can they consider me, at once, an “active” (therefore “eligible”?) employee and at the same time consider me “non-permanent” and ineligible to transfer/close/contribute?

Harley’s Advice

All retirement plans are voluntary endeavors by employers. When they volunteer to put in a plan, they are allowed to design how they want to provide those benefits, as long as they meet minimum standards set by the IRS and the U. S. Department of Labor.

Could your employer hold your retirement money until you die or reach normal retirement age? Yes. As a practical matter, most employers do not. If you have truly changed from an employee to an independent contractor (the IRS, DOL and State Labor agencies are looking at this issue very hard) and are no longer eligible to be a participant in the plan, the employer may distribute your benefit. May, not must.

Call the third party administrator (“TPA”) for the plan. Tell them that you have “separated from service” and are no longer an employee and would like your account distributed. If your employer objects, talk to the person who handles the plan. Tell them you are not an employee and not therefore eligible for the plan. That person could direct the TPA to make a distribution, they are presently choosing not to.

Full Question

I live in the state of texas, had worked for a small construction company. I was laid off a couple of months back, during my years of working there I had a retirement plan. I have asked my previous employer for that money with no success. additional there were some pending hours that I have not been paid for. what can I do?

Harley’s Advice

If you were in a qualified retirement plan, the employer has an obligation to provide you with a statement of account at least annually as long as your benefit is held in the plan.

Recognizing that sugar works better than salt, I would write a letter to your former employer and make sure you can prove they received the letter (return receipt or certified mail). The letter need only say that you had a pension plan while you were there and have not received any information regarding your benefits since you left.

If you receive no response within a couple of weeks, I would then call them and ask for an update. If they do not respond or acknowledge that they owe you any benefits, get an attorney.

Full Question

I was terminated in May 2011 and after many attempts to contact my employer, who administers the plan, by our investment broker and myself to have the balance directly rolled over into an IRA the transfer was made in February 2012. Funds were lost during this time. Can my ex-employer be penalized for this?

Harley’s Advice

I assume that “lost” funds means that your account was worth less on February 12, 2012 than it was worth in May of 2011. Risk of investment loss in a 401(k) plan is with the employee/participant. Were you entitled to direct the invest your account? If so, your employer has no say in how your funds are invested. You do. If you casued the loss, your employer will not be responsible. If your employer is responsible for investing your money, you might have an action.

Full Question

How do I set it up so that her mother be trustee but she gets all the benefits when she comes of age?

Harley’s Advice

While your 401(k) plan will let you name your granddaughter as your beneficiary, to do what you want to do you will need to do two things. First, create a trust naming your granddaughter as beneficiary and your daughter as trustee. You will probably need an estate planning attorney to do this (there are forms available in many book stores), but you could do it yourself.

Second, have the administrator for your 401(k) plan provide you with a beneficiary designation form. If you are married, you will have to get your spouse’s consent. Name the trust as the beneficiary.

Full Question

I was let go by an employer. He did not pay for the last year of retirment that I was there. He told me he didnt have the money. I live in the state of Washington. Thanks for your help, Deanne

Harley’s Advice

Not having the money is not a legal excuse for a pension contribution. You have two ways to go. Complain to the local office of the United States Department of Labor. They will often investigate employee complaints about benefits. Otherwise get an attorney. ERISA protects you from this kind of behavior and you will most likely have a sustainable action and may even qualify for attorneys fees.

Harley’s Advice

All employee benefits under ERISA are voluntary. the employer has the right to choose to provide these benefits or not. If they choose to provide benefits, there are standards that apply to retirement plans. Health benefits have similar provisions.

the problem in answering your question is it all depends. If you have worked at least 1,000 hours in a year (approximately 5 months and 1 day), you will go directly back into the retirement plan on re-hire. If you are on COBRA and are re-hired, you will usually go back on the plan.

If you have done less than 1,000 hours, it is impossible to answer your question because it depends upon your employer’s plan design. Most employers have liberal rules on re-hire, but it is not universal.

Ask your HR department to explain your rights (or look at the SPDs for each plan). They will have examples that discuss re-hire procedures.

Full Question

My father passed away and the pension office will not tell us who the beneficiary is on his penion. How does my family find out? None of us were listed. They will not disclose who it is. We believe it was fraudulent.

Harley’s Advice

A pension plan is a contract. As a pension plan it provides that your father’s beneficiary will be who he dictates, with certain limitations. If he is married, his spouse must be his beneficiary, unless she consents to naming another person. If he did not designate someone, the plan will provide for succession, which is usually first the spouse, then children equally, then his estate.

That being said, sugar works better than vinegar. I am assuming that your father’s wife is not alive, or she would typically be the beneficiary. If so, write the pension office a letter which states that you are his child. Unless you want delays, do not mention fraud, that scares people and they will run it through their lawyers causing further delay. Request that they explain to you why you are not the beneficiary. ERISA mandates that they respond.

Full Question

In October 2011 I was put on unpaid furlough indefinitely. I was a W-2 employee of a staffing company that sent me onsite to a client. The staffing company was seeking to appease the wishes of the client who wanted to retain my services on an on-call/callback nature and not pay me at all for several months. I have documentation that this was a cost reduction measure and not anything punitive/performance related.

January 2012, the client wants to bring me back on. I refuse for various reasons, one of them being that I have now been forced to find another position. Another that it was a hostile work env. I refused to go back to work in LATE JANUARY.

March 2012 – recd COBRA notice saying that I had a ‘qualifying event’ in OCTOBER.

Harley’s Advice

COBRA is a federal law. It is triggered by loss of coverage. What you do not discuss is whether they were providing health care coverage between October 2011 and March of 2012. it sounds as though they paid premiums for you and then when you refused to stay on call, they terminated your coverage retroactive to October. What is critical is what the COBRA notice says.

If it is requesting COBRA premiums back to October, they may have some issues. First off, health care premiums are paid in advance. So, in most cases, unless you were put on furlough on September 30, 2011, the October premium was already paid.

It is somewhat aggressive to go back to October. What you would normally expect is that as part of the furlough they agreed to pay your health care premium in exchange for your being “on call.”

In January, when you told them you were not interested in going back, they probably decided to stop paying your premiums. Assuming that you told them you did not want to go back after December 31, 2011, the January premiums would have already been paid and you would lose coverage February 1, 2012. Letting you know about COBRA in March with a February 1 qualifying event is not that out of the ordinary.

You may need to contact an attorney if they are seeking to go back to October. When an employer fails to give a COBRA notice, the typical 18 months of coverage does not start until the notice is given, however, the effected individual has to pay premiums back to the date the coverage was lost. Because the employer did not give appropriate notice, they many times do not request premiums for months before they gave the COBRA notice.

Full Question

My husband of more than forty years of marriage recently died suddenly (without a will). My name was not on the 457 and 401; other property was owned jointly.

Harley’s Advice

By 401 I assume you are referring to the qualified retirement plan sponsored by your husband’s employer. By 457 you could be referring to either a 457(b) plan or a 457(f) plan. In a qualified plan, if you are married, you are the sole beneficiary of your husband’s account unless you consented to naming someone else. 457 plans do not require the spouse to be a dependent, but they do have a provision that covers when no dependent is named. It is almost always the surviving spouse first.

Call the Human Resources Department and inform them that you are the spouse. More likely than not, you will be the beneficiary of both plans.

Full Question

The judge said in court that this accident was purely a freak accident, i was not drunk, under the use of drugs, or anything else.

Harley’s Advice

In all states, creditors may not reach assets held in your 401(k) plan.

Full Question

We are with Safe Harbor and they keep exstending when we will get the paperwork to sign and will not give us anything in writing.

Harley’s Advice

If a plan so provides, they can delay paying you until you retire or die. Most plans elect to make the distributions earlier. They can distribute as limited as once a year or they may do it whenever they want. I would recommend cooperating with the TPA and you’ll get your money sooner. Sugar works better than vinegar.

Full Question

I was divorced and remarried my present husband died and I was told iI could not get his pension but was told I may get some pension from my first husband.

Harley’s Advice

A lot of the response will depend upon where you live. In Community Property states, a non-employee usually is entitled to one-half of the benefit accrued during marriage. It will, however, depend upon what your divorce decree provides. If, for example, the court gave you all of the house (or any other community asset) in exchange for your ex-husband getting all of his retirement pension, you would not be entitled to one-half of the pension.

A second issue is the federal retirement plan. While these plans typically honor state property rights, you are not automatically entitled to a portion of the pension. You will typically have to obtain a court order directing the plan to pay your share of the benefit through a qualified domestic relations order (“QDRO”)

You need to get: (1) a copy of the final property settlement in your divorce; and (2) if (1) is either silent on the pension or provides that you are entitled to something, you need to contact the administrator for the pension. The administrator will provide you with documents describing a QDRO and will describe how you obtain one.

This is fairly complicated process and I recommend you obtain local counsel to assist you.

Full Question

My husband of 7 months passed away a year ago and I am sole beneficiary. His employer of 26 + 6 years (buyout of one company to another), has released all available benefits except his retirement. Per their policy, we must have been married for 12 months prior to his death. We were living together for one year and 1 month prior to his death. Is there any way possible that the retirement can be released to me or his adult children/grandchildren or utilized towards the mortgage on our home? He left no will or trust and the home and mortgage is in his name only(as an unmarried man).

Harley’s Answer

While it will depend upon the type of plan (defined benefit, defined contribution) federal law generally mandates that the surviving spouse is the beneficiary, regardless of length of marriage, unless the spouse consents to another person being named beneficiary. This trumps state law. I do not believe their “policy” is enforceable if it is a qualified retirement plan.

Full Question

we are in the pors retirement system in SC. then the fire dept comes out memo that anyone else retiring will not have health insurance. how can they give it to the other guy and not me. they said he got it cause he was over 55 and and your 52. when we went to PORS retirment the fire dept said health insurance will provided on a case by case basis….

Harley’s Advice

Retiree medical is what is called an executory contract. When an employee retires, he or she has done everything necessary on the employee’s side of the contract. Once a retiree retires with promised retiree medical coverage, courts are very reluctant to allow companies to cut back or eliminate that benefit unless the company’s policy allows them to do so.

For the reasons above, all employers are very careful in the provision of retiree health care. Simply stated it is a matter of contract. Retiree medical is voluntary. When an employer adopts a retiree medical plan they may set standards as to who gets it, what they get and how long they get it for.

I assume that SC is the state of South Carolina. Courts generally assume that states do not discriminate. In addition, states are not subject to ERISA, but they are subject to state contract laws.

In your situation, you need to examine what you were promised. In the employee practices and policies, it should discuss who gets retiree medical, what those people receive and for how long.

The HR people are probably using the term “case by case” because a number of factors influence your entitlement to retiree medical. For example, it is legal (and I note probable) that SC’s description of retiree medical says you must be at least age 55 in order to obtain retiree medical coverage for life. If it does and you retired at 52, you would not be entitled to it.

Full Question

My supervisor claimed that I gave a verbal resignation in a phone conversation. I did not and have an appeal hearing tomorrow regarding unemployment benefits. She emailed HR and me and said they would accept my verbal resignation. They sent me forms to sign acknowledging that I resigned and stating that they would pay me through the end of November and cover me on insurance through December. I did not sign these nor did I agree to these terms. When I received my final check they had deducted the insurance premiums for December. Is this legal?

Harley’s Advice

You do not provide enough facts. It sounds as though you were employed in November and that you had elected for the employer to withhold health care premiums for November coverage. It further sounds as though, according to your employer, you did not work in December at all. Your employer seems to be saying you quit in November and that they will pay you wages through November 30.

Based upon the above assumptions, withholding for health care coverage is, in general, voluntary. In addition, health care premiums are typically paid at the beginning of the month and provide coverage through the end of the month regardless of when you terminate during the month. Based upon the assumptions above, you agreed to pay November’s premiums and you should have health care coverage through November 30.

Although you do not agree with the employer’s version of the facts, according to them you had a Qualifying Event (as defined under the federal law known as ERISA) on or before November 30 (termination of your employment is almost always a Qualifying Event). By your employer’s version of the facts, you became eligible for COBRA on December 1 if you lost health care coverage on November 30, because you were no longer employed by them. I am assuming that your employer is subject to COBRA (20 or more employees) or a state mandated COBRA (which usually covers most employers with employees). It is therefore inappropriate for them to withhold “employee” contributions for December as you were no longer employed.

I note that if you want health care coverage from your former employer for December, you may be better served not raising the issue. In general, when you are an employee the employer typically pays often a significant portion of your health care premiums. So, for example, often an employee may pay $300 per month for premiums, but the employer might be paying as much as $1,300 for that coverage (meaning the employee pays $300 and the employer $1,000). Under COBRA, the employer can pass on the full cost of coverage to you (they could charge you up to $1,326 for the coverage described above). As a result, if you need health care coverage from your former employer in December, I might choose to let them withhold the $300 from your last check instead of having to pay a $1,326 COBRA premium for December.

Full Question

I am resigning in good standing from my job. One of the benefits that we get includes a match for a payment into a 457 retirement plan. The personnel rules simply provide the share that the organization will pay when the employee participates. It does not state when the payment will be deposited into the employees account and nothing regarding as to what happens if an employee terminates in the policy document or personnel rules. Past practice is that if a person left before June 30th then no funds get deposited for what the employer share would be. No one ever challenged this. Does the employer have the right not to pay their share?

Harley’s Advice

There are two types of 457 plans. I am assuming that you are describing a 457(b) plan that permits up to $17,000 per year (for 2012) and not a 457(f) plan. To answer your question, you need to get a copy of the plan document. In general, employers have full discretion to make contributions (many plans permit only employee deferrals – contributions made out of the employee’s paycheck). If the employer elects to make a contribution, they have a fixed period of time to make the contribution (anytime during the plan year and as late as the due date for their information return, which can be March 15 of the next calendar year for a calendar year plan or even later in certain circumstances). You, however seem to be describing a practice where the employer conditions its contribution for any given year on the employee being employed on June 30 (which is probably the last day of the plan year for the plan). These types of provisions are legal and common as an incentive to stay on until the end of the fiscal year. I note that when you have such a provision, contributions are rarely made by June 30 (because they need to know who satisfied the June 30 requirement) and are usually funded some time later. Read the document, it will not tell you when, specfically, the contribution is due, but if they have elected to make a contribution, there is a deadline by which the contribution must be made. If they do not, I would call the State Labor Department.

Full Question

My ex has made it clear that the only thing she wants is 1/2 of my 401K. We were only married 5 years and have been separated for over 2 and are now going through a divorce. I filed. We live in PA. During 3 of those years she was a student and I was the sole supporter. Eventually she became an RN but opted not to get her own 401K. She is money hungry and wants a large lump sum of money. If my 401K plan says that she does not get paid until I can does she have the ability to “pitch a fit” and get a lump sum of cash instead?

Harley’s Advice

Qualified retirements are optional. When an employer adopts one, they must follow the requirements of the Internal Revenue Code and ERISA. The employer may choose to draft the plan in the manner it chooses, as long as it complies with the law. The employer may provide that an alternate payee like your ex-spouse cannot get paid her share of the benefit until you are eligible to receive a distribution. If your employer’s plan so provides, the qualified domestic retirement order rules provide that a domestic relations order may not require a plan to make distributions that are forbidden by the plan.

Full Question

I started my Cal Cobra with my ex employer on 06/01/2011. I have paid my premiums on time and ahead of schedule. I was scheduled to have neck surgery I am in a lot of pain and went in to pick up prescriptions on 01/04/2012 and the Kaiser hospital told have not been covered since 11/30/2011 I called the insurance company and they said that my employer terminated my benefits. I am in a labor law suit with them and I am scheduled for a hearing. I believe they did this in retaliation. I have contacted them and they say they are in the process off getting me coverage in the meen time I am in a lot of pain. Please help!

Harley’s Advice

CalCOBRA has very specific circumstances under which an employer can terminate coverage. The most commonly used reason is fairly to pay premiums on a timely basis. If you do not pay the premiums during the grace period, your coverage is automatically terminated and not subject to reinstatement. Your former employer must let you know why they have terminated your coverage. If there is no legitimate reason, get a lawyer. there are serious sanctions for retaliation terminations.

Full Question

We are not married have been together off and on for 5yrs. he wants to add me to his health insurance but states employer says i cant bc there is a child support order.

Harley’s Answer

If you are not married, you cannot be added to his health plan unless the employer voluntarily allows non-spouse partners to participate. With or without a child support order, he can typically add his child at any open enrollment.

Full Question

Due to a non-amicable divorce’s legal costs, I’ve become a couple of months late on my housing lease payment. I’m attempting to withdraw funds from my 401k. The ‘experts’ at the 401k say I must ‘exhaust’ all withdrawal options before I take a ‘hardship’ withdrawal. My employer states that I must take a ‘hardship’ withdrawal with documentation. I rolled over fully vested funds from my previous employer that the 401k people say is available to me before a hardship. Again, my employer is saying that I must take a ‘hardship’ withdrawal. Who’s correct? By the way, I did amazingly obtain my ex’s notarized signature for the withdrawal.

Harley’s Advice

Qualified retirement plans are voluntary endeavors by employers. If you choose to adopt one, you have to follow the requirements of ERISA and the Code. Hardship distributions are specifically defined in the code and regulations. One of those requirements is that the participant exhaust all withdrawal options from the plan in which he or she is participating before a hardship withdrawal is permissible. Funds rolled into a plan may be withdrawn by an employee at any time for any reason. You will need to withdraw the amounts rolled over from a previous employer in order to qualify for a hardship distribution of your elective deferrals to your employer’s plan.

Full Question

I was fired from work and am going through the process of filing for unemployment. My wife and I are now going through our finances and considering bankruptcy. I was considering pulling out my 401k to pay off all our bills instead of bankruptcy.

Would that delay me getting unemployment like a severance would? We would be able to live off her income alone (meagerly) in case I don’t find something soon, but I’m leery of using up my retirement money since I am a little older.

Harley’s Advice

Money in a qualified retirement plan is not severance. It is savings. Distributions from a qualified plan should not delay your qualification for unemployment.