FINAL EXAMINATION
(May 4, 2001)

Instructions:

Question 1 will require the longest answer (worth 40 points).

Question 2 will require more than a brief answer (worth 25 points).

Questions 3-7 require only a short one to three sentence response. (Each of these questions is worth 7 points.)

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1. This question raises the issue of spousal rights under the Employee Retirement Income Security Act, as amended ("ERISA").

- If the answer is no, please explain why, and indicate how his wife is protected if she does not want him to select a life annuity form of benefit (for example, does ERISA require a certain type of benefit form for married participants?).

b. If Jim were to die prior to retirement, does ERISA protect his surviving spouse? If so, please indicate how she is protected, including the type of benefit that would be paid to her, if any.

c. When. Jim file-d his pension application, the Plan office for the Pension Plan learned that Jim had previously been married to Rose Quan. Jim and Rose were married for five years. During that period, Jim worked full time as an ironworker, earning benefits under the Hubb Pension Plan for three of the five years of marriage. Rose has written the Plan office asserting her right to her community property share of Jim's pension benefits. She provided a court order which "reserved" jurisdiction over Jim's pension benefits.

- Does Rose have any right to a portion of Jim's pension benefits? If so, what rights does she have? (Your answer may also be applicable to subsection b. below.)

- The Plan office later advises Rose that she must obtain a court order to be entitled to a portion of Jim's pension benefits with the Plan. Please describe what kind of order is necessary, suggest any provisions that may be beneficial to the former spouse that should be included in the court order, and indicate any limitations to the Court order.

- If Jim were age 61 and eligible to retire but chooses to delay his retirement until he is age 63, would Rose be able to begin receiving her benefits now, or must she wait until Jim actually retires? Please briefly describe the reason for your answer.

2. Dorothy Parker has worked for twenty seven years for the Medina Plumbing Company. She started as a unionized plumber and has risen to a supervisor role. Because of her years of service, she is eligible to retire on a full pension under the Medina Plumbing Company 401k Pension Plan. She and her husband, Fred, are now considering whether she should retire, and if so, whether she should take a distribution of her Individual Account balance with the Plan, which totals $150,000.

a. When Dorothy reached age 48, she decided to retire and take a lump sum distribution from the Plan.

- What are the tax ramifications of taking a lump sum distribution at age 50? Will she pay ordinary federal income tax? Will she be required to pay any additional amounts given that she has taken the funds at age 48 (a relatively young age). If so, what is the tax rule on early distributions?

- Would it be advantageous for Dorothy to rollover her amounts into an IRA or another qualified pension plan? Please explain the reason for your answer.

- If there is an IRS penalty for early distributions, may a pensioner avoid paying the tax? Please list some of the exceptions to the IRS penalty.

Short Questions with Brief Answers

3. What is a multiemployer pension plan?

4. For a multiemployer pension plan, do both management and labor representatives serve on the Board of Trustees? If so, does the Taft-Hartley Act establish requirements for the make-op of the Board of Trustees? If so, what is that requirement?

5. ERISA dispersed primary responsibility for pension matters among three government bodies. Please name them.

6. ERISA Section 510 provides certain protections for ERISA participants. a) What does Section 510 make unlawful? b) Does Section 510 apply to medical plans --yes or no.

7. Please describe a fiduciary under ERISA. What is a fiduciary's responsibility under ERISA?