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Why would there be? DRO gets written, submitted to the court, then someone forwards to the plan, plan determines if it is actually qualified or not (just having the word qualified on it doesn't make it qualified), If it is qualified - plan sends the alternate payee information about what they can do with their money that is in the plan. Which sounds like occurred when Ascensus sent the distribution forms. Nothing gets sent to the court again for QDROs. If there are issues about dates and representation - such as a posted dated item being filed with the court - that is something to take up with the court. As @QDROphile mentions, the things that you seem to take contention with, are not things the plan can resolve. A and B and their counsel need to work it out.

We have a 403b plan that is a 12/31 plan year. Their disc. match calculation is done on a fiscal year so the compensation they use is for that is 7/1/2024 - 06/30/2025. Do we use plan year comp or the fiscal year comp on the ACP test? Do we need fiscal year comp for everyone for the test? Historically (for the past 20+ years) the test has been done with full year comp. Just not sure which is correct. Plan definition of comp in the document is plan year and does not discuss doing match contribution on a fiscal year basis. TYIA!

Thank you to all for the great replies.

A plan can allow the use of any definition of compensation defined under 1.414(s)-1 Definition of Compensation to perform the ADP test. Assuming that the plan document does not restrict the definition of compensation, you can use any of the available definitions in this section regardless of the definition of compensation used to calculate elective deferrals or for other plan purposes.

Got it - thx again

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I continue to be drawn to the divorce proceeding, including the domestic relations order (NOT the qualification of the order by the plan), in which B does not seem to have participated in the identification, valuation, or terms of division of the plan interest in the context of the larger division of property between A and B in the divorce proceeding. That is a state court matter in which there may have been ignorance, inattention, unfairness, deception, omission, or other skulduggery, or not. There is nothing* about federal QDRO rules that relates to what B “should” or could get from the plan in consequence of divorce. In fact, the plan is generally not supposed to have any concern for what happened in the state court and may/should look only at whether the proposed QDRO appears to be an actual domestic relations order. The alarm about A’s position and behavior relating to the plan (other than refusal to provide (1) benefit information necessary for fairly adjudicating or settling rights in the state court divorce proceeding, and (2) information about plan procedures) seems misguided, despite the bad optics relating to A. The bad things that may have happened — or things that should have happened and did not — probably happened (or not) in the state court. Which brings me back to, “What does B think B should be getting from the plan by way of benefits that B is not getting under the terms of the QDRO?” The answer probably relates to the terms of the domestic relation order — the product of the state court — not the qualification of the domestic relations order by the plan. *Well, almost nothing.

It’s not safe harbor meaning it eliminates ADP testing. Just means no a4 testing on the profit sharing allocations. The deferrals have no impact on the PS allocation. It will be something like: 1. everyone gets equal percent up to 5.7% on all compensation 2. Then anyone with compensation in excess of the TWB gets 5.7% of that comp that doesn’t exceed the max limit. 3. then any remaining PS money gets allocated pro rata for everyone. this assumes all eligibility and allocation requirements had already been applied.

Thank you for your response, Bill. I now realize maybe I wasn't specific enough. I was concerned about how you would take the elective deferrals into account - if the HCEs defer maximum amounts while no NHCEs are deferring (it's a small plan), no testing is needed as long as the PS contribution is allocated on an integrated basis - is that correct?

It is a “safe harbor” allocation meaning there is no a4 testing. The allocation steps will be in the document.

I've been tasked with a 401(k) plan whose profit sharing contribution allocations are integrated with the SSTWB - a first for me. I realize that this PS allocation method is a type of safe harbor design, though probably not like the popular SHNEC and SHMAC 401(k) designs. Do you have to do 401a4 testing like when there are new comparability PS contributions in a SH 401(k) plan, or is that not needed because of the integrated design? Any pitfalls to look out for?

Plan has never ever had an employer contribution. Only 401(k). Changing pay definition would only affect test results. Revisiting 2024 (2 plan years ago). Reason for thinking about it - Changing Definition of Comp might benefit the 2025 ADP Test based on Prior Year ADP.

I know have more information in regards to all the paperwork signed/filed etc. I can't say for certainty this is everything. I again want to point out that the Person A is the Plan Administrator. So any time I say Person A or Plan Administrator I could use either qualifier. This conflict of interest, lack of transparency and other fraud found out in regards to assets/income are why the actions of Person A/Plan Administrator are being questioned. MID January 2022, a file was submitted to court and electronically signed by the Judge, titled: QUALIFIED DOMESTIC RELATIONS ORDER. It lists out over a dozen definitions like plan name, participant, alternate payee and other legal information. At the end of the form it says: Approved As To Form Only and is signed by Person A/The Plan Administrator's attorney. However, the date on the signature says DECEMBER 2022. This attorney requested and received recusal from the case in JUNE 2022. A letter dated April 2022, Ascensus addresses person B, stating "regarding the QDRO dated END January 2022, a full two weeks after the judge's signature mentioned in the point above" and included Distribution Request Forms A letter dated the following day in April 2022, again addressed to person B, with the header "QDRO Notice", states "we are in receipt of a DRO assigning you benefits...". The next section says "Upon our review of the provisions of the Order in accordance with the attached QDRO procedure (not attached), we have determined that it meets all requirements to be considered a Qualified Domestic Relations Order ("QDRO"). The signature at the bottom is Person A/Plan Administrator. There is an attachment to this letter. That attachment is titled "Determination as to Qualification as QDRO", then lists court information, then again says "DETERMINATION AS TO QUALIFICATION OF DOMESTIC RELATIONS ORDER", then states the parties involved/case number. This letter then states its purpose "The Plan Administrator hereby states and agrees as follows: The Attached Order is a Qualified Domestic Relations Order. It is then signed MID MAY 2022 by the Plan Administrator/Person A. There are no court records for April or May of 2022. The only item signed by the judge was in January 2022.

You only need to test them all together as one big group. Under 414(b), members of a controlled group are treated as a single employer for testing purposes. So if A, B, and C are all the same employer, and C, D, and E are all the same employer, then logically all of A, B, C, D and E must be the same employer.

Is there anyone out there who has Plan Sponsors that have "deemed Section 125 compensation"? And if so, how do you know about it and where is it reported in the payroll records, assuming it is?

No worries, no one is 100% here and we respectfully correct or disagree with each other when appropriate - that is what's great about this forum, it makes us all better.

First, implicitly this issue appears to be a question arising only under a plan using elapsed time. As someone stated above, under the applicable rules, the employment commencement date is the date on which the employee first performs an hour of service. This is the date that the rules require that service begins. That is, a plan cannot credit less time than what this rule requires. I believe a plan could use a more generous standard to determine the date on which service has to begin. Like someone said above, since it is the first year, it should not be discriminatory. § 1.410(a)-7(a)(2) provides in parts relevant to my thoughts: (2)(i) ...Under this alternative method of crediting service, an employee's service is required to be taken into account for purposes of eligibility to participate and vesting as of the date he or she first performs an hour of service within the meaning of 29 CFR 2530.200b-2 (a) (1) for the employer or employers maintaining the plan. Service is required to be taken into account for the period of time from the date the employee first performs such an hour of service until the date he or she severs from service with the employer or employers maintaining the plan. (3) Overview of certain concepts relating to the elapsed time method--.... (ii) Employment commencement date.... (B) In order to credit accurately an employee's total service with an employer or employers maintaining the plan, a plan also may provide for an "adjusted" employment commencement date (i.e., a recalculation of the employment commencement date to reflect noncreditable periods of severance) or a reemployment commencement date as defined in paragraph (b) (3) of this section. Fundamentally, all three concepts rely upon the performance of an hour of service to provide a starting point for crediting service. One purpose of these three concepts is to enable plans to satisfy the requirements of this section in a variety of ways. (C) The fundamental rule with respect to these concepts is that any plan provision is permissible so long as it satisfies the minimum standards. Thus, for example, although the rules of this section provide that credit must begin on the employment commencement date, a plan is permitted to "adjust" the employment commencement date to reflect periods of time for which service is not required to be credited. Similarly, a plan may wish to credit service under the elapsed time method as discrete periods of service and provide for a reemployment commencement date. Certain plans may wish to provide for both concepts, although it is not a requirement of this section that plans so provide.

Oh, absolutely! This one just has some extra stuff like links to each of the IRS and Social Security authorities for each year, and cautionary notes about the fact that 403(b) plans have more than one catch-up. But the IRS one works, too.

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Agree with @Peter Gulia. More than a few years ago, that exact pattern happened to me: hired for a January 1 (Tuesday, holiday, office closed) start date, first hours worked on January 2 (Wednesday). But I was paid for the entire month, so the ER (wisely) treated me as employed on January 1.

If the employee’s pay includes pay for January 1-2, the rule cited above might suggest counting a time when the employee otherwise would work but does not work because of a holiday. “An hour of service is each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty[,] or leave of absence.” 29 C.F.R. § 2530.200b-2(a)(2) https://www.ecfr.gov/current/title-29/part-2530/section-2530.200b-2#p-2530.200b-2(a)(2). If a term to be applied is something other than an employment commencement date that refers to a first hour of service, the plan’s administrator might read carefully the plan’s definition. Or if the plan uses a word or phrase but none of the plan documents and none of ERISA title I, the Internal Revenue Code, or other relevant Federal law sets the in-context meaning of the word or phrase, a plan’s administrator might use its discretion to interpret the plan and its discretion to find facts. This is not advice to anyone.

Link updated and happy to have it still. I liked the acknowledgment of Ms Carol’s contributions on the page. Well done Bakers!

Here is a stupid question based on what is being discussed above, just curious as lately I am seeing this more than usual. I am not the police and I go with what the client says (though stupidly question it with the client) Example: December 15th, having an interview with the prospect and saying, I am hiring you effective 1/1/2025 (which is a Saturday) but the first day you can come to the office is 1/3/2025. So, what is DOH for pension purposes? Assume document says for eligibility: Completion of YOS Entry is 1/1 and 7/1 coincident with or next following Hmmmm

Consider also that “[a]n hour of service [might include] each hour for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed . . . due to vacation[] . . . or leave of absence.” 29 C.F.R. § 2530.200b-2(a)(2) https://www.ecfr.gov/current/title-29/part-2530/section-2530.200b-2#p-2530.200b-2(a)(2). While a norm for many employees is that one must work a while to accrue vacation days, an executive or valued knowledge worker might get a different arrangement. I’ve seen employments begin with a paid vacation or mini-sabbatical—often, two months or more.