Leaderboard

in other words, I think this is what happens (as Lou explained) 1. neither plan is subject to disqualification so there is no reason' for the distribution 2. the IRS has received all the W-2s. they are sophisticated enough to know there are excess deferrals, so the person is taxed on the amount of excess deferral, even though no distribution took place 3. someday in the future the person quits and takes a distribution, thus ultimately he is taxed twice. if he quits before age 55 the 10% penalty applies. if the person actually received a distribution in this year, how would he ever get taxed a second time on the amount since it is not in the plan? I think Lou gave an excellent brief explanation, I only used the IRS comments to back my statement

Keep in mind that determining what is marital property to be divided and what is the amount that will be awarded in a DRO are totally separate calculations. Even if all marital property is divided 50/50, one person may prefer to receive a house and let the other have the retirement account.

I, for one, would think that a public flogging of the broker (or investment professional) for not doing his job to ensure the mapping occurred properly must be taken.

"What policy goal does that achieve?" I'm not saying this to be sarcastic at all, but I had the good fortune to have my initial mentor in this business, (more years ago than I care to say) tell me, "Don't try to make sense out of it! Just apply the rules, if there are any. If you try to make sense out of it, you'll make yourself crazy." I thought that was good advice, and I've mostly followed it but I'm crazy anyway. Regardless, I have no good answer for what policy goal this achieves, but thankfully for sleeping at night, I honestly don't care. I'm just thankful that the regulations now clearly spell out a rule, which I can show to recalcitrant clients and their advisors who don't believe me!