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I'm quite comfortable up here, way up here, on whatever horse you think I'm perched. Most plan sponsors, no matter the size of the plan, don't want to commit fraud. Paychex might have done the plan sponsor a disservice by not adequately informing them of the top-heavy consequences, even to the point of potential liability should the plan sponsor choose to pursue damages, but I would seriously doubt they would knowingly participate in fraud.

We need to back up here a bit. Was the QDRO approved by a court? When? Was the QDRO submitted to the plan back in 2009? Did the plan accept the QDRO? When? The account should have been split back in 2009 when the QDRO was submitted and approved a good by the plan administrator. Some thing sound off here. A splitting of 401(k) benefits in a divorce decree isn't enough. There had to be a QDRO approved by the courts.

No. No.

I may or may not have liked this post... We will never know...

...change the settings so that the old system of displaying the user names for those who "like" a post was in effect rather than the new system which just identifies the number of likes.

1. Interest rates are discussed regularly here. Use the Search function. 2. Loan payback policy is up to the Plan Sponsor and, from previous discussions, I believe it has to provide some assurance that the payments will be made. Perhaps check with a banking expert on this. 3. To me, the availability of loans from a RETIREMENT plan that does not have banking expertise is like a roaring flame 3 feet high.

Nobody here can provide you with the advice you are seeking. At one end of the spectrum you can, obviously, just accept the ex-wife prepared DRO. At the other end of the spectrum you can engage an attorney in your jurisdiction to see if they feel that the ex-wife prepared DRO should be modified and, if so, how. Good luck.

If you were Top Heavy in 2015 then why were you not aware that you were Top Heavy for 2016?

Remember, the earning don't have to be exact. Just reasonable.

Another thing a good TPA could help you with is if a Safe Harbor plan makes sense for you company. If you are having both ADP testing problems and Top Heavy problems it might be worth looking into a Safe Harbor plan that can be set up and ran such you get a "bye" on both of those tests. There are required contributions in a Safe Harbor plan but they can run a cost/benefit analysis for you to decide if it meets your goals at a cost you can accept. I agree with others. In any metro area of any size there are people who do nothing but help administer these kinds of plans. Also, some CPA firms have departments that do nothing but help administer these kinds of plans.

I'd ask for a copy of the lease agreement to prove the actual business relationship.

normally earnings associated to the excess should be forfeited as well. otherwise, for example, you could give the owner a 20,000 match, collect the earnings and the simply forfeit the excess match, and someone has made out pretty good.

I am going to throw my voice behind the idea undoing the deferrals is not an approved correction method.

The plan administrator is supposed to keep these records. Do you represent the plan or the person getting the QDRO? If you are the person getting the QDRO talk to the plan and see if they have the records. By the way they are supposed to do the computation. If you represent the plan talk to the people who help you administrate the plan. See if you can get the records you need.

What, pray tell, is the "mistake" to which you refer? Please don't tell me that it is along the lines of: "Well, if I was told about the consequences I wouldn't have deferred." While that may be a mistake it isn't something the Code or regulations allow one to "undo". Unless, of course, you are volunteering to assist with an EPCRS filing that incorporates your practical solution.

While I agree with your practicality. I believe the IRS from the podium at conferences agrees with Mike's comment that you can't simply "reverse the key-ee deferals."

It seems that some of the large 401(k) providers are compartmentalized to the point that there are a number of issues that don't get addressed until the plan sponsor has very few options. Nobody can answer your questions without seeing a copy of the plan document that you signed. However, with that said the answers are: 1) It is probably not everybody, it is not even necessarily employees "eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015" because not only do they need to satisfy the eligibility criteria they need to also satisfy the entry date criteria. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 2) Typically, top-heavy minimum contributions are not required for participants who have terminated before the end of the year. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 3) Typically, if the highest deferral rate for any key employee is 1% then the top-heavy minimum is also reduced to 1% from 3%. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 4) Typically, the top-heavy minimum allocation will be subject to a six year graded vesting schedule (0-20-40-60-80-100). Nobody can definitively answer your question without seeing a copy of the plan document that you signed. See a pattern? Straight out of the department of redundancy department: Nobody can definitively answer your questions without seeing a copy of the plan document that you signed. I would not "lean on" any service provider to commit fraud. Unless somebody thinks they can get the IRS to allow you and your partner's deferrals to be retroactively re-characterized, I would stay away from any manner of pretense. You need to hire a competent service provider to review the actual plan document and the actual history of the plan. Frankly, the first thing I'd take a look at is that 60.7% figure and make doubly sure that is being calculated correctly. If that number falls to less than 60% it renders the rest of this discussion moot. And while it is too late to do much for 2016, until this issue gets resolved you should take steps to eliminate any deferrals by any key employee for 2017 (probably just you and your partner). Good luck.

In addition to considering the other suggestions, the plan's administrator might want its lawyer's advice about whether an interpleader (or some other court proceeding) is or is not appropriate. ERISA grants a Federal judge discretion concerning attorneys' fees and costs. If a judge finds there was no real ambiguity that needed the court's decision, the judge might order the administrator that initiated the interpleader to pay or reimburse another party's fees and costs.