Leaderboard

Your post lacks important details, but it sounds like you are dealing with a defined benefit pension plan and your former spouse is a participant who died after the entry of a divorce decree but before a domestic relations order was submitted to the plan. The post does not say if a draft domestic relations order was submitted or you are operating based on comments from the plan. Unfortunately your circumstances are legally very complex. Because the Department of Labor did not do its job to issue clarifying regulations, there is much uncertainty about what can be done to assign benefits to you at this stage (both under state law and federal law). The complication involves the death of the participant and features found in most defined benefit benefit plans to limit post death payments to whatever the plan provides for a death benefit, and only if some portion of the death benefit is expressly awarded to the alternate payee. Unfortunately, you not only need someone who understands QDROs, you need someone who is better than the average bear in these matters, especially because the plan is like to be confused or resistant.

Using language like this does a huge disservice to the plan sponsors (current and future) and participants who lurk these boards. There is no such thing as a no cost plan. The ones who market themselves as such are riddled with proprietary investments, termination fees, and other hidden costs that if properly taken into account would show that they are anything but "no cost". But effective marketing using terms like "no costs", "free" and "soloK" has created the appearance of a free alternative as long as you use a certain broker or investment house.

Good question :) I had do some extra reading for this one. It is not exactly on point, but it sounds like you should be able to treat the employee as benefiting with a 0% contribution rate for the ACP test... 2017 EOB (Ch 8, Part B, Item 4)

However, there is a simple answer to the very narrow question asked: the process of amending a DRO is to have a revised DRO typed up, have the revised DRO submitted to the court for approval, once approved by the court it is then submitted to the plan for a determination as to its being qualified and hence a QDRO. BUT (you knew there had to be one, right?) you have to follow the rules of your state when you go about the above. And you will find that a lawyer is your best bet for advice as to what rules apply in your state. A legal aid clinic might be available in your area to help you if you can't afford an attorney. Nothing in this message is meant to imply, and you should not infer, that I am addressing the substantive nature of your post. In fact, it is perfectly possible that the existing QDRO does NOT need modification for the reasons you mentioned and that a court will reject your attempt to have it amended. Good luck.

yes, caveat being: assuming you don't have someone who only received the gateway based on mid year entry comp. they would have to get extra profit sharing to get bumped up to 3% based on total salary to satisfy top heavy

Hooray for efforts to improve anything relating to joinders, but the only reasonable thing to do with the travesty of that California Law is to get rid of the whole concept altogether, as suggested by the previous comments. But then the California divorce bar would have to learn how to use the federal law effectively. I apologize for not reading the materials to provide constructive comments, but I do not care about the color of the lipstick on the pig.

Interesting though because it makes it sound like I can use a free pass on testing since this was the only HCE in the Plan. If I can disregard anyone effected by this failure, I can disregard my only HCE. Sometimes I wish they would just write this stuff in plain English.

The pension plan and its service providers should not ever be parties to the divorce action. At most, the divorce action would generate a court order dividing the benefits/account balance under the pension plan, which would be subject to acceptance or rejection (for good reason) by the plan. Even in California.

Give it a look-over. Mark down everything that looks amiss. If it appears to meet the requirements for a QDRO and appears to be capable of being administered, say it appears to be suitable (and, if you have the authority, qualify it). If not, say what is objectionable and send it back. The responsibility for coming up with a suitable DRO that can be qualified does not belong to the plan, the plan administrator, or those who provide guidance to the plan administrator. Put it back on the court and the lawyers! $700? Sounds awfully high for fulfilling the limited responsibilities belonging to the plan. If it won't do, a quick sketch of why it won't should be sent off to the parties. "Sorry, we cannot treat this as a qualified DRO because A, B and C", and let them try again. How many QDROs a year have to be dealt with per 1,000 participants?

I understood that the 20% withholding is not required when the distribution is below $200. Under $200 - probably appropriate to pay with no election and no withholding. Probably a good idea to include the tax notice.

maybe you just didn't find it in the document. here is language from FT William (i) Correction Methods. The Plan may, pursuant to applicable Treasury Regulations, do any of the following to avoid or correct excess contributions and/or excess aggregate contributions: (1) provide for the use of any of the correction methods described herein; (2) limit contributions in a manner designed to prevent excess contributions from being made; or (3) use a combination of these methods.

another of my long winded answers... I have never seen it written you 'make catch-up contributions' - and you even indicated the majority of the catch-up would be recharacterized to pass ADP test, which borders on a circular type argument. Though I guess some payroll companies classify deferrals as catch ups initially, and that really makes no sense. Anyway, just to make sure others understand the basics: catch-up contributions occur when one reaches a limit 1. deferral limit (currently 18,000) 2. plan imposed limit (for example, a plan could limit everyone or just HCEs to a certain % or $ amount. 3. 415 limit catch-ups could also result if a plan fails the ADP test, sort of an unplanned after effect ............. now, the original proposed regs indicated a plan could impose a 0% limit on key employees, and therefore all such people, if eligible, could only defer up to the catch up limit. this example, by the way was not in the final preamble, but that does not necessarily mean it is not valid. I have seen some argue if you have a cap of 0% then since the person can't defer they can't even make catch-ups. Personally I disagree, one could impose a 1 cent cap, and at that point, the amount is so small one still wouldn't generate a top heavy minimum unless the key person's comp is so low... so, without knowing more details, in your situation, if there is only one NHCE deferring a small amount the plan would probably fail ADP test and all but a small portion of the key employee would be treated as a catch up. the remainder, whatever % of pay, is the top heavy minimum. which is what you conclusion was. very good and observant! gold stars. The other option I have heard (if not in the document itself) a board of resolution indicating key employees are capped at 0%, and therefore the entire amount is indeed a catch up. of course this is supposed to have been in place beforehand..e.g. have it in place now for 2017 so you don't have a problem like this in the future..

This prior discussion may be of help: Mike