Leaderboard

Or the day after...

Merely as a reference, it's likely most Separation Agreements include a phrase similar to: "Both parties acknowledge and agree that prior to and at the time of the division of properties as more particularly set out in this Separation Agreement, each has made a full disclosure ..."

You are missing nothing. She should be talking with her divorce lawyer, or if she didn't use a lawyer she should find one. She has no need for an ERISA lawyer at this juncture, if at all.

You're absolutely right. All I can say is "good luck" getting the custodian to accept this and process it. It should be do-able but someone will have to be persistent.

So the company pays the HCEs taxable compensation to compensate them for the taxes that they have to pay? That seems rather circular.

For what it's worth, I see no moral, ethical or legal obligation to "make whole" the HCEs whose 401(k) contributions were at a high enough level for the plan to fail ADP testing. It looks to me just like another effort to take care of the HCEs. Had there been more timely efforts to hold down the HCE contributions, the HCEs would have been on the hook for higher 2016 taxes instead of higher 2017 taxes. The entire regulatory structure is intended to keep HCEs from deriving too big a tax benefit from the 401(k) plan when the level of contributions from non-HCEs is on the low side. Why should there be any pressure on the sponsor to make anything up for the HCE's?

Withholding is not possible on in-plan conversions. As for your question about whether it can be done, the document should have that answer.