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I had a brokerage try to tell the plan sponsor that the plan had exceeded the contribution limits for a plan year and they would not accept the additional contributions. The brokerage did not know that the contributions in the early part of the year were for the prior plan year. In a pleasant communication with the brokerage, I said I did not realize they had any fiduciary responsibility for monitoring plan contribution maximums. When they heard the words "fiduciary responsibility" they ultimately decided they did not have and did not want that responsibility and agreed to accept the contributions. They are simply the custodian. (Unless they are in fact considered the plan administrators.)

Here's how you can make the husband happy and save him some money. First, the Plan is not going to distribute anything to anybody now that they know there is an Agreement that I assume was incorporated in the Judgment of Absolute Divorce. They will insist on a QDRO so like it or not a QDRO will be necessary. Second, if the QDRO is issued by the Court giving 50% to his ex-wife then at that point he can take out his 50%. BUT, the ex-wife's 50% will be taxable income to her but will not be subject to the 10% early distribution penalty. AND, his half will be taxable income to him and, if he is under 59-1/2. it WILL be subject to the 10% penalty. Third: Assuming he is under 59-1/2 and therefore subject to the 10% penalty, the parties should amend the Agreement to give her 100% ot the 401(k) and provide that she will divide the net after tax amount she received 50/50 with the husband. That will save both of them the 10% penalty. And there are no tax consequences to the transfer from her to him. I have done this on may occasions to get money into the hands of the Participant penalty free. And the law is clear that the Plan Administrator is not required, or even allowed, to look behind the motivations of the parties. My favorite case is In Brown v. Continental Airlines, Inc., 647 F. 3d 221 (5th Cir., 2011) https://scholar.google.com/scholar_case?case=4019345202025914766&q=brown+v.+continental+airlines&hl=en&as_sdt=20000003 Continental alleged that a number of pilots and their spouses obtained "sham" divorces for the purpose of obtaining lump sum pension distributions from the Continental Pilots Retirement Plan that they otherwise could not have received without the pilots' separating from their employment with Continental. The pilots were allegedly acting out of concern about the financial stability of Continental and the fear that the Plan might be turned over to the PBGC and that their retirement benefits would be substantially reduced. By getting divorced, the pilots were able to obtain QDROs from state courts that assigned 100% (or, in one instance, 90%) of the pilots' pension benefits to their respective former spouses. The Plan provides that, upon divorce, if the pilot is at least 50 years old (as all the pilots in this case were), a former spouse to whom pension benefits are assigned can elect to receive those benefits even though the pilot continues to work at Continental. (Think “separate interest” annuity allocation.) The former spouses presented the QDROs to Continental and requested payment of lump-sum pension benefits. After the former spouses received the benefits, the couples remarried. Continental sought to obtain restitution under ERISA Section 502(a)(3). The Court of Appeals noted that ERISA § 206(d)(3) limits the QDRO qualification determination to whether the state court decree calls for benefit payments outside the terms of the Plan. It rejected Continental’s expanded reading of § 206, concluding that plan administrators may not question the good faith intent of Participants submitting QDROs for qualification. But the opposite may be true in U.S. v. Brazile, No. 4:18CV56 RLW, United States District Court, E.D. Missouri (2018) - that you can find at - https://scholar.google.com/scholar_case?case=10011356851935590761&hl=en&lr=lang_en&as_sdt=20006&as_vis=1&oi=scholaralrt&hist=bY5nDLcAAAAJ:14880692104701005079:AAGBfm2qi1_JaXLJvydb4f3quYTnTlLkbA, where Steven Brazile was convicted of securities fraud and, as part of his plea agreement with the Government, he acknowledged owing restitution in the amount of $3,902,880.85. The Government imposed a lien against his property and rights to property under 18 U.S.C. § 3613(c). It seems that among Steven’s assets was a pension plan. Steven’s wife, Lorraine, filed suit for divorce and as part of the settlement the parties agreed to the entry of a QDRO transferring 100% of the plan benefit to Lorraine, thereby putting this asset unavailable for Steven’s restitution obligation. “ In September 2017, probation officers conducted a home visit at Defendants' home and discovered that Steven Brazile and Lorraine Brazile are living together with their children and are raising their kids together as a "family." (Id. at ¶ 28) The Government contends that this demonstrates that the Defendants entered into a "sham divorce" to transfer assets to Defendant Lorraine Brazile that could have been used to pay victim restitution. (Id. at ¶ 29) On January 12, 2018, the Government filed a three count civil Complaint against Defendants alleging fraudulent transfer in violation of 28 U.S.C. § 3304. (Id. at ¶¶ 30-44).” The case came before the court on Steven and Lorraine’s motions to dismiss or for summary judgment. The judge allowed the case go forward.

Yeah. Never mind this. Another senior moment. Not my best week...

RatherBeGolfing, I had no issue whatsoever with anything you said. My issue is with QDROphile, who is simply rude, and not even 100% accurate in all the advice he gave. Responses like the one he gave will drive away people who might otherwise have participated on this forum, and will make many more into "lurkers" who read the information but don't dare speak up for fear of being ridiculed for asking questions in the first place. Even I am going to step back and read from now on and try to solve all of my questions on my own. I don't say I will never put up a question again - management may require it - but not if I can find any other alternative.

I was under the impression that all employer contributions are pre-tax.

I don't think there is any choice; you are adding a new employer and deciding which QSLOB it belongs to. That's a change in your prior information provided (line 11 stuff). It won't impact the NUMBER of QSLOBs, but it does impact your determination of who is in each QSLOB, and that's a new determination.

RatherBeGolfing, right now I'd rather be golfing too and I don't even play! Seriously, we are a tiny, tiny shop. We don't have the luxury of sending something down the hall to the correct "department". Like it or not, ready or not, 100% up to speed or not, we have handle everything our clients throw at us. Occasionally, the scornful, snide responses we get on this forum make us feel like the rest of the pension world works in a 50 story building with a "distribution floor", a "QDRO floor", a "loan floor", etc. where each floor has 25-30 minions running around at the behest of the department head, etc. We do all the normal things that responsible, caring people do. We attend the ASPPA convention and take ASPPA credentialed courses. We read Sal's Bible faithfully. We bounce things off each other, call former colleagues, Google things, and look things up in the Answer Books put out by Aspen Publishers. We consult the ERISA attorney on call if necessary, but first, we have to know that it is necessary! It's a simple fact that no one human being (except maybe Sal Tripodi) has ALL of the knowledge about ALL of the topics in his brain and at his fingertips. We would like to be able to ask questions on here without coming under attack for what we don't know. After all, if we knew, and we knew that we knew, we wouldn't need this forum, would we? I do honestly believe that our tiny band gives it their all, every day, to do the best job they can for the clients and the participants with the tools and the information we have. QDROs come up maybe 4-5 times a year. As such, reviewing them is a negligible part of our overall duties.None of us have ever been presented with a case that was not attached to a DRO or a QDRO. This was something new, something we did not know could happen since we had never seen it before. We acted in good faith as we knew it at the time. The HR department of the client sent the marital settlement agreement because they thought it was important. We all were under the impression that once you knew, no matter how you knew, that an alternate payee had a right to part of a participant's account, the account was supposed to be frozen lest the participant run off with the alternate payee's balance. We now know better, but that doesn't make us stupid, ignorant, or bad administrators. We are darned good administrators who seldom process QDROs and never pretended to be attorneys. All this is to say that it's time to give anyone who asks a question on here the benefit of the doubt. They are at least TRYING. If they didn't care they wouldn't ask questions in the first place. Why not try to foster an environment where anyone from rookies to old fogies can ask questions without fear of repercussions?

Pardon me while I bark first. Your ignorance about QDRO law and procedures probably prevented the practical solution that I offer below. Your should refer QDRO questions out to someone capable of advising about QDRO administration. That said, your standard of understanding and competence is about average in the industry, so don't take it too hard. What should have happened is the participant should never have shown the papers to the plan. The order (and it is a domestic relations order) applies only to the participant and has nothing to do with the plan. It orders the participant to pay half of the distribution to the former spouse. This may be stupid or pretty sneaky on the part of the former spouse; it changes the tax consequences and I pass on that issue. The direction has nothing to do with the plan. But the participant DID give the order to the plan, so next what should have happened is the plan (or its adviser) should have recognized that the plan was not implicated and bent the strict processing procedure and conclude that it has not received a domestic relations order and therefore it should process a distribution to the participant in normal course. The plan should not accommodate the participant's request to split the distribution check in any way -- the plan needs to completely disregard the order to keep itself clear. The entire distribution is to the participant -- just as the order says. You probably cannot now restore Humpty Dumpty. You have started processing the order as a domestic relations order. You may have to continue, especially since you jerked John Hancock's chain. If you understood QDRO processing, there is still a way to get the participant a distribution of half of the account right away, even while processing the domestic relations order that is not going to be qualified. I will refer you to section 414(p)(7) to give you ideas, but I am not going to spell it out. You need a shock to your system to make you understand that you are not competent to deal with QDROs and you should seek professional help that you or the plan pays for to extricate yourself from this mess. Or not. You can just let the participant dangle while you process the domestic relations order under usual procedures. The participant brought it on himself by not participating in the divorce.