Leaderboard

These are all questions that should be answered by whoever is administering your plan for you. The ADP test is not the easiest thing in the world for a non-pension person to understand. But yes, it is a test that compares the deferrals made (on average) by the HCEs for the year to the deferrals made (on average) by the NHCEs for the year. And yes, the HCEs for a given year are determined (under one rule) by the compensation earned in the prior year. If it is high enough in the prior year, they are an HCE for the current year. The other criteria is ownership, which can also make someone and HCE and that is actually regardless of how high their income actually is. What you need to do is ask your administration folks for an actual copy of the ADP test; it will show you who is in the test for both HCEs and NHCEs and the allocations to each that are being tested and the math that shows the results and why you did, or (in this case) did not pass. That test printout is something that they should absolutely be able to give you; we all do that test for our clients and our software spits out the results with all the necessary info to show the failure and, often, what the correction is that is required to make it pass. To answer all the questions you posed requires a detailed tutorial on this issue, and that would be both long and complicated and really unnecessary. You need to know only why YOU didn't pass (unless you are deciding to go into the plan administration business, in which case you will need a few years of study under someone who already knows all the rules!). Best of luck.

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?

If the spouse is the sole beneficiary and the joint table produces a larger life expectancy, the RMD is determined using the joint table. So, it is required. See 1.401(a)(9)-5 Q&A 4(b) & Q&A 6. That said, I also agree with "who cares" for the prior year distributions, as long as the participant paid the taxes.

As a Moderator, I'll take this opportunity to comment about a previous post/exchange in this thread. Let's keep our discussions civil. Please. You know who you are. There is no value here in using demeaning words or phrasing.

Identity theft is so scary on these accounts. I think I have mentioned this before - my 401(k) at my former employer changed over to Prudential as the recordkeeper. When I read their long, convoluted and crepuscular disclaimer, I was horrified to find that they claimed they had no liability for unauthorized withdrawals unless I had previously notified them of password theft. Well, how would I know until it is too late that my password was stolen/hacked and my account was emptied? (I give my password to NOBODY, but some hackers are evil geniuses.) So, after protracted unsuccessful responses with BS statements carefully crafted by their legal department, we worked out a system whereby my account is flagged so that NO DISTRIBUTIONS may be made using on-line tools. I must CALL in, and answer a special challenge password before withdrawal forms are MAILED to my address of record. Address cannot be changed without similar steps. Call me paranoid, but I feel a lot more comfortable this way.

I don't think the letter from the lawyer has any meaning other than it might be a good suggestion. The girlfriend has no authority until the plan determines (probably with the results of the court case) who the rightful beneficiary is. Now, having said that, might it be a good idea to move into a QDIA? Probably, but I'll let other who have more involvement with those animals comment on that. And, now you have an example of how identity theft is going to be a major issue for all these platforms where access to both the funds and beneficiary issues is done on line with no human intervention.

If your current provider will not/cannot answer these questions then I strongly suggest seeking an provider who's willing to take the time to explain it. If you started with a "Budget-friendly" TPA then you're now seeing how they keep their costs down.

@Bill Presson Bill is it too late to get this question in for the "ask the experts" panel at ASPPA Annual? I wonder what kind of discussion we could get with a whole panel of "pension celebrities"...

Are you even sure the kid is eligible for the plan? Also, they can change the plan to exclude people under 18. Eligibility is not a protected benefit.

What does the plan document say re age to participate? Our documents state that you have to be 21 to participate.

A retirement plan (to state the obvious) holds its assets in a trust. That means, there must be trustee(s). It is interesting that it is state trust law that mostly applies to the issue of what is a valid trust (that's why we have a designation in our plans as to what state the plan will come under, even though it's clearly subject to ERISA which is federal law and state law is superseded in all other areas. Clearly, the trust assets are still going to be held in a trust that is subject to the jurisdiction of US courts (that's a given and a requirement). Can you have only foreign individuals as trustees? Don't have an answer to that. In the estate planning area, naming a non-US citizen as a trustee may result in the trust being considered a foreign trust, which would clearly be a problem for an ERISA plan. I think this is one that needs to be kicked up to the proverbial "good ERISA attorney" to opine on. Or, you can just make sure you have new US citizen trustee appointed and avoid all this mishegas (and yes, that came up in my spell checker!).