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None of us here are going to advise you what to do--so nothing said here is advice. But I can tell you that if it was me I would tell the plan that I'm not paying it back because its gone. Then, I'm probably going to get an attorney to look at the QDRO. I would go to the attorney who originally drafted it. That attorney may have some skin in the game if it was not properly drafted. (Of course, that attorney may not want to talk to you for the same reason). Someone should look at it because obviously there is ambiguity in the language ... if lucky there could be language that favorably resolves the issue, e.g., provides that the moneys should be segregated or put in a separate account, then gains and losses should be payable. Shame because if lawyers get involved, there won't be any money left for either of you. It's also likely not worth your ex getting a lawyer either. You see why I don't practice family law.

Are you certain the stock repurchase will generate W-2 income? Generally it's a capital transaction if the employee is selling stock he/she owns outright (unless the employer's repurchase is at a significant premium or is otherwise some form of disguised compensation).

I think this is the section that Bird is referencing. this is from 1.410(b)-6 Excludable employees (f) Certain terminating employees - (1) In general. An employee may be treated as an excludable employee for a plan year with respect to a particular plan if - (i) The employee does not benefit under the plan for the plan year, (ii) The employee is eligible to participate in the plan, (iii) The plan has a minimum period of service requirement or a requirement that an employee be employed on the last day of the plan year (last-day requirement) in order for an employee to accrue a benefit or receive an allocation for the plan year, (iv) The employee fails to accrue a benefit or receive an allocation under the plan solely because of the failure to satisfy the minimum period of service or last-day requirement, (v) The employee terminates employment during the plan year with no more than 500 hours of service, and the employee is not an employee as of the last day of the plan year (for purposes of this paragraph (f)(1)(v), a plan that uses the elapsed time method of determining years of service may use either 91 consecutive calendar days or 3 consecutive calendar months instead of 500 hours of service, provided it uses the same convention for all employees during a plan year) Essentially, if you have a requirement that someone complete 1000 hours OR be employed on the last day in order to be eligible to receive a contribution, then you get to exclude terminated employees with less than 501 hours of service from 410(b) coverage testing. This is irrelevant to the grouping method. But, if you don't have those requirements and instead just use the individual grouping to not make a contribution to this terminated participant, you have to include them in 410(b) coverage testing.

I would not advise a client that the cost of preparing the initial plan document can be paid from plan assets. (I would also say that the final decision must be made by the plan fiduciaries.) From https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/2001-01a:

Agree with JM. It is unfortunate but you'll have to get an attorney involved. It seems highly unlikely that there would be no gains or losses credited for that long a period of time - "date of valuation" doesn't necessarily mean date of initial valuation and in any event it would seem that you went through a process that was approved all along the way, and the ability to come back 6 months later and try to recapture something is shaky at best. We're only hearing your side of course but from what you're saying, this sucks. Good luck and let us know how you make out. One question - is this a big company or small company your ex worked for? That might give a hint as to who is making decisions for the plan and how serious this is. It could be that your ex just rattled somebody's cage and out of fear or whatever, they are going after you, but maybe just to see what happens. I can't really advise you to ignore it, but it could be just an attempt to see if you will cough something up without a fight.

I would talk to a pension attorney as I see two issues here. First, it would be possible to amend the prior QDRO to clarify gains/losses through date of distribution are to be included. The other option is to challenge the plan on their ability to recoup a payment in error. There are cases out there on this issue and the IRS Employee Plans Compliance Resolution System or EPCRS, says recovery is not always required. Check out Pensionrights.org and talk to an attorney on how best to proceed.

I think the requirement to allocate those assets to participants ratably over a specified period not exceeding 6 or 7 years, I forget which, precludes their use for anything else, including payment of expenses. Deviation from that could result in excise taxes retroactively applying to those transferred assets. I also do not think that the preparation of the initial plan document is an expense eligible to be paid from plan assets.

I think you are fine for ADP, I like others I don't believe this satisfies ACP since NHCE can not receive the discretionary match and thus HCEs receive a higher rate of match - even though the intent seems to be to give HCEs the same match as NHCEs "in good years". I think this is also a contribution that is likely to blow the deemed not Top Heavy excemption. Though this seems to be one of those times that the Plan is in compliance with the spirit of the regulation, just not the letter of the regulation. But for the record, I'd like to be wrong on this because it's hard to see how what they are doing is descriminaroty in practice.

Good call Peter. Here is some more reading material on the topic from Ms. Ferenczy if you are so inclined: https://ferenczylaw.com/flashpoint-surprise-you-are-or-are-not-a-professional-and-you-are-or-are-not-covered-by-the-pbgc/

I agree with Carol Calhoun (of course!) and Mr. Bagwell. 403(b) Plans can be very difficult to terminate because of the distribution of assets in 12 months requirement. Be sure to examine the annuity or other investment contracts in the 403(b) for termination rules or limits. My understanding is that a failure to get this completed within the 12 months, "disqualifies" the termination. So now (given a failure to distribute within 12 months) you may have assets improperly rolled over (payouts to some participants who then rolled over the distribution on the assumption that the plan termination was a distribution event) and if the sponsor has started the 401(k), the plan sponsor now would have two plans for 5500 filing etc. Paychex does not have a 403(b) product. So their "sale" to your client is an "If all you have is a hammer, everything is a nail" argument. They are not selling your client a 401(k) because it is the best plan for your client; they are selling a 401(k) because that is all they have to sell. A very significant advantage to a 403(b) is no testing requirement for the deferrals, as Mr. Bagwell notes. You might run a sample ADP test on this client's statistics to help them see what happens. This change is also, in my opinion, a fiduciary decision to be made by your client. They had better be prepared with investment and pricing comparisons to substantiate why this change is an improvement for the participants in this plan. A decent article on this is "Your Payroll Provider and 401(k) Provider Should NOT be the Same!" by Fiduciary Shield. Also Ary Rosenbaum (an ERISA attorney) writes on this topic all the time. I "Googled" and found one of his articles entitled "Why You Should Avoid Using Your Payroll Provider as your 401(k) Provider." Good luck! PNJ