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Unless the plan has bad QDRO procedures or bad advisers, the plan is blind to a divorce and needs to take no action out of the ordinary, including proceeding with distributions on termination, until the plan receives a domestic relations order. Finish the distribution and keep quiet and lay low. Don’t seek trouble. Don’t believe the DOL QDRO book.

Really, I implore all of you to stay safe, even though it may mean skipping traditional celebrations. We lost our best friend to Covid earlier this year - he and his wife didn't observe standard precautions, had a couple of big family gatherings, and both got Covid and he paid the ultimate price. Please don't let this happen in your circle. Be thankful for what you have, and don't take chances! I'll get off my soapbox now. Best wishes to everyone.

Yes, but in the middle of the current restatement period, we would just accomplish both items at the same time instead of doing one now and the other later.

Generally, I agree with above comments. However, it's not prudent to simply ignore it. Rather, write down what you are doing, including nothing, and cite your QDRO procedures. Remember, being informed of a divorce or potential divorce might be a "red flag" (i.e., you might be expecting to receive a DRO) but is not the trigger for "put hold on account". It is not the same thing as receiving a DRO. See IRC 414(p)(7).

Thank you Peter. Clearly this is another case of imprudent investments (fairly common) and not following the IPS (also common), and not an issue of pooled vs participant directed accounts. The complaint mentions (and misstates) that participants were not allowed to direct investments, but does not claim that this itself is a fiduciary breach (which would have been a summary judgment slam dunk). Rather, they use this to set up their claim of imprudent investments and failure to follow the IPS. Incorrect. Also incorrect.

Yeah. Know the feeling, BG5150.

The court found: “Plaintiff is not alleging that Defendants breached their duty of prudence by failing to provide Plan participants with a menu of investment options[.]” Rather, the plaintiffs asserted that the plan’s fiduciaries imprudently invested the plan’s one portfolio. Toomey v. DeMoulas Super Markets, Inc., Civil No. 19-11633-LTS [document no. 32] (D. Mass. Apr. 16, 2020) (order on defendants’ motion to dismiss). The court found the facts alleged included these: “Between 2013 and 2017, the Plan had approximately 11,000 to 13,000 participants with a wide range of retirement needs and objectives. During that time, the Plan had between $580 million and $756 million in assets. . . . . The Plan’s Investment Policy Statement (IPS) called for 70% of the Plan’s assets to be allocated into domestic fixed income options, and 30% into equities.” “[E]ven taking the investment strategy chosen by the Plan as the benchmark, it was imprudently executed in several ways. For example, . . . Defendants often failed to meet their own equity allocation targets, in some years devoting as much as 86% to fixed income options, with the remainder (14%) to equities. [E]ven among fixed income investments, the defendants failed to undertake appropriate efforts to generate meaningful returns. In 2013, for example, Defendants invested 58% of the Plan’s total assets—$336 million—in cash and money market accounts earning .01% interest or less. In 2014, Defendants increased the Plan’s investment in cash (or cash equivalents) to over $400 million, or 66% of the Plan’s assets, in accounts earning .05% interest or less. Defendants also left millions of dollars—$27 million in 2016—in bank accounts that returned 0% interest. [T]o the extent Defendants invested in bond funds, they failed to procure the lowest-cost share class of those funds even though, as a large institutional investor, they had the leverage to do so.” Toomey v DeMoulas Super Markets Inc.pdf Toomey v DeMoulas Super Markets Inc complaint.pdf

Is it necessary to restate? If they WANT to, can't the new entity just assume the sponsorship/assets/liabilities of the existing plan?

Frankly, it's not your responsibility unless you're a fiduciary. You should send a certified, signature required letter to the wife explaining what needs to happen. Copy their attorney if you know who it is. Then, if she doesn't respond, you're done.

Agree with this.

We would restate and use the new EIN; probably include the sole prop as an adopting employer or at least credit prior service.

I think you have to know how they are allocating the contribution expenses for employees amongst themselves. Might have to do some manual calcs or trick the system by dummying in some numbers. Don't know Datair to opine on how that would be done.

Personally, I always recommend a crystal ball.

There are different ways for an executive to get some protection against her employer’s insolvency. While some use non-insurance arrangements, some use contracts with an insurance company or other insurance underwriter. The Internal Revenue Service has recognized some carefully arranged purchases of insurance against an employer’s inability or failure to pay an obligation as not funding a deferred compensation plan’s promise. For example, IRS Ltr. Ruls. 9344038 (Aug. 2, 1993), 8406012 (Nov. 5, 1983). Among the described facts, the participant paid for the insurance. Also, the participant negotiated the insurance, and did so without involving the employer. A letter ruling is not precedent. IRC (26 U.S.C.) § 6110(k)(3). Each taxpayer should get her lawyer’s advice. Because this insurance is an obligee’s personal protection against her employer’s inability or failure to pay deferred compensation, it is not a “plan” (or the employer’s) investment; rather, it is a participant’s personal insurance against one or more risks about her employer’s ability or willingness to meet its deferred compensation obligation. An insurer will underwrite this risk only if the insurer receives detailed financial information about the employer or obligor, and considers the information reliable. An underwriter might look (at least) for CPA-audited financial statements and minimum revenue and capital positions of the obligor. StockShield’s “Deferred Compensation Protection Trust” http://stockshield.com/our-products/deferred-compensation-protection-trust/ is a different idea. I’ve never evaluated it.