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One important point you are missing, with all due respect. The IRS has said in some of its discussions on the issue that the reason you can use seasoned money is that it constitutes a distribution (and so the entire premium is taxable). (The concept of "seasoned money" is that it is distributable at the participant's election.) I don't know if this is their current position ... it's been a long time since I discussed insurance in a plan with the IRS .... but i would at least warn the client that the IRS could take the position that the payment of the premium is taxable income. In any event, you need to be sure your plan document permits seasoned money to be distributed, or this option doesn't work. Three more things: first, the 49.99% is applied on a cumulative basis in a DC plan. So, you add up all contributions for all years (up to the year in which the premium is paid), take 49.99% of that, and that is the total premium that could be paid and still have an incidental death benefit. So, you may have more "room" than you think. Second, don't forget that, even if you take the position that the premium payment is not taxable income, remember that the term cost always is. And, the amounts on which taxes are paid becomes a basis if the insurance policy is distributed to the participant. Last but not least, the provision of insurance is a benefit, right, or feature, and cannot be discriminatory. If it has not been offered to other participants, you have a problem that needs to be repaired, probably through VCP. Best wishes for a likely big mess!

I'm having a great deal of trouble understanding the text of your question. Two letters were sent by the plan administrator -- to whom? Could you type (as a reply) the text of those letters (just put a blank line where names and addresses appear)? I am assuming that the wife is the participant here. Correct? The participant has been waiting 6 years, I see. Please explain when the 6-year period started. I'm not sure what the significance is. You say the attorney who did not file the QDRO; are you saying the attorney for the participant's husband did not provide a copy of the order, signed by a judge, to the plan until 5 days after the funds were distributed to the wife (via a rollover, I believe you said)? What do you mean by "funds to the plan that has been discharged per the letters" -- what does "discharged" mean here? And what do you mean by "per the letters"? I know the Department of Labor has published two documents for the general public about the 18-month rule -- https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/qdro-determining-qualified-status-and-paying-benefits.pdf https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qdros.pdf

As does Relius

401Kology: You are correct. Be careful to distribute the 403(b) accounts within the 12 month period. Also correct that you cannot merge the plans under the current law. Employees must enroll in the 401(k) to start deferrals into that plan. Nothing about the 403(b) is "transferable" to the 401(k). Entirely different code sections.

My observation is that it's almost always a giant red flag to see insurance and 401k in the same sentence. I suggest you search this 401(k) Forum, using the search term "insurance".

Found it myself, but get an ERISA attorney involved, and file for a determination letter if you do want to go this route. Premise: 1.411(a)-11; for participants whose benefits are NOT immediately distributable, upon Plan Termination, in the absence of participant consent (albeit because none is being sought-after), and provided that a commercial provider annuity option will not be offered; "...the participant's accrued benefit may be transferred without the participant's consent to the other plan if the participant does not consent to an immediate distribution from the terminating plan." This is an abrogated form of the involuntary cash-out provision allowing terminating dc plans to exceed the $5k threshold, or for db plans to transfer the benefit to the PBGC. It was an attorney led effort and recieved explicit determination from the IRS, so I would use only if you absolutely wanted to keep the 403b monies under the employer's oversight.