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Voya is an insurance company. I would expect that the "separate accounts" are held under a group annuity contract that is a "registered" product. That's how we handle 403(b)'s in our group annuity business.

Santo Gold, the theory is that IRS in VCP will require correction all they way back to the dawn of time, or at least the founding of the republic. Having said that, if you can show that you have no records that would enable you to determine the magnitude of the violation or the identities of the participants who were affected in the distant past (say 10 years ago) and you really don't have records for one reason or another and are otherwise reasonable in your approach, they will probably work with you. They don't generally require perfect correction where it is not reasonably attainable.

Final assets $0 PYB = 1/1/2022 PYE = Date of final distribution Yes, Short plan year. Use 2021 form. If filing on paper cross out 2021 and write 2022. If filing electronically, should be no problem if PYB/PYE date are correct.

and you obviously cannot apply to existing loans or any that have been applied for prior to any such amendment being executed.

Why not? Isn't 72(p) the maximum allowable parameters? Why couldn't a plan, either via it's document or the loan program, enact more restrictive requirements? 72(p) requires loans amortized at least quarterly, but most plans amortize per pay period. Plans are not required to collect loan repayments via payroll withholding but nearly all of them do. 72(p) allows longer than 5 years for mortgages but some plans still limit to 5 year terms. Etc. Etc.

No. See Treas. Reg. 1.401(k)-1(b)(4)(iv)(B). No. Can't restructure with safe harbor, either. Need to adopt separate plans.

HCE, I really don't know if there is any guidance directly on this, but I think the key thing is it was not an error, but a clawback. At the time the amount was deferred from the bonus, the employee had a "claim of right" to the bonus. As others have pointed out in the other post, I think, if the bonus and clawback are in 2022, you can probably treat the deferral as an error in the deferral amount. But if in different years, no, because you can't even amend the individual's W-2 for a prior year.

It was right at the time it was made so you just have to explain it.

Beyond my initial response it's not something I'm aware of, sorry can't help you further.

My recommendation is to close the barn door before the horse gets out and provide in the QDRO procedures that an order will not be qualified if it does not expressly address the withholding issue. If the QDRO procedures do not address the situation, it may be possible to disqualify based on an inability to interpret the order, as has been suggested. The fiduciary may choose to interpret the order with respect to withholding, and make qualification contingent on that interpretation. Disagreement can be resolved under the claims procedures or by resubmitting a modified order. The fiduciary might choose not to extend itself because the interpretation is going to favor somebody, probably with respect to an issue that was not properly considered in the domestic relations proceeding because of ignorance of the tax law.

My thoughts: 1. Reject the QDRO and let the parties or the judge figure out how the Plan is supposed to withhold taxes on Plan account money that must be distributed in full. 2. Pay out 100% of the Plan account to the "Alternate Recipients" (as we call them in Maryland) per the QDRO and issue a 1099-R to the Participant, and don't worry about withholding on the theory that the alternate recipient are not receiving taxable retirement benefits and is not a party to the tax consequences imposed on the Participant and should not have the amount ordered reduced. See IRC 402(e)(1)(A) - "For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p))". The spouse or former spouse is NOT the distributee of payments made to the child c/o a parent. And this is consistent with the law that makes child support not taxable to the recipient parent. The same would be true in the case of a Participant in pay status with respect to a defined benefit plan. Recognize that this issue will likely become a bigger problem for custodial parents under the SECURE act when Participants need not elect an immediate lump sum distribution and elect some other distribution option. One company I know is making available the following options for its 401(k) Plan as of 1-1-22. Single Lump Sum Payment Option. Partial Lump Sum Payments Option ­Fixed Periodic Amount Option Partial Lump Sum with Fixed Periodic Amount Fixed Time Frame Option ­Fixed Percent Option Life Expectancy Option 50% Joint and Survivor Annuity for married Participants only (not divorced?) whereby the Plan purchases an irrevocable 50% joint and survivor annuity from an insurance company. Uncertainties: When can such elections be made? Before or only after retirement? Before or after divorce? Will such an election be superseded by a QDRO? Will State law preempt the SECURE act? Given that a lump sum distribution is an option, and that a QJSA is an option, would a separate interest allocation be an option as well since IRC 414(p)(2)(B) - (D) neither mandates or restricts the use of a shared or a separate interest allocation, and since 29 USC 1955(d) requires that a QJSA be the actuarial equivalent of a single life annuity for the Participant. The plan says "no". But I say that she should be able to get 50% (or time rule share) of the lump sum in the form of a separate interest annuity. See attached interesting case. David Knight v. IBM Attorney Comment.pdf Knight v. IBM - Complaint.pdf

Santo Gold, there is really more to this than meets the eye. As was mentioned, if the intent was always to exclude and you can demonstrate that intent in some manner that is not dependent on people's recollections (for example, an SPD that said that these folks were excluded, or perhaps even a powerpoint presentation or letter to the plan administration/document provider that outlines the intent to exclude), you have some basis for asking the IRS to let you amend retroactively. The key is that the expectation of both the employer and the affected employees must be shown to exist -- so that the employees knew that they were not supposed to participate. This is really hard to prove. In addition, the IRS will ask why you went through X versions of the document and didn't fix it before now (the error in document was repeated over and over). In absence of being able to demonstrate this definitively, you should plan that the IRS will require that you fix this back to the original effective date, as these people are entitled to restitution for the mistake. As Luke mentions, if data is not available (and that means really not available, not just that you don't want to spend the time), you can use reasonable estimates for earlier years. But, you can't just say: we're not going to do it for the earlier years. Having said all this, you probably want to assess what the risks and rewards are for intermediate corrections and the like. For this, seek legal counsel who knows how to do this stuff. You want to make a really informed decision here, assuming that the dollars involved are significant. This is where the consulting stuff comes in. Good luck! Ilene

Agree with Bri, no plan document = no qualified trust = still corporate asset. How/why a trustee/custodian would open a plan account without a copy of a signed document baffles me. Establish the trust account now, and either transfer the previously deposited funds or withdraw from the "corporate" account and deposit into the trust, then close that prior account. You can roll dice that IRS never sees this or even makes a case if it does, but why take that chance when there is an easy fix?

Was the forfeiture supposed to be allocated in a prior year under the terms of the document? If so, that's your justification for going back and at least tying it to a year with compensation for at least someone.

I agree unless these are Code Section 403(b)(9) accounts. Pending legislation, if passed into law, would change the investment restrictions.

Can the sponsor be deemed to have transferred the funds from some "clearly not a plan account because there's no plan adopted yet", still-a-corporate-asset, account into a brand new "this is definitely a plan account pursuant to our new document" as of June 3?

Just asking but can the plan say the DRO isn't a QDRO because it is asking the plan to pay a larger benefit than the person has? I mean the federal taxes is mandatory after all. So by not making a provision with the mandatory 20% withholding they are asking the plan to pay in excess of what the benefit actually is. Once again, I am asking not saying this position is correct. Otherwise, I would think Peter is got the answer. This person has to figure out how to account for the taxes outside the plan and distribution. A big of enough payment that could really hurt. If that is the case, they need to get a good CPA to help them to make a plan. The IRS is more willing to accept installments the last few years than they used to many years ago. A CPA should be able to guide the person through that process.

But if a QDRO calls for the alternate payee to get 100% of the participant's account, the plan should not permit a withholding choice that would lower the QDRO distribution to less than the court-ordered amount.