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The follow Q&A on this topic is from the American Bar Association Section of Taxation - May Meeting in 2004. Basically, whether the forfeiture buy-back creates basis can depend on the source of funds that were used for the buy-back. 36. Sec.411(a)(7)(C)-Buy-back of Cash out Distribution Section 411(a)(7)(C) provides that the accrued benefit of an employee that is disregarded by the plan must be restored upon repayment to the plan by the employee of the full amount of the distribution. Employee A participated in Employer's qualified defined benefit pension plan, terminated employment, received a lump sum distribution of the present value of his normal retirement benefit and rolled over his lump sum distribution from the plan into an IRA. The lump sum distribution did not include the value of any early retirement subsidies. Employee A was rehired by Employer and would like to repay the Employer's defined benefit plan the full amount of the distribution with pre-tax IRA funds. The repayment will be part of the Employer's defined benefit pension plan trust and will not be segregated in a separate account in the name of Employee A. May the Employer's defined benefit pension plan accept pre-tax funds from Employee A's IRA as repayment and include the repayment as part the trust's general assets? Does the answer vary if the amounts in the IRA are not funds from a tax-qualified plan distribution? Is the repayment from Employee A's IRA to the Employer's tax-qualified defined benefit plan a taxable event to Employee A? Proposed Response: Employer's defined benefit pension plan may accept the pre-tax funds from Employee A's IRA as repayment of the prior distribution and include such amounts as part of the trust fund's assets. The repayment provisions of Sec.411(a)(7)(C) and Treas. Reg. 1.411(a)-7(d) do not state that only after-tax funds may be used to repay a pension plan and does not require that the repaid amounts be specifically set aside in a separate account for the participant. The answer is the same whether or not the pre-tax funds in the IRA originated from a tax-qualified plan. The amounts repaid by Employee A from his IRA to Employer's defined benefit pension plan will not result in ordinary income to Employee A because the amount is not distributed to Employee A. IRS Response: The IRS agrees with the proposed response. It doesn't matter whether the buy-back is made with pre- or post-tax funds. The source of the money used for the buy-back is not important, but buying back a benefit with after-tax funds may create basis in the benefit for the participant. The source of the funds might be relevant to whether lump sum distribution treatment is available for the ultimate distribution from the qualified plan.

True, but even if there were NHCEs, that doesn't meant the other HCEs get 5, they'd still only get 3.

EPCRS is used to correct plan qualification failures. Typically those are operational failures, which means a failure to follow the plan document. Most profit sharing plans these days will say that the contribution is totally discretionary, but not all. Does your plan document actually say that the contribution is discretionary? If the 10% contribution is required under the terms of the plan, then not making it would have been an operational failure that could be corrected (probably self-corrected) under EPCRS. Failing that, did the employer make a corporate resolution, or notify the plan administrator, or otherwise memorialize their intention to make the 10% contribution for 2022? If so you may have something to lean on to call it an operational failure.

To be clear.... you don't have any NHCE eligible for the PS at this point? Because not eligible is different than not getting PS. Why group instead of "each in their own group"? I've found each in their own group has been a more sane approach. Plus you get options to help pass.

Each covered service provider is responsible for disclosing to the plan sponsor of any fees it receives from any source other than from the plan sponsor. If the broker account provider is receiving payments from the participants' accounts or from investments held in the participants' accounts, then the broker account provider is responsible for disclosing all such fees to the plan sponsor. If all of your fees are paid by the plan sponsor, then you have nothing to disclose. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/fact-sheets/final-regulation-service-provider-disclosures-under-408b2.pdf

Whether it is an employee or an employer contribution has no bearing on whether or not the employee can have basis in the account. An employee can have basis in employer contributions. For example, if they took a loan which was deemed and later repaid. The employee would not be taxed on the amount of basis upon distribution. Again, this is true regardless of whether it was employee or employer contributions.

See my bolded comments. Plan admin What is the name of the plan? There are 175,000 different pension and retirement plans in the USA. Some are under ERISA relating to private companies. Other plans are under Federal law addressing US Government plans like FERS, CSRS, Military. Still other are created pursuant to State, County, City and Municipal law. They are not all the same. send 3 letters to the defense In discussing pension and retirement issues and QDROS you have a Participant and an Alternate Payee. It does not matter if the parties are Plaintiffs or Defendants. asking for the pre approved DRO Pre-approved by whom? sent back Sent back to who? signed and certified Certified by a Court? so his client could be paid also stated that the was no hold on the account I assume you are dealing with a defined contribution plan and not a defined benefit plan, but you didn't say? due to ERISA rules so if the Participant filed the paperwork to remove they would have to follow through with that. So it sounds like the parties are divorced and the Participant - you - planned to terminate your employment and roll over your entire account to an IRA take a taxable distribution and hide it under a mattress. And it looks that that is exactly what you did. So they were taking a risk of that. 2019, 2020, 2021. All 3 letters Letters from whom. Plan admin calls and ask if I wanted to roll the funds out as ERISA rules state they had to return the money back to me. I agree and the money is rolled out on the 7th of Oct. Plan Admin had received the sign DRO from the defense on the 6th of Oct. She returned it and asked for a few changes, nothing big and said it would need to be signed and certified and sent back. Well on the 14th of Oct. nothing had been sent back yet. So she call the defense and explains that the money was returned to the participant. The defense gets the QDRO signed on the 18th of Oct. by a new Judge and sends it back to the plan admin. Not certified? Anyway this Judge was being told that I did this willfully to kept my ex wife from receiving her share. That was so off the wall as well as the contempt charge he gets from the Judge because I willfully took all the funds and thumbed my nose at the court. The source of the obligation to convey a share to your former spouse did not originate with in the QDRO. It originated in the Marital Settlement Agreement you signed, if any, or in the Judgement of Divorce. The QDRO is nothing more than a collection tool, like a garnishment of your wages or an attachment of your property for a debt. You owe her the money. Her attorney was negligent in not getting the QDRO prepared, entered by the Court and a certified copy sent to the Plan Administrator. But she can pursue you for her share. When I tried to explain I was was shut off. Video court. So I retired on a disability retirement.Chief, Merchant Marine. They had me arrested and put in jail I'm over 72 years old and they beat me shoved me in a car and now I am on medication for fear of jail again. Now the Judge is saying that they will get a warrant of commitment for holding the money from his client, if I don't pay them $132,000. No bondsman. Cash only. I have asked about the statutes and the Judge told me to get a good attorney. It looks like in your State they take contempt of court very seriously. Every state is different. You need to pay her what is due to her. And the judge can put you in jail and make you pay interest on the amount due and make you pay her attorney fees. That will purge the contempt and you will be a free man. Well can't do that as they have frozen all my accounts. Can't even buy a stick of gum, unless I borrow the money. QDRO Masters did the QDRO for the defense. In fact in 2018 he had it made in the Order that his client would be responsible to get the QDRO done and he has had me in court on contempt charges for not doing what the decree stated. He gets the court fee from his client and then the attorney fees out of me so he is making bank here on the both of us. I have tried to explain and now the Judge is stating the approved DRO back in 2016 that was never signed but plan admin pre approved it was done but now she signed the new one in 2021 so that made it a new transaction? Has anyone heard of this before? Get a good lawyer. You're going to need one. You are the architect of your own problems.