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Essentially, I agree with, “Get a different lawyer.” Maybe it does not have to be so dramatic. In the retirement professionals community, both lawyers and non-lawyers have a general expectation that most domestic relations lawyers do not understand retirement plans, and pension plans in particular (because they also include actuarial principles). Most domestic relations lawyers also know that they do not understand retirement plan law. Consequently, domestic relations lawyers will have a relationship with one or more lawyers who understand retirement plans and QDRO law. Before even contemplating a QDRO one must consider the design and provisions of the retirement plans to be divided in the divorce and how to measure and describe the interest that each party in the divorce will have in the plan or plans. The primary divorce lawyer can associate with, or be advised by, a lawyer who is competent to work with retirement plans, ultimately including drafting a QDRO. If your lawyer seems lacking in understanding or answers that can be conveyed to you so that you understand, then your lawyer needs to connect with another lawyer for help with the retirement plans. Or you get another lawyer.

That is the best solution, and you got great advice above - fixing a plan error that didn't exist in the first place by doing something not otherwise supported by the plan document creates a plan error. We've had other discussions in this forum over the years about employee accountability, so I'll reserve opinion on that.

Be mindful of precedent setting.

So the employee thought they had turned in a deferral election? but didn't? It doesn't sound like a plan error. It sounds like the employer needs to decide if they want to do something to make the employee happy. Perhaps give them a bonus and they can turn in a deferral election now to defer most of the bonus. For morale purposes. But not because the plan needs correction. I don't see how a QNEC would be appropriate since there is nothing on the plan side to fix.

Good to also start a practice of getting an election form back from every new participant, even those electing 0%.

It depends on the terms of that pension plan. Some allow QDROs to paid out in a lump sums to the alternate payee at any time after the DRO is qualified by the Plan Administrator and becomes a QDRO. Other plans restrict the timing to when the employee reaches the plan's earliest retirement age and may not have a lump sum payment option, requiring the alternate payee to receive an annuity.

Depends. You can freeze a DBP, including a CBP, before accruals/credits are earned. If the plan has a 1000-hour requirement then you need to freeze before anyone is credited with 1000 hours. If there is no hours requirement, accruals are earned from day 1 of the plan year but you could freeze further accruals and limit to the portion of the year earned (for example, freeze effective 2/1 after a month's worth of credits have been earned). Unless it's an owner-only plan, you need to provide an advance 204(h) notice at least 45 days (large plans >100) or 15 days (small plans <100) prior to the effective date of the amendment. Such amendment needs to be adopted on or before the stated effective date or the adoption date becomes the effective date (i.e., cannot be adopted retroactively). Those are the relevant timing issues for executing the plan freeze, the employer's decision deadline is a function of these timing concerns and it's actuary's/TPA's lead time requirements for providing the necessary items (resolution, amendment, 204(h) notices).

It would be helpful to more about the plan design, the communications the employee received, and any documentation about when the employee became aware that deferrals were not being taken. From the perspective of the employer, generally the employer is on the hook for a correction if there was a missed deferral opportunity or a failure to implement deferrals after an employee elected to start deferrals (or should have been auto-enrolled). A missed deferral opportunity would be where the employee was eligible to defer but her eligibility to defer was not communicated to her. The failure to implement would be where the employee notified the employer that she wanted deferrals to begin and the employer did not implement her instructions. In each case, the employer will have an obligation to take the required corrective actions. The corrective actions will depend upon the facts of the situation and the type of mistake, and the employer should not take any corrective actions that are not among the actions prescribed in regulations. If the employee properly was informed she was eligible and did not make an election, and if the employee did not notify the employer that she made an election (or should have started auto-enrolled deferrals), then the employer does not have obligation to make her "whole in some way". There are not prescribed corrections for an employee who would-a, could-a, should-a make an election and did not tell anyone. The employee is accountable for the consequences of the employee's irresponsibility and inaction. Arguably, if the employer puts money into the plan to "make her whole in some way" and the employer was not at fault, then the employer potentially is making an impermissible contribution to the plan. This possibly could result in adverse consequences for the plan or the employer. Short version of all of this is if the employer failed to do something, follow the required corrective actions. If the employer did not fail to do something, do not involve the plan in any plan to "keep the employee whole."

My primary concern is not with a divorce lawyer that doesn't understand retirement plans, but one that apparently won't even acknowledge it and bring in someone else. It's just ridiculous.

Yep. Also, request a copy of the plan's QDRO procedures. if your spouse worked for more than one employer, don't forget to include any others in your review/research.

Get a different lawyer.

Pretty sure the 5500 only deals with participants and not employees. Also a 5500 usually deals with a single plan. It’s possible that plan could have more than one benefit but it may not have all benefits. And not all benefits have enough participants to require reporting on a 5500. While 5500s and 990s are technically public documents, it’s bad form to identify an employer on the board.

In general: any optional form of payment is "locked in" at its commencement date, such that no one is entitled to change it later. any J&S option will pay X to the retiree and some portion of X to his/her surviving spouse. The identity of such spouse is "locked in" at commencement date. Divorce and/or remarriage is irrelevant. Very likely, a QDRO is also irrelevant, primarily because most plans don't allow changing a J&S election after commencement, so a QDRO cannot force a plan to do something that is disallowed by the plan. However, some variations might exist (especially if the plan has a governmental sponsor), @Bill Presson's advice is essential.

Amicable or not, you need legal counsel to ensure your requests are met.

Well heck, if we're getting semantic/pedantic, let's go further and say it's the 5th anniversary of the first day of the plan year in which participation commenced.

In a controlled group, moving from one employer to another within the group is not a distributable event from either employer's plan. Transferring an account from one plan to another will require each plan to have provisions to allow the transfer out and to accept the transfer in as a trust-to-trust transfer. This may not be a great idea if there are differences between the protected benefits in the two plans

LadyjaneM10, your lawyer has to handle this. Your lawyer may want to co-counsel an ERISA attorney who can help with this, or seek the aid of an actuary for expert assistance.

The client is going to bonus the participant outside the plan. I expressed to him that the plan did nothing wrong. I don't know the employee... maybe they are good at their job. He want's to just keep the peace. My opinion CuseFan, she has gall to go to her boss and say that "HE" messed up. I have had ZERO problems with the office manager or bookkeeping/payroll over the years. They have been thorough to a "T", always providing clear accurate info in a timely manner whenever asked.... and they pay their bill very quickly! This is a lesson for them... they won't let it happen again. Thanks everyone for your help!

I agree that it’s a better solution but I don’t like it. It’s only better because it’s outside the plan.

Thank you both for responding. YES, that is what happened... in a way. She was give the deferral form but never turned it in. And of course the EE feels jipped. The plan sponsor is such a good guy and want's to make it up to her to keep her happy... doesn't want a thorn in his side. It sounds like the plan doesn't need to do any corrective measures. It sounds like the best course of action is to make her whole outside the plan with a bonus and she can turn around and defer it into the plan. Case closed. Sound like a plan?

Since you note that the plan does not use the rule of parity and does not use the one year hold out rule, it seems you have read the plan document correctly and the individual is eligible to participate upon rehire. Is there other language in the plan document that is causing some confusion? If you have read the plan document correctly, you won't find an explicit statement in the plan document that says otherwise. If you are uncomfortable with your reading of the plan document and have a colleague that is knowledgeable about plans and eligibility rules, ask them if you can give them a copy of the plan document to get their input on how it applies to this individual's circumstances.

Among other things, how your property settlement states "the pension remains my husbands [sic]" is important, so heed what Bill Presson wrote. But I can see why the plan representative told you "no" for the reasons david rigby wrote (and beware government plans). In addressing contingent annuities in pay status, some courts describe the contingent annuitant's interest as "vested" with the same meaning as "locked in".

Are both reports for the same period? And even if they are, consider that one report's item might be on an accrual basis of accounting while the other report's similar item refers to an amount actually paid or received. Further, seemingly similar items might not be exactly the same in a particular report's query or instructions.

Well I’m confused because I’m not aware of many data points that would be identical on those two forms. The name, address and EIN ought to match of course. But can you list a few examples of data points that should match? Please be specific.

The reasons for the differences in value are beyond the scope of the facts presented. However, a higher redemption price for other shareholders could be dilutive to ESOP share value. This could raise fiduciary issues under both state corporate law and ERISA.

Valuation is a constant bugaboo, and ESOP valuations are considered to be "special" (e.g. not to be undertaken by a non-ESOP valuation expert), so a discrepancy between/among valuations by different persons for different purposes is neither unusual nor necessarily wrong, but it can be confusing and controversial. You will often find in ESOP valuation engagements a nondisclosure provision -- the ESOP valuation may not be disclosed or used for other than ESOP purposes. You should discuss this with the ESOP valuation professional for free education. Actually, it is not free because the appraiser is being paid and it is good fiduciary practice to get a good understanding of the ESOP valuation. It is the ESOP fiduciary that sets the valuation, based on the professional advice. Questions about the valuation, how it is derived, and what it means (including relative to other valuations) are an indication of good fiduciaries at work.

Why is the plan’s administrator so eager to pay? The facts and circumstances you describe suggest that no one submitted a claim. Even if the plan would provide an involuntary minimum distribution because the beneficiary’s required beginning date is a few days away (or the plan otherwise provides an involuntary distribution), an administrator might consider it prudent not to pay if the payee’s identity is not determined. If an administrator needs or wants to put in an effort to identify a minor’s payee, an administrator might consider checking records of the court in which the decedent’s will likely would be admitted to probate and, if different, records of the court that has jurisdiction to appoint the minor’s conservator, guardian, or other fiduciary. A search of publicly available records might be logically consistent, by analogy, with the IRS’s internal guidance directing an EP examiner not to challenge a plan’s tax-qualified treatment for failing to pay a required minimum distribution when the plan’s administrator has not located the distributee. This is not advice to anyone.

I would at least double-check to see if the BPD says anything about how deferral elections may or may not apply to "imputed income" rather than a straight wage payment to the employee.

Trustee? Why isn't the Plan Administrator taking charge?

So there were no 401(k) (or other) contributions during the plan year. ADP test is based on prior year NHCE ADP. Since 2 x 0% = 0, no 401(k) is allowed for HCE in the next year. I just haven't had that happen before, but I believe the options are as follows: HCE's over 50 are actually limited to the catchup amount, rather than 0's. Prior to end of the plan year switch to current year testing

Sending the check is the cleanest way to correct it as long as the all of the plan accounting regarding the loan and the correction are consistent. It isolates the correction to the original loan. Note that if there is not full documentation of why, when and what happened, then the plan accounting could make the extra money in the participant's account look like an overpayment, or an invalid contribution, or some form of a permissible or impermissible plan distribution, or excessive income, or other anomalies. Applying the overpayment to the new loan is tempting, but still requires full documentation of the plan accounting that would involve both the old and new loans.

Yes, I guess I was thinking about a 2023 plan year based on a 0% ADP for 2022. But a 3% SHNEC could be adopted for 2024 before 12/1/2024.

Agree that HCEs over age 50 could make catch-up contributions during the current year. If they are key employees and the plan is top heavy, this would also allow them to make contributions without triggering the top heavy minimum for the non-keys, since catch-up contributions in the current year are disregarded for top heavy. Assuming that the plan did not switch to prior year testing during the last 5 years, then it could switch to current year testing. However if none of the NHCEs defer in the current year then you are back in the same situation. Another option would be to do a 4% safe harbor non-elective contribution for the NHCEs.

There is no prohibition on doing another DBP like the 401(k) successor plan restrictions, but make sure all the relevant circumstances concerning the termination of the first plan are legitimate and well documented, especially if the owners were under age 59 1/2 and the plan was in existence less than 10 years. Otherwise, IRS could possibly challenge the permanency of the first plan and view the termination and subsequent re-establishment as a circumvention of the in-service distribution rules.

You may be under the impression that your legal option must come down to the correct opinion, and that you may be sued for malpractice is you are incorrect. In my mediation cases I always make it a point to tell the client's that Mary's lawyer may have one opinion of the outcome of a particular dispute, and that John's lawyer may have a second and different option, and I may have yet a third and different opinion, and that at the end of the day the only opinion that counts is the opinion of the judge knows nothing about the area of law involved, and who hears the case after an expensive trial. I can find case law on every side of every issue. I can find you inconsistent statutes and regulations. The best I can do is say that if Mary is right then the outcome will be favorable to her, and that if John is right the outcome will be favorable to him, and that my opinion as a mediator doesn't count, and that Mary and John may just have to wait and see what the judge decides at the end of an expensive trial. Now the parties have to do a cost benefit analysis and decide if a compromise settlement might be a better option. BINGO. The old saying is the opinions are like a*******s, everybody has one. You opinions better be filled with lots of "but"s and "however"s and "on the other hand"s, and plenty of disclaimers, your know: "This opinion is not intended to diagnose, treat, cure, or prevent any uncertain issue." And, of course, don't offer an opinion about anything unless you are an expert and know your stuff.

Yes, a participant must become 100% vested upon attainment of normal retirement age as defined in the plan.