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Assuming no credit balances and no annuities purchased for NHCEs, the AFTAP with a BOY valuation date is (assets) / (funding target). For a EOY valuation, the AFTAP is based on the prior year's funding values, and the formula is (assets + contributions adjusted to valuation date) / (funding target + target normal cost). In both places, "assets" means plan assets as used for sec. 430 (minimum funding) purposes. For a plan with an EOY valuation date, the 430 assets do not include any contributions made for the current year prior to the valuation date. You increase those contributions at the effective interest rate to the valuation date, and subtract them from the value of the trust to get the value of assets. This rule is found in 1.430(g)-1(d)(2) So the numerator for an AFTAP measured at EOY is (assets + adjusted contributions) = ((trust account value - adjusted contributions) + adjusted contributions) = (trust account value) Which means it ends up being the same thing, but not maybe not for the reason you were thinking. I would recommend discussing this with the actuary who will be signing the AFTAP.

My only comment is that once the new spouse has “vested” because the participant has retired, anything that would defease the new spouse or “restore” the survivor annuity for an alternate payee could be adverse selection. The plan would look disfavorably on it and could assert that any attempt to add a benefit through a QDRO would force the plan to pay a benefit that the plan is not otherwise obligated to pay —,thus disqualifying the DRO. This is most starkly illustrated by your suggestion of the death of the new spouse as an opening to award some benefit to the former spouse (other than sharing the life payments to the participant, which can always be done). The untimely death of the new spouse is a great thing for the plan from an actuarial perspective. Why would the plan give that up?

Without knowing all the facts, every objection I could think of (in theory) is contained in the GLAM @EBECatty posted.

Without knowing the facts - and the many variations they could take - this recent IRS GLAM provides some discussion of related topics from a compensation standpoint (assuming there is some compensatory aspect here). Not sure how close your situation is to the facts in the GLAM, or whether the arrangement would be similar to product marketed therein, but may be worth a read: AM 2022-007 (irs.gov)

Is the judgment taxable?

A Labor department rule describes some partial interpretations for some situations you mention. 29 C.F.R. § 2530.206 https://www.ecfr.gov/current/title-29/part-2530/section-2530.206#p-2530.206(a). But consider these cautions: Those interpretations are profoundly incomplete. Some of the interpretations might be contrary to the statute. Whatever deference this agency rule might get could become obsolete tomorrow or in the next few days. To the extent, if any, that Chevron deference continues, some of the rule’s interpretations might not be a permissible interpretation of the statute. As always, a court order that would call the plan to pay something the plan does not provide is not a qualified domestic relations order.

Plan is correct, his tax situation is correct, and he essentially owes the employer those funds as Bri noted - like an interest free loan from the employer, which they can arrange how to have it repaid, in my opinion.

Agree with Paul and seem to remember a similar discussion on this topic not that long ago that came to the same consensus.

Wait, isn't the problem just that the guy has too much take-home pay, but the correct plan amounts were deposited? Seems like the plan is actually in good standing but that the guy's next paycheck needs to have six months' of deductions properly taken off the gross.

Consider whether the settlement agreement might be wholly or partly void, voidable (by one or more of its parties), legally enforceable, or unenforceable. Consider whether the settlement agreement might be effective or ineffective regarding the retirement plan. Consider whether the settlement agreement might be a plan amendment. (As one aspect of this, consider whether the settlement agreement’s signer also might have had authority under the plan’s governing documents to amend the plan.) Consider whether, if a safe-harbor contribution is not allocated to the participant’s account, a consequence might be that the plan loses whichever safe-harbor relief relates to that contribution. If you’re a service provider, consider how to get the plan administrator’s proper instruction that protects the service provider. This is not advice to anyone.

A Form 5500 report should factually state information according to what happened, or didn’t. To help someone discern what might (or might not) have changed, and how it might have changed, and when: Was the business purchase a purchase of assets from the company? Or a purchase of shares of the company? Recognize that documents governing the plan might include some that don’t look like what many employee-benefits practitioners call a plan document. Might the buyer corporation, limited-liability company, partnership, or other organization have adopted a resolution, written consent, or other act that changed the seller’s plan’s sponsor or administrator? While the instructions for line 3 are ambiguous, some practitioners assume one reports the administrator that is duly appointed and currently serving on the day each signer signs the Form 5500 report’s jurat, not the organization or other person that served as the plan’s administrator on or as of the last day of the reported-on period. The instructions for lines 1 to 4 [pages 16-19], include details about what to do if: ÿ the plan’s name changed, ÿ the plan’s sponsor changed, or ÿ the plan sponsor’s EIN changed. Again, some practitioners assume this refers to changes up to the day the administrator signs the Form 5500 report. It might be possible that nothing changed. This is not advice to anyone. To answer your query, I’ve seen situations that called for reporting short plan years that end and begin with or around the business transactions’ closing date. But that sometimes happens when the m&a deal teams for both seller and buyer include not only business lawyers but also employee-benefits lawyers, who think carefully about the provisions.

Bingo! Bri hit the nail on the head.

Beginning today, Federal courts no longer defer to an agency’s rule. Loper Bright Enterprises 22-451_7m58.pdf