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Is the ex-spouse still the beneficiary? That seems odd. When you say "The policy was to be transferred to the ex-spouse..." that implies s/he is the bene. Being the trustee and being the bene are two very different things. In any event, no the spouse cannot pay the premiums. There is no way to get money into the plan. This is a good example of why life insurance does not belong in plans. And it being a second-to-die policy compounds the problems, and the long term care benefits, oof. I'm honestly not sure that is even a legit benefit but I really don't know. It's probably best to surrender the policy and take the $200K. The only other alternative I can think of is to have the plan borrow money from the policy to strip down the cash value, then distribute the policy and the cash. Unfortunately that leaves a policy that has a heavy debt load so it will require not only premiums but debt payments. It might make sense to repay the debt over time with the cash that has been presumably rolled to an IRA. This all assumes the ex-spouse is the beneficiary, which again seems odd. It's a mess any way you look at it.

Just a note not a suggestion: You do have the option of requesting penalty relief due to reasonable cause as an alternative to submitting via DFVCP. It's a facts and circumstances test whether or not you would be eligible for relief.

If you are required to file and file late, you either pay the penalty or the DFVCP user fee. The penalty for a small plan is $10 per day capped at $750, for a large plan its $10 per day capped at $2,000. Participants don't matter for the $10 per day, just the cap. For purposes of the calculator, I think you have to "trick" it by entering 1 participant instead of 0. It needs the count to decide if the cap is $750 or $2,000.

Subrogation/reimbursement situations are commonly negotiated by the employer plan sponsor and plaintiff counsel. This is an unusual one because the counsel is using the document production failures as leverage on the reimbursement amount, but that does not change the general positioning here. I think this is a key point from Peter above. If this is a plan where benefits are paid from the employer's general assets, I don't consider there to be a significant fiduciary issue with respect to potential reimbursement amount. Yes, and the employee funds are not held in trust, so they are just comingled with the employer's general assets. Where the plan is not funded by a trust, there is effectively no connection between the reimbursement amount and the plan. It effectively just means the employer has paid more for plan benefits than it otherwise might have. So I view this more as an employer budgetary/business decision than a fiduciary one since there is no pool of plan assets (i.e., trust) to make whole here. Here's some commentary on a similar issue re the recent J&J litigation: https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-1 https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-2

Probably YES - unless they demonstrate the plan meets the one-participant plan exception for the year and is below the filing threshold. Read the instructions to the Form 5500, Form 5500-SF, and Form 5500EZ. just being small doesn't mean a filing isn't required. plenty of one person and two person plans are required to file, even when assets are very low.

Thanks! I was able to get it submitted.🙂

It's probably merely a warning, not an actual error. If you have read the instructions and you are confident that you are eligible to file Form 5500 (and not required to file Form 5500-EZ) then I would say proceed.

You are right. Her election to move it to her own IRA in 2023 is effective 2023. Therefore, the only RMD that she needs to take is his, if he did not take it.