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I have now retired, and will no longer be updating my site. So for all of you who have been relying on my maximum benefits and contributions page for historical limits, it is unlikely I will be updating it and I may take it down at some point. However, I do have the database with all the limits back to 1996. If anyone wants it so that they can develop their own page, let me know.

The rule for QDROs and RMDs is odd. See https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-8#p-1.401(a)(9)-8(d)(2). YOu would think that once in a separate account it would be treated as the alternative payee's, but for RMD purposes it isn't. don't know why but that is what the Reg says. The alternate payee should consider @fmsinc's suggestion and roll the account balance into an IRA or she may be subject to this same RMD treatment next year, etc. That said, probably won't help with this year as the amount that is required to be an RMD this year normally cannot be rolled over. So, there likely would be two 1099-Rs issued, one with the RMD non-eligible rollover amount and one with the remaining eligible rollover amount.

I did not read all of the posts in the thread but the OP states that payments are "in pay status". Maybe one of the posts stated that benefits are not in pay status... if so, disregard my post. This is because I view a coverture fraction only helpful when benefits are not "in pay status", i.e., benefits are going to start at a later date. Like you said, it is used because you know the numerator but do not know the denominator. The fraction allows for adjustments for the participant's additional service time post-divorce for which the alternate payee should not receive a benefit. For example, QDRO issued in YR 1 awards 50% of the coverture fraction. QDRO states at divorce the participant has 10 years of service and the alternate payee and participant were married for all of those years. When the participant retires in YR 21, they would have an additional 20 years of service. Benefits begin to be paid, so the alternate payee's portion of the monthly benefit payment would be 50% x 10/30 of the monthly benefit. The coverture fraction is needed to ensure the alternate payee does not benefit from the additional service when the payment start. If, as stated in the OP, payments are already started, I don't see a problem with amending the QDRO to do the math... using the example... the QDRO would simply state that the alternate payee should receive 16.67% of the monthly benefit. I am not saying the plan administrator is correct, I am just saying, practically speaking, amending the QDRO would be easier than arguing with the plan administrator or taking them to court.

Add another voice that is objecting to the annual part of this idea. We look for or advise our clients to look for people when it is relevant. Although places like Inspira people send a lot of forced out to IRAs to them does an annual search. Not sure if it is part of the base fee they charge those IRAs or an add on What I do know is that a few hundred in an Inspira IRA needs to have an incredible rate of return to not have the balance go down annually.

In the current environment of online enrollment/automatic enrollment and estatement delivery, getting employee addresses for mailing purposes can be like pulling teeth. Years ago, we requested W-2s for plan testing purposes and could get addresses from those. Today, everything is done electronically, and address information is not necessarily provided. I know that this question is specifically with regard to participant distributions. However, with the upcoming regulations about once a year paper statements coming into effect, that is going to add an additional burden on someone (PA or outsourced to the RK) to keep track of missing participants. If statements get returned by the post office with no forwarding address, what is the regulation going to specify about lost participants and their paper statement delivery? If the participant is active, a request is going to need to go to the employer for an address update and there should not be a fee for that. RKs should be asking employers to update addresses to prepare for the paper statement rules. If the participant is terminated and the employer does not have a good address, an address search will need to be conducted and $30 to cover that cost is probably reasonable, considering all the possible steps that need to be followed, including any locator search fee.

If you are an attorney or lawyer for the would-be alternate payee, consider evaluating (and then advising your client) on some possibilities and probabilities about whether getting discovery so a domestic-relations order would state a percentage might be less expensive and more effective than trying to persuade the plan’s administrator to approve an order that states a time-rule formula. You might consider this even if you have no doubt that the plan’s administrator is wrong. I won’t speculate about what ERISA § 206(d)(3)(C) means, what a Federal court might say it means, or what might persuade a Federal court to not defer to a plan administrator’s interpretation. Rather, my practical point is that challenging the plan’s administrator could be an uphill fight. And even if a plaintiff wins an ERISA litigation, that does not assure an award of attorneys’ fees. Under ERISA § 502(g)(1), a court may, not must, award attorneys’ fees. And it’s in the court’s discretion. A Federal judge might wonder why a plaintiff pursued litigation when a little discovery could have accomplished what the alternate payee needed, without bothering the Federal court’s attention. (I have met judges who would think that way.) This is not advice to anyone.

A lot cheaper and fewer issues to add the $7k cash out isn’t it?

You should really read or re-read the proposed regs. Federal Register :: Long-Term, Part-Time Employee Rules for Cash or Deferred Arrangements Under Section 401(k) They generally permit an employer to elect to exclude LTPT employees from the application of the nondiscrimination requirements of section 401(a)(4), the ADP test, the ADP safe harbor provisions of section 401(k)(12) and (13), the ACP test, the ACP safe harbor provisions of section 401(m)(11) and (12), and the 410(b) minimum coverage requirements. So, generally they can be excluded when determining whether a plan satisfies those nondiscrimination and minimum coverage requirements. They basically say that if you exclude LTPTs from nondiscrimination, they must be excluded from all nondiscrimination testing. In fact, the plan could exclude them from testing and still give them additional benefits (e.g., matches). Note that if your plan is not intended to satisfy the ADP or ACP safe harbors, the proposed regulation would not require an election to be set forth in the plan. However, the regs state that the plan would need to provide “enabling language.” It say in this case if the plan document doesn’t include enabling language, or an election under the proposed reg, then LTPT employees would not be excluded for purposes of determining whether the plan satisfies 401(a)(4), the ADP test, the ACP test, or the 410(b) minimum coverage requirements (to the extent those provisions would otherwise apply to the plan). If the plan is a safe harbor plan, it must specify in the document whether the safe harbor provisions will apply to the LTPTs. Apparently, this exclusion from testing seems like it would allow the owner the ability to get "creative" since these potential HCEs, i.e., the spouse and children of HCE, can escape testing.

100% this something that an experienced ERISA law firm should handle. This is NOT the type of VCP to cut your teeth on, even if you as a TPA want to start offering VCP services and have staff with the proper enrollment (CPA, ERPA, ETC) to do so.

I think amendment after year-end to increase the match only for HCEs is problematic, even if it is to simply bring their percentage up to NHCE rate. I think forfeiting amounts allocated in error along with attributable earnings is the proper correction. The design/practice is burdensome, but at the end of the year the payroll provider has sufficient information to identify the following year's HCEs and should be able to implement. Maybe if payroll is weekly the timing is tight, so why not have the employer make deposits monthly? In addition to solving a current problem, put on your consulting hat and help them avoid its recurrence.

I would instruct the payer to make the check payable to Corp IRA FBO Participant, not over think and be done with it. Joe Participant is not going to be cognizant of all those nuances.

Another unfortunate case that we see all too often, the questions that should have all been asked, answered and documented before the transaction are surfacing afterwards when it it likely too late to do what the parties had hoped to do. As the consultant to at least one of the parties (which I assume you are) the best you can do is assemble all the relevant facts and communicate what you believe (in your professional opinion) the parties (or at least your client) can and cannot do in accordance with your understanding of applicable law and regulation.

Moreover, with unfreeze you can change the benefit formula to target precisely what your client wants to accomplish.

As I read the implications here: (1) the owner can afford to pay more into the plan, and (2) the 100% pay limit has not been reached. If my interpretation is accurate, the simplest way for the owner to accomplish his/her goal might be to amend the plan to unfreeze. Have I missed something?

There has been some discussion on that before in this forum. The consensus seemed to be that this is definitely a gray area and that the amendment and document language matters - meaning either interpretation is possible. You could likely amend to unfreeze if needed to accomplish your objective, if not for the entire benefit formula at least for average compensation.

It appears you are looking for someone with expertise in prohibited transactions? You might not find an expert with a banner that says 'experience with solo 401ks' . Look for an expert that audits qualified plans- period, as that would cover SoloK plans. Or an expert in self-directed accounts. The rules are not different for SoloK plans. Good luck!