Several years ago a Mississippi Chancery Court judge ordered in a divorce decree a QDRO, as a separate interest stating, "Counsel for the defendant is directed to draft the QDRO in compliance with federal requirements. The parties shall cooperate in the drafting of the QDRO and in its approval process by the plan administrator in a timely fashion."

Points of note:

1. The counsel for the defendant has to date (5 years later) not drafted the QDRO as directed.

2. The separate interest concerns interest in the plaintiff's Mississippi PERS account. He has not yet retired. PERS membership handbook states,  "Your right to your benefit is exempt from levy, sale, garnishment, and attachment; and is not assignable. Furthermore, PERS has no authority for recognizing, implementing, administering, or enforcing the provisions of any domestic relations order or other actions decreed by a court in a divorce settlement." 

So a couple of questions arise:

1. If counsel for the defendant does not draft a QRDO prior to the plaintiff retiring can that be done after he retires or is the door closed?

2. As the MS PERS states they will not recognize or enforce and thus not qualify the DRO is the plaintiff still responsible getting to the defendant their "separate interest" when there is no QDRO?  This is assuming that another court would find that the judge in the decree ordered something that is not legally possible thus the counsel for the defendant cannot be held at fault for there not being a QDRO but as the judge did find that the defendant does have a special interest in the PERS as a marital asset the amount is still owed. 

Any thoughts from anyone?  

I have a plan that is terminating and has liquidated all its assets that were held at a national carrier earlier this year.  Funds were disbursed properly, per participant instructions.

They did this before we could calculate the 2019 Safe Harbor contribution for them.  The national carrier, as expected, is reluctant to re-open the plan.

Our solution was to just have the client open up a bank account using the TIN obtained for the trust.  The bank cannot seem to understand the nature of this transaction and is saying they need to "register" the the name as a new entity thru their CPA.  And they said "alternatively, you can have business documents registered (articles of incorporation or short form) to the name [you] are looking open the account under." [sic]

Any talking points to get these guys off the ledge?  I've never had such trouble (or, rather had a client get so much push back) trying to open one of these accounts.

This is a big, international bank, so I'm mystified as to why they cannot understand the process.

Plan X (PN 001) was effective 1/1/2012 and was made up of two entities (A and B) in a controlled group.

During 2020, Company B is sold to unrelated buyer. Will spinoff / restate as of 12/31/2020 as Plan Y. 

Will the plan number for Plan Y have to be 002 or is 001 okay?

Original effective date is 1/1/12, so for the "new" spun off plan, this is not considered a "first return/report", correct?

Would Line 4 (of the 5500-SF) be completed with the info of Plan X on Plan Y's 2020 return?

Is it permissible to request a participant to sign a release that he accepts the calculation of his benefit from an ERISA pension benefit plan?

Long history short--the participant terminated employment over 15 years ago, and disappeared with a vested balance remaining in the Profit Sharing Plan. The employer could not locate the participant, and so after 5 breaks in service the employer decided to forfeit the entire account balance including the vested amount, with the understanding that the vested amount and earnings would need to be restored if this participant were found. This forfeited amount was used to reduce the employer contribution for the year it was forfeited, in accordance with the Plan provisions.

Fast-forward to last week--the employer was contacted by this missing participant.

We (third-party administration firm) have calculated the investment earnings on this benefit. I have suggested that the benefit statement show the amount of earnings by year, so that the participant understands how his final benefit amount has been determined. After all, the participant would have received a benefit statement each year had the employer been able to locate him.  The amount involved is under $10,000.

I am not comfortable that the employer wants to condition payment of this benefit on a release by the participant. The employer does not require any other participants receiving benefits to sign such a release. I'm not sure what they are concerned about.

Have any of you faced this situation? Thank you for any thoughts you care to share.

Participant P died - he was the brother of the plan sponsor.  The plan is terminating, and all of P's beneficiaries have been paid out except for his minor child... because the ex-spouse is not completing any paperwork.  The product platform says that the child's parent is the only person who can execute any paperwork for the child.  Sure, I've got one or two other non-responsive participants who can be rolled to IRAs, but the platform says that since this has to go to an Inherited IRA, it can't be forced like the others, and that requires a signature.  The plan sponsor has tried to contact the ex-spouse/mother via mail and through a grandmother, but has gotten no response.  I don't know the situation well enough to try and speculate as to why there is no movement.  And we're talking about $50K.

Besides "hire a lawyer", is there anything else the plan sponsor can do?  Thanks.

What is the current status of the extended Define Benefit contribution for Plan Year 2019?

Hello,
I am an employee of the company which few years ago introduced ESOP plan and I was a part of it since day one. Now by the end of 2019 company approached all share holders saying that there is a good buyer for the company and the price is right. Then we all could vote in favor of sale or against it. Sell was accepted and all calculations  and testing started. There was a huge amount of unalocated shares that should be fairly redistributed between all ESOP participants and due to sale all participants were 100% vested. Here my case started. In December 2019 I was injured in a car accident and forced to go for surgery, which put me out of work for 7 months.  During that time I was  on short term disability provided through company's benefits since company did not wanted to adjust my work to lighter duty to allow me to earn my income and recover at the same time.   I was recently released to work by doctors just to find out that I am getting only 100% of my share value which I owned till end of 2019. The big pool of unalocated shares was distributed on the beginning of 2020 and I was told that since theoretically I did not get any pay stub in 2020 I am not eligible for distribution of the most valued shares. In that case I lost 2/3 of predicted after sale payout. Is there any law, rule or regulation that is protecting me in this case? I never quit the company nor was fired. I was told to go on disability which I did. It was not my choice, just unfortunate accident which can happened to anyone and any time. Now it feels like double loss to me since I worked hard many years just to be left like that. Thank you all for any comment, opinion etc.     

Hi,

Employer has 2 companies. One company grows cannabis and makes cannabis products. The other company sells the products. I was told that a 401k plan could be set up for the store but not for the company that produces the product. I can't seem to find anything on this topic. 

Has anyone else had this scenario?

TIA!

Employer (an S corp) has two owner-employees who participate in a tax-qualified profit-sharing plan. The corporation directly pays an investment management fee to an RIA (a percentage of the plan's total assets, usually about $12,000 per year), rather than having the trustees pay the fee from plan assets.

Employer pays about $1,200 in administration fees for the preparation of Form 5500 and other administration services.

Employer pays for an ERISA fidelity bond for the plan's trustees (who are the two owner-employees).

COVID-19 occurs, with general chaos and substantial drop in revenue.

Employer looks for ways to save costs.

Idea: terminate the profit-sharing plan in order to stop the annual administration fee (no more Form 5500s). Also avoids the need to pay ongoing cost of the ERISA fidelity bond. Employer says it isn't wanting to make further contributions. So each employee-participant takes his or her account balance and rolls the distributed assets into an IRA at Schwab (for example).

The sun comes goes down and the sun comes up.

Employer sets up a new SEP arrangement, which covers all employees (being only the two owner-employees), using a document provided by Schwab (for example). The employer probably will need to set up two new IRAs at Schwab, but maybe Schwab will be happy to use the two existing IRAs.

Drum roll, please ...

Can the employer pay the investment management fees of the two IRAs (or "SEP-IRAs," if you prefer), and have the payments be deductible to the corporation and not counted as income to the SEP participants?

On the one hand, it is an employer-sponsored retirement plan of a sort. So, like investment management fees on a profit-sharing plan's trust that are paid to an investment adviser directly by a plan sponsor, the payment of the investment management fees on the SEP participants' accounts arguably is similarly deductible.

On the other hand, there is no trust once the employer has made the contributions to the employees' IRAs.

If the employer doesn't pay the investment management fees, the employees certainly could pay the investment management fees for their IRAs out of their own pockets, but such payments for managing an individual's investments are no longer deductible due to recent legislation. (Or they could have the fees deducted from the assets of the IRAs, which happily avoids income taxes, but which takes away funds that otherwise would generate compounded investment returns inside the IRAs.) So they'd probably opt to keep the plan running because the ability to avoid about $3,000 in income taxes on the $12,000 paid by the corporation would offset the administration costs and the cost of the ERISA fidelity bond.

Year after year client answers 'no' tot he question 'were and deferrals deposited late.'  The accounts are brokerage accounts for which we only get the 12/31 statements with the YTD figures.  Often this is good enough to cobble together my 5500's.  (side note, this is my first year servicing this client)

They switch investment houses in 2019 so I needed some help from the client to reconcile the deposits.

I got a list of all the remittances to the trust accounts by date and type.  Turns out, they were transmitting funds once a month, but the employees get paid every other week.

We are, of course going to calculate lost earnings for 2019 and 2020 and try to right the ship going forward.

I'm pretty sure that this has been going on for a while.

How far back would you go looking to correct this stuff?

I've been researching what is considered a reasonable time for an employer to deposit a 401k contribution/match of an employee’s compensation and was wondering if there are there any exceptions/exemptions for 132(j) types compensation? Some situations I am looking at have 132(j) compensation that is hard to get a number on quickly as they are paid in advance and then, what is not used by the employee, is later refunded. Any guidance would be appreciated.  Thanks!

Can a partner take a deduction for pension contributions to his 401k plan if he has net earned income for the year, however, is carrying a negative partnership basis on the books?

Can anyone recommend a north central based Florida QDRO expert who can help word QDRO and possibly represent party for pension partially funded with qualified funding and partially funded with non qualified funding? Need is immediate. Thanks.

Can anyone recommend an expert QDRO attorney who can represent someone regarding pension award complicated by qualified and non- qualified sourced funding in north central florida? 

We have a terminated 100% vested participant (under 59-1/2) who wants to take all of her money out of the plan as a cash distribution.  The plan has not adopted any of the CARES Act relief measures.  The participant is claiming that 20% is not required to be withheld since she is claiming she was impacted by COVID19.  But this is a distribution due to termination of employment, not an ISW.  

Is she correct?

Thanks

If an employer can't find signed versions of its PPA restatement documents and the recordkeeper does not maintain signed copies, are there any suggestions of what to do? Surely the documents were signed within the 2014-2016 required time period but they can't be found. The employer has the unsigned versions. Could we just sign and date on the day they were likely signed in 2015 and put those in the file?

Hi,

May everyone be well and safe.  Based on the incidental death benefit rules, a life insurance policy cannot be held beyond retirement of the employee. If an employee is still active, yet is beyond 62 and is taking in service distributions, must the policy on this employee be distributed/converted to cash value etc. as well?  In addition is there a difference if the one taking the in service distributions is an owner as opposed to an employee? Thank you for any insights on this matter. 

Am I understanding correctly that basically any MEP may file 1 Form 5500 and just provide the attachment regarding the participating employers, the contributions, etc.? Or do Open MEPs need to file separate Form 5500s for their participating employers? Did that change for 2019 or has it always been that way?

Does anyone know if custodians offer directed trustee services for defined benefit plans? What about TPAs? Does anyone else offer these services? What type of insurance do you carry for such offering?