Hi esteemed experts!

Not in the business but have benefitted greatly from your input and expertise as I navigate retirement planning for my own business.

Here's a strange situation and I am looking for some basic guidance. Bullet points for simplicity

1) My masseuse is vietnamese.  Her sister's spouse/sig-other passes away suddenly. He has assets in a 401k

2) The deceased did not trust his wife with funds (and they were not legally married) so he decided to put my masseuse (his sister in law) as the beneficiary of the 401k assets with the understanding that funds would be used for the benefit of the deceased's child (single child).

3)  Somehow, the beneficiary name was my masseuses first name and the deceased's LAST name (they are unrelated and not married).  The deceased, apparently, did not understand English well, nor the ramifications of this but thought if he put his sister-in-law's first name and his last name, that somehow it would work out in the end.

4) So.....401k has a non-existent sole beneficiary (there is NO ONE with the legal name ascribed to beneficiary status, essentially a made up name), the deceased was never officially married to the now widow and the intent was for the 401k to go the widow's sister for management purposes (my masseuse, a very intelligent, caring and trustworthy individual).

I have offered to call the 401k admin to explain the situation and get some advise (I believe it's empower), but they won't talk to anyone who isn't associated with the account (not my masseuse, not the widow, no one), nor will the employer get involved.

How does one even begin to address this (state of Massachusetts).  Will the assets eventually escheat to the state? Are we talking legal counsel and a drawn out process? To top it off, no one knows how much the assets are and whether or not it is even worth pursuing (could be hundreds, could be hundreds of thousands).

Any takers for this bizarro situation?

Thank you!

SR

Thank you for the newsletters!!! I have relied on them for many, many years and they have always been a very valuable resource for me. Just came here to say thank you! Wishing you all the best. 

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Employer properly deducted and remitted participant deferrals.  But due to some accounting mishap on their end, they won't up contributing additional amounts for several participants.  It wasn't a correction or anything.  All the amounts were properly withheld and remitted the first time.

So say Jimmy had a $100 deferral from his paycheck and the company deposited that timely.  But when they went to do in-house balancing, it looked like he was short $15 so they sent that in for him, too. (the $15 was NOT withheld from pay)

What's the correction?  Put the funds in suspense account?  Should it be sent back to the company (with earns, if any) as a MOF?

I am leaning toward the latter.

Plan had amount involved of $400, so tax is $60 for late deposits in 2024.

Amount was corrected in 2025.

We prepared the 2024 5330 for $400/60

Since it was corrected in 2025, we are preparing a 2025 form as well.  My admin group wants to put $800/120 on the form because it extended two years.  is that right?  Do they have to pay $60 tax for 2024 AND 2025?  Seems to me like a 100% penalty for not paying the tax right away.

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Sally owns 2 separate business, 100% ownership.  Business PDQ is the 401k profit sharing plan sponsor.  PDQ has been in business for 3 years.  2025 SE income is $350,000 from PDQ.  There is 1 employee in PDQ and she is covered in the PDQ plan.  Sally started Business XYZ in 2025.  There are no employees.  This business will have a $325,000 loss for 2025.  XYZ did not adopt PDQs plan.  I use ftwilliam documents and confirmed that there is not an automatic adoption feature.  

Her SE income from PDQ is used for plan purposes because PDQ is the plan sponsor.  Although XYZ did not adopt the plan, is her SE income from PDQ and XYZ combined for 415 purposes?  Is she limited to compensation of $25,000 for 415 purposes even though her PDQ adopted the plan but XYZ did not?

I'm getting some conflicting information.  One suggestion is that PDQ and XYZ are combined for 415 however, there's Zero income from XYZ (not negative income) and therefore, the 415 limit and plan compensation are $350,000.

I appreciate your help.  Thanks!

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I am the Alternate Payee/former spouse in this matter and am looking for general feedback from anyone familiar with QDROs, 403(b) retirement plans, TIAA orders, or similar experiences involving defective DRO/QDRO drafts.

After waiting approximately six months for a TIAA 403(b) DRO draft, I finally received one from counsel’s office, and it contained serious errors. This was not simply a completed TIAA template form; it appeared to be a separate/custom DRO draft prepared by counsel’s office that used some TIAA model language in places, including standard provisions addressing beneficiary/death issues.

The draft definitively reversed the Participant and Alternate Payee designations in the order. The identifying addendum also contained incorrect personal information on both parties. The office made several attempts to correct only the addendum, but the addendum still was not fully correct. The DRO draft itself has not been substantively revised or reissued after 15 business days.

The draft did not identify the specific two employer plans, plan numbers, TIAA contract numbers, CREF contract/account, or Other Investments, even though the TIAA template appears to require plan identification. The draft also did not address the participant’s separate-property baseline in one TIAA Traditional RA contract, even though counsel has been aware of that issue for well over a year. The percentage-award language was vague and did not clearly distinguish the community-property interest from the participant’s separate-property portion. It also omitted pro-rata/exclusion language for the TIAA Traditional RA contracts, including language needed to apply the percentage award correctly while excluding the separate-property baseline and preserving the applicable RA allocation/interest-crediting characteristics to the extent administered by TIAA. The draft also did not clearly state the sequence for a separate CREF-only award after the percentage division.

After I sent a detailed written list of corrections, the office partially corrected only the addendum, but no corrected DRO draft, call, status update, or substantive response has been provided after approximately fifteen business days. Staff indicated the draft had been reviewed by counsel before it was sent to me.

For those familiar with QDRO/DRO drafting, TIAA/403(b) administration, or similar experiences, is this type of delay and lack of communication after serious draft defects are reported normal in the QDRO process? What is a reasonable professional expectation for follow-up after a client identifies material errors in a draft DRO?

We had an inquiry today about a "cash distribution profit sharing plan that is in compliance with 29 CFR Part 549".  Researching this, we found a lot of info that implied that it's a normal PSP, but even the TPAs we work with didn't know exactly what this was.  Does anybody know what this and how it may differ from a traditional qualified 401(a) PSP?  All assistance is appreciated.     

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Our client's plan terminated and all accounts have been distributed except one.  Upon employment, the participant provided an incorrect SSN.  The participant has been unable to provide a valid SSN and is not expected to do so.  Unfortunately, the employer is a small business and failed to obtain I-9 verification.  The account balance is approx. $2500 and is all attributable to employer safe harbor contributions.  He satisfied the eligibility requirements and the funds belong to him, but a distribution cannot be processed using the invalid number, nor can an IRA be established.  I am looking for suggestions on how to handle the remaining funds.

Very small TPA firm - a SOC Report has been requested. I'm curious if other small TPA firms have audits or documentation of their processes/systems prepared for them?

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Just was informed that the client made 300k of db contributions in all kinds of different stocks held by the corporation rather than cash.

This is the first time I am dealing with this and any guidance on how to correct it is appreciated. 

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A client is looking to hire a top tier employee.  The prospect has a counter offer.  Plan eligibility is a problem.  The competitor has immediate entry while my client has a 1 year service requirement.  I was asked, can we change the eligibility to get this one new hire into the plan immediately and then change it back?   And if technically it is ok do we have to wait a certain amount of time before we tweak the eligibility requirement again?  I totally understand, if anyone else is hired during that time gets to enter based on the existing plan design. 

Is this playing games with eligibility frowned upon? 

Hello -

My understanding is that if an employer finds ineligible dependents enrolled in health insurance plans as a result of an audit, the employer is not obligated to offer COBRA to those that are removed from coverage. Can the employer choose to extend COBRA to these folks or is that not permissible or creates other compliance issues.