I received a QDRO that was filed by the court with judge's signature. The QDRO assigns $140,000 to the alternate payee as of Sep-19-2024, adjusted for investment gains and losses through the date funds are segregated.

The problem is the participant's account balance as of the assignment date was only $125,000. Can we assume the QDRO's intent was to assign 100% of the participant's account balance as of the assignment date?

And there has been a single $1,500 deposit for the participant since the assignment date, which is not subject to the QDRO and will remain in the participants' account +/- any gain or loss.

What happens with the accounts in a SIMPLE IRA when it ends? Does each participant then just have their own IRA that they maintain indefinitely? I believe they can roll over that IRA to a qualified plan but not until 2 years after the SIMPLE IRA ended.

Also, is there a standard form that needs to be presented to participants of a SEP IRA before the SEP IRA ends? Is there anything else the plan sponsor needs to execute. For example, when we terminate a qualified plan, an amendment needs to be executed before hand and if it is a pension plan then participants need to receive 204(h) notices before hand.

Thanks.

In PBGC's answer to 2004 Blue Book Q&A 2 item b, PBGC stated that a 1.411(a)-4(b)(6) forfeiture would not affect the inclusion of the participant in the flat rate premium count, but that it would result in the exclusion of the participant's benefit from the variable rate premium -- the reason being that IRS staff advised the PBGC that the benefit would be disregarded for current liability, and current liability was used for the variable rate premium.  I understand this logic extends to the current environment where the relevant liabilities are (based on) target liability.  Regarding the exclusion of these benefits from current liability and target liability, is anyone aware of where the IRS has actually opined on this or even mentioned it, other than the PBGC's statement in 2004 Blue Book Q&A 2?  If they haven't opined, relying on the PBGC's statement might be aggressive.  In this case, my follow-up question would be whether it might be objectionable to the IRS if I established a probability assumption for the reappearance of the participant (and consequent benefit reinstatement) -- where such probability might be very low if the participant was old, long gone, etc. (as it would reflect my expectations).

A very large PEO that files as a DFE - GIA does not provide the SAR to those who are participating. The participating employers are concerned of being out of compliance for the Plan participants. Has anyone had a remedy such creating their own SAR even though they did not prepare the 5500 or have the Schedule As from the carriers? Has anyone heard of any consequences for the participating employers? Many thanks for your assistance. 

Congress seems unlikely this week to legislate anything for retirement plans.

In the 1,547 pages of what might become this week’s appropriations, here’s what so far I see:

555 pages with provisions that affect health care or health plans: division E—the “Health Improvements, Extenders, and Reauthorizations Act”.

That includes additions to, and amendments of, the Employee Retirement Income Security Act of 1974.

Those include new and amended text in ERISA § 408(b)(2), some of which might affect how that prohibited-transaction exemption applies regarding retirement plans.

Only eight amendments of the Internal Revenue Code, none of which refers to a retirement plan (unless a retirement plan engages a pharmacy benefit manager).

An amendment of the Defense Production Act of 1950 would prohibit, and impose penalties on, a covered national security transaction in a prohibited technology.

https://docs.house.gov/billsthisweek/20241216/CR.pdf

The next government-shutdown threat would be March 14, 2025.

My client has a 2-person 401(k) with non-qualifying assets.  The plan covers the business owner and his girlfriend.  We have been filing Form 5500SF.  They are not legally married but are "legally domestic partners".  Not sure what that means.  For years now we've been advising him to obtain the very expensive bonding needed to qualify for the audit waiver.  It's time again to pay the premium again and he is questioning the need for the bonding based on his domestic partnership status.  Any comments, experience or thoughts to share?

Hi, 

I am working on a profit sharing projection for a safe harbor match plan with prevailing wage (ugh).  The eligibility for sources other than PW is 21/1 YOS/semi-annual.  There are 4 employees receiving PW - one is HCE (another ugh) and one never met YOS.  I was able to disaggregate those not meeting the YOS so the OEE that has PW doesn't need to receive the gateway.  

The employer gave specific $ amount for several participants and I backed into the HCE $$ by giving them 3x so it passes gateway.  Not all NHCEs (6 don't) receive a PS - it's SH Match and this passes.  

My question is related to the those in the main test - if the document states that PW offset PS, SHM and Match - I am struggling to get ASC to run how I think it should be run.  If I click on PW to include in gateway, then it uses PW eligibility and includes ALL employees and is saying it fails gateway because those 6 participants are not receiving a PS. My understanding (and I could very well be wrong), I thought PW would offset PS and would be counted in ABPT but NOT in ABT.  The lowest NHCE was 2.65%, so I gave HCES 7.95%.  However, the HCE that has PW only shows .21% on the gateway test because most of his ER is coming from PW - the rest is PW.  

I messaged ASC to see if there is a work around but figured I'd check with you gurus as well.  

If a client has a qualified plan (whether it be 401(k) plan or not) and they exclude a majority of their employees by class does this plan still satisfy the CalSavers requirement?

If a plan terminates late in a calendar year and there is overfunding and the goal is to transfer 25% to a QRP and revert the balance to the employer, must everything occur in the same taxable year? Can the transfer and/or the reversion be spread across 2024 and 2025? Could the required 25% be spread across two years?..would this create two seven year clocks? Could the reversion be spread across the two years? A little simpler, can the transfer happen entirely in 2024 and the reversion entirely in 2025?

I have a terminating Defined Benefit Plan with assets in a pooled account at Vanguard.  I prepared my standard Letters of Authorization for the Trustee to sign and submit to Vanguard for the benefit payments.  Vanguard said the Letters were not sufficient but did not provide any alternative.

Does anyone have a form or template that they have successfully used to get payments made from a qualified plan with Vanguard?

Thanks,

Had an actuary ask me about Code 4980's text of:

(I)  allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or

(II)  credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.

and whether or not that means if the final transfer of excess assets occurs today in mid December, that at least one-seventh of the money has to be posted to accounts by 12/31.  I suggested that the allocation date is going to be 12/31 even if that means waiting until the 2024 census is ready and the PS allocations determined some time over the winter.  As opposed to actually being posted to accounts for participants in the DC plan by 12/31. 

I think (II) covers the issue, even if (I) didn't.

But "allocation" includes as a receivable, no?  (Whether or not (I) would be enough argument....)

--bri

If an allocation of stock is originally based on compensation, but then adjusted several times in order to pass 409(p), does the resulting allocation need to be tested as though the plan was using New Comparability?

To satisfy the new secure 2.0 auto-enrollment feature. A QACA arrangement would be considered an eligible automatic contribution arrangement if the QACA contained a provision that would allow an employee to do a permissible withdrawal?

Is there anything I'm missing here? 

May I also ask, What type of attorney would handle this matter? 

HCE deferred 35k during 2024 (over 50) thus exceeded the 402g limit by 4.5k

The refund will be done prior to 3/15/2025 - does it make a difference if needs to be refunded prior to 12/31/2024?

For 410b, which amount should be used?

For 415(c) limit for PS purposes, is it safe to assume 69k-23k i.e. 46k allocation? The refunds will be made, that is not something to worry about.

Thanks

I've been spinning my wheels on this one, so I am reaching out to my colleagues for guidance.

Bank wishes to lend Company funds secured by Company's equipment, accounts receivable, inventory, etc.

Company is owned 85% by the Company's retirement plan ("Plan") and 15% equally by two individuals: Owner A and Owner B

Three individuals used their balances in the Plan as an equity infusion into Company. One of these individuals is Company's President and Secretary/Treasurer and a Board member; and another is Company's retirement plan trustee (for the 85% Plan shareholder)

While the rollover assets of the Plan can't be pledged as collateral, nor can the Plan guarantee the Bank loan; can any other assets owned by Company be used to secure the loan from the bank, or does it result in a prohibited transaction.  If so, where in the Code, Regs, case law would I find that.  I have searched everywhere.

Ex-spouse died suddenly before the final QDRO was signed by court. The Pension plan involved was a SINGLE LIFE ANNUITY with only benefit to surviving spouse or ex-spouse with QDRO order. The Pension plan administrator approved the QDRO and it was sent back to be signed by lawyers, participant, alternate payee, and court. Is this QDRO now invalid, or does the alternate payee (ex-spouse) still have a right to fight for benefit with another lawyer? 

My spouse had a medical FSA that she contributed to for 2024.  I had an HSA that I contributed to for 2024 and my employer contributed into as well.  I just found out that because my spouse had an FSA, I was not eligible for HSA contributions, so I'm trying to rectify this.  To make matters worse, open enrollment was over a month ago for both of us and we elected to continue with our FSA/HSA respectively.  I called my benefits department--they said I could bring my HSA contributions down to zero, and to avoid them from contributing to my HSA for 2025, I could ask the HSA custodian to close the account or to just "disassociate" it from my employer.  I asked if they would be wanting their employer contributions back for 2024 and they said no.  I'm going to wait until next week to officially do this, as first my spouse is going to see if her employer can cancel her FSA selection for 2025(seems doubtful I would assume).  So ive gotten a few different bits of confusing advice on what to from online forums.  One person said to spend the account down to zero before the end of the year on medical purchases--but can i do that if the contributions were ineligible in the first place??  Without going into too many details, there is a travel version of a medical device that I've been considering purchasing that I know would be an out of pocket expense that could easily remove a large chunk of the funds.  Ive also heard about return of excess, but I'm in a bit of a bind there because my contributions of approx $2400 for the year plus my employers contribution of $600 is $3000 for the year.  But there's only about $2400 in the account since I used funds for medical costs earlier this year--so how can the custodian return the full amount of $3000 if its not in the account?  One thing to note--I never invested my HSA funds, they just sat in the account.  What is the easiest way to rectify this?  If there are multiple solutions, Id rather take the easier one even if that costs me a bit more money(up to a certain extent obviously).  Any and all help is appreciated! 

Company trying to force us to file a QDRO. 

Hi

DC plan sponsored by ABC, Inc owned by Joe.

XYZ Inc is also owned by Joe but no employees.

Joe apparently took salary under XYZ Inc for 2023 and applied for pension purposes.

Joe now decided to let the TPA know this happened and wants TPA to have XYZ adopt the plan as well so that can continue having both firms within the plan.

Can the effective date of adoption be 1/1/2023 for XYZ Inc? Is this correctible under self-correction?

Thank you