Effen

I have heard about plans that only credit annual interest, but I have always felt that would cause a 411(d)(6) violation. I would think you would need to credit interest to the date of payment, otherwise you have a declining accrued benefit. So, I would use the 5-year average for post 12/31/25 and credit interest to 6/1 payment date. Just my opinion, others may disagree.

You should consult with the plan's ERISA attorney. My personal non-lawyer opinion is that the inaction of the AP caused the delay and therefore the plan should not provide interest on missed payments. I would also argue that the PA had no authority to withhold the P's payments for such an extended period of time. Most QDRO procedures allow a 180 escrow period, after that, if no DRO is presented, the P gests the full payment until the AP provides a DRO. Therefore, I might be inclined to argue that the majority of the 11 years of retro would go to the P - and maybe they should receive interest on those "lost" payments since PA had no authority to withhold them, but the AP would only potentially get 6 months of retro, and maybe none. But you asked about qualifying the DRO. Does this plan have established QDRO procedures? I agree the timing is no a big problem and the DRO c/b qualified, but if it requires 11 years of retro payments, I would look very hard at those provisions. Short answer - you should consult with the ERISA attorney.

Agree with what David said. "No formal QDRO was entered by a court until 11 years after the participant's annuity starting... Nevertheless, the participant commenced receiving reduced pension payments based upon the parties' agreed division as of his annuity starting date, in the form of a ten-year certain and life annuity. " Are you saying the PA withheld the AP's share for 11 years without a DRO?

I agree that $39,750 is the present value of a $2,028/year for 30 years @ 3%, assuming EOY payments. In reality, this should be done based on the probability of living each year, then each potential payment discounted back to present. The result would not be materially different. If you are saying your life expectancy is 30 years, that would put you around age 55. If you really wanted to complicate things, you could also try to quantify the value payable to your ex if you predecease him and he continues to receive the annuity payments. You chose, or the plan required you to chose, the J&100%S annuity. Trying to parse the value of the joint life annuity, or to quantify the impact of that choice on one party of the other, is difficult, both logically and mathematically.

A few general thoughts. Others opinions will vary. Form 5500 and Form 5330 are unrelated, each with their own timing requirements and penalties for late/insufficient filing. Use the Form 5330 when you are paying the excise tax for the missed MRC. One does not impact the other, but seems reasonable that you would want to clean them both up at the same time, but they are not connected. 1) I don't see any reason to wait. Penalty for not filing 5500 is a running clock based on days late. Even if DFVCP significantly limits the penalty, I think it would be best to stop the penalty clock on the late 5500 ASAP. 2) Maybe, but IRS is very understaffed and it might take them a long time to connect the dots. 3) I don't see any connection. 4) Not connected. Excise for missed MRC is due on the day it is late and the 5330 is also due on that date. That doesn't change. 5) Not connected. You need to correct the missed MRC ASAP. Keep in mind that the excise tax is due each year the payment is late, and the unpaid minimum gets rolled into the next year's MRC, therefore, the excise tax increases in a geometric like progression, compounding into future missed MRCs. Both the MRC & the excise tax needs to be paid. You can't reduce or waive benefits to avoid the MRC. That said, if they haven't done 5500s or made MRCs, you should check if they have certified AFTAPs. Might be a way to argue accruals were frozen at some point due to AFTAP failures which might lower future MRCs. Be careful to also check the plan's correction language to see if benefits are automatically restored once the AFTAP is signed.

Make sure you carefully review 1.417(e)-1(d)(6)(ii). There is a present value comparison/test is required under 417(e).

Sharing this link on this board to hopefully give Joseph better response

Thank you for the clarification/correction CuseFan.

Maybe. It seems to me that it would default to the maximum 415 limit, which would be 10% of high 3 ave comp as of 12/31/25. The question would be how to handle YE 12/31/26. Are they trying to give NHCEs $0 benefit because they would be hired after 12/31/25? That might work if the HCE accrues no benefit after 12/31/25 (ie 10% max), but there are rules about who is benefiting even in a frozen plan. There was a time when IRS wanted all formulas expressed over 25 years, so it was common to see 250% of comp over 25 years (ie: 10%/year). I think they have backed off that now, but not sure. Maybe if we knew what you were trying to accomplish, we could be of more help.

Each plan would need to satisfy 410(a)(26) independently. If you can get over that hurdle, and satisfy all of the other non-discrimination tests on an aggregated basis, it would be permitted. IOW, you will probably need some NHCEs in the plan with the HCEs in order to meet the 40% rule, unless you have at least 50 HCEs. Then again, if your HCE plan satisfies 401(a)(26), you could use a DC plan to satisfy the NDT and you would not need a second DB plan for the other employees. Nothing wrong with having a second DB plan, but a DC plan would likely be preferred.

Are you sure that is the reason for not qualifying it? I agree that the use of a coverture fraction is very common, so not sure why the PA has an issue with it. Have they specifically stated the coverture fraction is a problem? If so, what didn't they like about it? If the benefits are already in pay status, only option s/b a shared interest, so just a question of how you split the benefit that is already commenced.

Where did he make the deposits? What type of an account? Any other employees? Based on your prior answers, I don't see any reasonable path forward. When you run into stuff like that, do you really want to get involved with a potential client with such a low business acumen? I means seriously, how could he think they would be deductible?

Was a plan document ever prepared? If so, maybe they have a signed copy in their drawer? Did they create a trust? Where have the contributions been deposited? Generally you shouldn't be able to create a trust without a plan document. Are 5500's required? What is value of the assets? Any other plan participants? We need more information to give you better ideas. I agree with C.B. that if he never opened a trust, it would be difficult to justify that he has a qualified plan. However, if he has a trust and a plan doc, then you could go back and prepare 5 years of valuations and 5500's under DFVC.

Oops, sorry. Then you can ignore my comments. (I get confused by what Board I am reading since they re-adjusted the order. I assumed I was on the DB board, but now realize I was on the general board.)

I agree with Connie in that some attorney's feel the CBA can override 411(d)(6). I personally do not agree, but like Connie, they are the attorney so let them defend it if necessary. I have also worked with attorney's who disagree and would implement that change as soon as administratively feasible, after required 15/90 day notice requirement. This is obviously the advise I would give, but not my monkey if the attorney feels otherwise. I have a little concern over your words, "remove or reduce the required employer contribution". I assume this is a single employer plan and not a multiemployer plan? If so, you cannot remove or reduce the required MRC that is determined under Section 430 (i.e. Schedule SB requirements). You may be able to reduce the negotiated contribution, but that doesn't eliminate the employers obligation to satisfy the requirements of Section 430.