Effen

When you say, "met the audit requirement threshold", do you mean is had > 100 participants and required an audit, or it did not require an audit? Can you provide additional information? How many participants are in the floor offset plan? How many of those have cash balance accounts? What is the type of business? There is nothing special about a floor offset plan that would exempt it from PBGC coverage, but some take the position that only those with cash balance accounts are actually participants.

Micks - Thank you for your participation on the board. Always nice to see new contributors. However, I created a new topic with your most recent post. Please don't start new topics on old threads. It makes it very difficult to search in the future.

Ok, I think you are saying Plan A issued the 1099, but plan B actually made the payment. So, Plan A needs to re-imburse Plan B for the improper payment. Since Plan A issued the 1099, I think Owner 1 taxes s/b correct, even though he received the money from the wrong trust. He will need an ERISA attorney and his accountant to help him sort all this out, but seems to me: Plan B may have incurred a PT for improper payment to an HCE Plan A needs to re-imburse Plan B. This should include some interest adjustment so that Plan B is restored to where it would be if the improper payment was never made. There are probably a myriad of other issues the IRS/DOL could pile on if they wanted. Check the Self-Correction Guidance and work with attorney and accountant on the best way forward.

It's just an AFN. Do whatever you think is reasonable. Generally, we are putting on the most current information available, but I don't know if there is a clear rule.

Thank you, but that wasn't the question. Which plan issued the 1099?

These are separate and distinct plans. How he solves these problems is up to him, his attorney, his accountant. The 5500 should reflect what actually happened in each plan. Did he get a 1099? Which plan reported the distribution? If Plan A reported the distribution, then he m/b ok on the personal side, but not on the plan side. He should retain an ERISA attorney to help him sort all this out.

It is ok that they have 2 plans, assuming both plans comply with the applicable non-discrimination rules. Do they both cover at least 40% of the eligible workforce, or have at least 50 participants? 1) Definitely a problem. They will need to reverse this. Put the money back into Plan A, and take it from Plan B. 2) I know you think of contributions as "his" contributions, but they are corporate contributions. "He" didn't really deposit "his" contributions into the wrong plan, the sponsor made the deposits, so that part is ok. How were they reported on the SB? Is plan A overfunded and plan B underfunded? You cannot transfer money between plans, but you could merge the plans to equalize the improper contributions and avoid future MRD issues.

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.