AlbanyConsultant

I don't think she is. I'm just wondering about the incorrect statement in the divorce paperwork (that we did NOT ask for!). I'm no actuary; I read the CB statements (yes, it's an ERISA plan) that say the person's "balance" is $X. I know that's not a 'real' number until it's time to pay out a benefit. The statement in 2015 said $3K, and his calculation as part of the plan termination distribution is... I don't remember exactly. $9K or $10K. I only bring the 401k plan into this because the section we were provided (I don't even know if what legal document that was provded - we got a half-page picture) specifically (and correctly) identifies the 401k plan and then specifically says there are no other plans that J is a partcipant in, and it clearly says that S is waiving her right to all benefits in the 401k plan. All your other questions are better answered by attorneys, which is why I suggested that's the route the plan sponsor take. In accordance with our client services agreement, I disagree that we are a fiduciary and that we are "more than ministerial" now, though I suppose a dogged attorney could attempt to prove otherwise.

This is for a cash balance plan, so QJ&S applies. Participant J and spouse S got divorced in 2016. There was no QDRO because as part of the divorce, S waived her rights to J's benefits (kind of...), so nothing was ever provided to the plan sponsor or us as TPA. We never knew or cared about this. Fast forward to now and we're terminating the CB plan. J calls us because the standard distribution package asks for the spouse to sign if married. J says that he was married, but now he's concerned because in the divorce paperwork, it clearly says that S waives her right to J's benefit in the 401k plan, and that J attests that he is a participant in no other retirement plans. Like many participants, J didn't understand what the CB plan really was. [It's not relevent, but at the time his balance in the 401k plan was $20K and his lump sum benefit in the CB plan was $3K.] Now J and the plan sponsor are wondering what to do. Obviously, the best answer is "check with an attorney". I told them without a legal opinion or a QDRO, we can't split J's CB payment. Any other suggestions? Thanks.

That would be very cool, and an excellent tool to teach new administrators how it works...

Believe me, this is where I started the argument against even considering this. This is what I was afraid of. I mean, not "afraid", since I'm glad to not have this as a recommended option.

403b Plan D was at Recordkeeper R about ten years ago. They had about 20 participants with defaulted loans. Recordkeeper R is an insurance company, so they treat the loans as loans from the vendor. The plan converted to a new recordkeeper, but R said that they have to maintain the defaulted loans. We came into the picture a couple of years later and weren't successful at getting them to change their mind. Now participants who have these old defaulted loans are looking to take a new loan - they call the new recordkeeper who of course has no information on these old defaulted loans and are told that they can certainly take a loan. Then all sorts of headaches ensue. Let's say that repaying the defaulted loans with accrued interest is not an option - almost all of them are for workers just above minimum wage. They're basically taking a loan to get access to the profit sharing while still employed. The plan currently doesn't allow age 59.5 ISW, but most are under that age anyway. Can we amend the plan to allow for a second loan ONLY to participants who have a defaulted loan at Recordkeeper R? There are no HCEs in that situation, so from a purely mathematical standpoint, it should be fine. Note that this is not what I'm suggesting they do. I'm just looking for options... and will gladly take any others. Thanks!

Yuck. The plan is a pooled 401k (yes, they still exist!) and now the owner needs do to Roth catchup deferrals. I really don't want to commingle the pre-tax and Roth in the same account. Is there a discrimination issue if only the HCE HPI has a self-directed account? I have been suggesting that they move to a participant-directed model for years and I was hoping that this would be the thing that clinched the decision... but the owner says that he's retiring in 2-3 years and doesn't want to go through all the changes for a short term, so I'm looking for a different solution. Part of me hopes there isn't one... Any other suggestions (other than "you can't always get what you want, even if you are a doctor")?

I've been presented with this situation: Two spouses own two S-corps - MS owned by J 51% and her husband O 49% OC owned 100% by O It's a controlled group because O owns part of MS. Each business has only one other employee, an NHCE. OC has a 401k plan (I don't have any other details yet). Of course, J wants a 401k plan to cover MS... and only MS. I want to say that as long as the populations are stable, then this is OK. No matter what feature I put into the MS plan, I'll either have: 1 HCE benefitting, 1 HCE nonbenefitting, 1 NHCE benefitting, and 1 NHCE nonbenefitting = 1/2 / 1/2= 100% or 2 HCE benefitting, 2 NHCE benefitting = 2/2 / 2/2= 100% This seems... simplistic? Like I'm missing something? What trap am I unwittingly walking into (other than the one where one of the NHCEs leaves and the testing fails and it's a disaster). Thanks!

We've known that our client NR is in a controlled group with RR (has their own plan but not our client) for several years, and we actually get the RR data every other year or so to prove that it passes 410b for all the various BRF, which it does. We've convinced the owners to let us take over the RR plan, and as part of the discussion they mentioned the RR plan includes union employees (they were included in the data we received, but not identified as such). NR's plan excludes union employees, and there are union employees that are excluded. They want to keep the two plans separate (getting close to the audit threshold, don't want a conversion, etc.). Is this union thing going to be a problem for coverage? I'd like to think that since we can exclude all union employees, it's OK to include some class of them. Thanks.

In a MEP, one of the adopting employers (AE) has said that they intend to leave the MEP soon - I don't know all of the details. This was an informal conversation, no official formal notice has been given. The owner of the AE followed-up by asking for some kind of trust report for the participants in that employer as of 12/31/25. I presume the intent is to use that to bring to a new recordkeeper for pricing, conversion discussion, etc. However, the trustee of the MEP has asked me to not provide this until we get a formal letter of the intent to separate from the MEP. I don't think that's a tenable position. Surely, the owner of the AE must have some rights to information? They're not officially a "trustee" since they haven't signed a trust agreement (though maybe they should?), but since they do handle plan money...? Obviously, it would be great if everyone would just play nice. But in the absence of that, any ideas as to what I can lean on? I'm perusing my basic plan document, but so far it's not that detailed. Thanks. UPDATE: I convinced the MEP sponsor to stop being difficult and I provided the data, so now this is just a theoretical issue.

I see. Those are good points. Thanks!

I'm definitely looking into the top paid group. I think the line will be north of $200K, but less than $500K. 2025 is literally the first plan year, so I don't have full data yet. What's the goal of your last question?

I have a large law firm client that recently asked about mega backdoor Roth and voluntary after-tax contributions in general. I explained the ACP test issue and after a slight pause, one of the partners said, "but that can be resolved by making a company contribution instead of refunds, right?" They are actually considering corrective QMACs to let their highly paid (and, coincidentally, HPI) participants do this. Sure, it works mathematically if they don't mind spending the money, but I have to wonder if it will really work out better than adjusting their class-based profit sharing.

We started a new plan for Company R in 2025, and we just found out that the plan's financial advisor (through a shell company he owns 100% of) purchased 10% of Company R's stock sometime in 2025. The plan is on a recordkeeping platform that pays the advisory form some amount of bp (50, I think). This seems to be a prohibited transaction; I don't see any way for the FA to keep getting paid on this. And he should return all the fees paid to him since the purchase (with earnings) to restore the plan. Anything else I'm missing? Thanks.

Sadly, telling a potential plan sponsor about how the safe harbor works during a sales meeting has no bearing on what they remember over a year later when you provide the contribution amounts.

Guess we got the official answer! I'm just not patient enough.