Below Ground

Normally, a QDRO is done by the attorney of the "spouse". While it can be done by the lawyer of either party, it generally comes from the party that benefits the most from the QDRO. I can also say that I have seen situations where no one even thought of a QDRO until AFTER the divorce settlement was finished. This did not turn out well for the "spouse" since it was then ruled the settlement was done and it was the failure of the spouse's party to address the issue. Since I am not a lawyer I can't comment on the underlying legality, I can only say what I saw in my role of defining the amount of the benefit.

A number of years back (2021) I was faced with a cancer diagnosis that had my likely hood of dying pretty much a given. Anyway, I was afraid I might not have enough credits given the weeks I was spending in the hospital in no shape to deal with CEs. I called the IRS to see if there any kind of extension, I mean I did have a doctor's written statement that I was facing a likely death. The IRS said no. Well, it turned out I did 25 of the 20 needed so I was fine, but wait! By calling they decided to audit my CEs going back 10 plus years. At that time the ERPA Program was under ASPPA, not the IRS. Apparently, a letter from the entity giving the seminar while good enough for ASPPA, doesn't work for the IRS. Instead, it had to be a specific format certificate, and anything not in that exact format was disallowed! So yeah, I am well aware of what David D. wrote because that is exactly what happened to me. And as I understand, it is still the same. I suppose I could have fought it but given that my focus was on staying alive I decided it wasn't worth it. Quite honestly, I haven't missed it, and I am still alive so boo hoo. Anyway, if you are looking for flexibility or even basic human compassion, forget it.

To correct the ACP Test Failure remove an amount equal to the excess contributions from the person's account. The correction does not need to use the exact dollars being deposited. It just needs to come out of the right account of the person. There was one funding platform that always gave us trouble with this every year. At that time I sent them a copy of regulations that showed monies just need to come out of the right person's account and proper contribution source, and we have not had any problems since. I note that we have even had plans audited and this approach was deemed correct. That was many years ago, but if you look you should be able to find it.

The Sponsor files but data and payment is the Employer that failed.

Have a MEP that has been in effect for decades as a closed MEP, and has never with any problem. Recently they allowed a firm that does not satisfy having the same business type which has been making the MEP closed, and I am concerned about the 5500 filing(s). For example, the other firms are all "butcher shops" while this new firm is an automobile repair shop. Anyway, does this mean every firm has to file a separate 5500 now, or does the plan continue to use one 5500 for the "closed firms" with the "open firm" the only firm that needs a separate 5500?

The Top Heavy Minimum is not determined by Nonelective Contributions alone. As Bill Presson notes, even employee deferrals from an HCE will trigger a Top Heavy Minimum.

There is no plan termination in this situation. Remember, the plan will remain in effect, it just doesn't cover Employer B's employees. This means that the one employee of Employer B is no longer eligible since Employer B no longer is covered employer. As for a spin-off, Employer B is not adopting a new plan so there is no spin-off. You should definitely document that Employer B is no longer a participating employer, which is analogous to a termination but is not an actual termination. You would then need to process a distribution to the one employee given that Employer B's employees are no longer covered. Peter's comment is 100% correct including his comment about the box for MEP on the 5500.

Thank you for your comments. This was a situation where you know the correct answer, but the client's broker was so positive to the belief that rents could be contributions that it makes you stop and question what you believe is correct. I guess we all have those days where you just feel "shaky" and question yourself. (At least I do.) Regardless, I really do appreciate your feedback as it removed all doubts in my mind. As a side note I did address potential UBI and prohibited transactions with the client at the time our service for them began.

The Plan has a number of real estate properties held under the trust, including several that receive rent payments. I believe that rents received from assets under the trust a part of the investment return. My logic is that the properties are owned by the trust, and any rents received would be "investment earnings" and not contributions. Am I off base?

Thanks Artie M for the constructive comment. I was just trying to offer a suggestion of what I might use in this situation. I certainly was not trying to be "cold and harsh". If someone wants their version to use something like "went belly-up" in lieu of "has died" that is fine by me. Bottom line is if you are the author, feel free to use whatever verbiage that pleases you.

In a Board Resolution I would suggest you have as one of the "WHEREAS Clauses" something like whereas the Trustee named ???? has died the Plan Sponsor has determined that ???? be named to replace ?????. I am NOT providing legal advice, just a suggestion of what you might look for to address the situation, preferably by a competent ERISA attorney. I think anything else might be overkill.

I suggest that using 520 would cause problems on audit. Specifically, you might need to show that the impact of this provision would unfairly benefit the highly compensated employees, so testing might be needed. Regarding the "must be reasonable" aspects, I suspect you could have a problem here, but I also agree that the 1,000 Hour "fail safe language" may eliminate all problems.

You might be surprised by how easy it can be. The key is establish solid "information paths" before doing anything.

Lets say you have a real estate firm that employs a hundred "independent brokers" who are all paid via 1099 Forms. The real estate firm itself has several W-2 employees, primarily the owners and clerical people. My question is could the real estate firm adopt a plan that excludes the independent brokers, but does cover all of the W-2 Employees and the owners who are primarily paid via K1 under an LLC? Assuming that is possible, could the real estate firm then offer to the independent brokers the ability to adopt their plan, but under terms of a multiple employer firm. To clarify, each independent broker would be considered a separate firm that chooses to adopt the plan for the employees of the "independent broker's firm"? This would be similar to a MEP that covers several independent franchises where there is no common ownership, making this to not be a controlled group. I am guessing that problems might be due to Affiliated Service Group Rules and/or the independent broker being deemed employees of the real estate firm. I understand that the key to this topic is proving that the "1099 employee" is truly an independent contractor, including the ability to control work hours and work location; and that a Form SS-8 can be filed where the IRS determines if the person is truly independent, or if that person must be treated as a W-2 employee for issues like benefit coverage. Any and all comments are greatly appreciated. Thanks in advance!!!

If the only employer contributions are qualified under safe harbor rules, including the discretionary match, top heaviness does not apply.