Below Ground

I had a similar problem quite a few years ago. What we did was just setup an account for the person and deposited money to the default investment, after telling the person this was just part of his pay. Since the employee was not being forced to put anything in, we told that person that he was losing nothing. If he wanted to ignore that he was being given this money under the Plan, then that was his choice. Once we made that clear that literally nothing was required of the person the issue literally just sort of died. Since there has yet to be a payment to that person, there has been nothing further on this "problem" since the original setup. In this case the issue was that the person thought this was just some way that the firm was scamming money from him. (The firm's relationship with labor was rather poor at that time. It is now much better.) Since there was no religious or "identity politics issue" involved, the solution of just putting the money in after saying there is no cost to you, worked just fine. May I suggest that your first step be toward finding out exactly why this person has a problem. Until then I don't see what else you can do other than put the money in for compliance purposes, but be ready to adjust to account for the underlying reason. Maybe setup the account as a trustee managed account without reference to the person? Of course, "internal plan records" would identify who the monies are held for.

You are correct. If Key gets contribution then TH Minimum applies. IF HCE defer then ADP (and ACP) apply.

Another complication would be accrued, unused vacation days. Could the person say on 12/29 I am taking my week of paid vacation, that now put the person's termination date in the next year? While I can see holes in that argument, I can also see the DOL agreeing with that position. I suggest that issues like this do seem to support that the employer needs to define the correct date.

I appreciate all comments. Thanks to everyone.

So, if I read Mr. Pojie correctly, the person who terminated on 12/29 is not employed on the last day since his employment relationship terminated prior to that date? I don't think any of the examples fit this situation, since in example #1 the person was not terminated on 7/29. Otherwise that example, and #4, would be identical. I had already asked the Plan Sponsor to clarify if the person should be considered terminated on 12/31 vs. 12/29 given the arguments that were provided earlier. I suspect I should discuss the issue of setting a precedent if the answer comes back as yes?

Person terminated on last workday of 2017, which is Friday 12/29/2017. For the profit sharing allocation the person must be there on the last day of the year (12/31). Since that is not possible for this firm (closed on weekends), is the person deemed to have been there on the last day, and qualify for the allocation? Also, how does this last day is Sunday impact coverage (and other) testing?

The "executor", who happens to be the oldest son and is a trust beneficiary, refuses to provide a copy of the trust document. Asking him to have lawyer provide written statement of who should be paid the benefit, and yes there is an RMD.

Participant dies at age 81. Was not Key or HCE. Spouse had already died. 3 Adult Children, who are named as Contingent Beneficiaries. Primary Beneficiary is named as Living Trust establish with the Participant's name. Since Living Trusts are something I have zero experience with any suggestions, comments or advice on how to process this death benefit will be greatly appreciated. Thanks!

We tell the Client that they need to submit an itemized written request of items missing from their files. There is no charge for providing documents at this time, but we will charge a "file retrieval fee" for requests made after a specified date. This fee is applied after we transfer the file to storage, and reflects time needed to retrieve the file. (We want ex-clients to address file items at the time service is discontinued.) Items that are saved to pdf are provided without charge, as those remain on the server in archive. We do include a section in our service agreement on this topic.

No, the DRO simple says the benefit will be rolled over to avoid current taxes. It is the attorney making that statement. What does "PITA" mean?

Ahhhhhh. Form of benefit, not form as in election form. I missed that totally. The Plan is lump sum only, but a person could take as taxable, rollover, or a combination under plan terms. The DRO says rollover, but doesn't even say to where! So you would think, send an election form for that information, right? Lawyer says no, just issue check. Right. Payable to whom? This is why I question the qualification, since the way it is presented is not "serviceable". I am leaning toward just sending out election forms, and being done with the issue. Recommending that the DRO be deemed not qualified looks like it will be Pandora's Box.

Typically, "my plans" have small sums related to late deferrals. If the amount was large, I could and would justify the expense a client would need to pay. However, when your penalty tax adds up to something like $15 on late deferrals that do not total $1,000, it is pretty hard to justify what would need to be charge to provide for the filing. I do see your point though. I am guessing, from the OP, I am not alone in this regard.

I was looking at it from the other direction. Doing the Form 5330 without a VFCP Filing.

I do not understand the question "what form is mandated". My post was about the lawyer who did the DRO says that we can't send anything to the AP, including election forms and the 402(f) notice. The format of the form is not relevant since the lawyers is saying NOTHING can be sent. The only action permitted (per the lawyer) is to issue the check (almost verbatim to my phone conversation). So with respect to your statement (Mike Preston) about "can't imagine not being required to provide a 402(f)", I don't have to imagine. That is what this lawyer is saying; hence my concern toward qualification of the DRO since the author is saying we can't provide that notice; thereby making administration impossible in my opinion. I appreciate very much your comment on the steep price of a flat dollar payout. The amount is well over $5,000 so that action would be a poor choice indeed (unless if we go into a total economic collapse). Of course, people often seem determined to shoot themselves in the foot. Again, thanks for all comments. I make no claims of expertise on this topic. I know a little, but more would be better.

I thought that you could either (1) file an application under VFCP, or (2) file Form 5330 with payment of the tax. (Lost earnings must be deposited to member accounts under either method.) Why would a person complete Form 5330 AND complete a VFCP Application?

... and the 90 degree temperatures have melted the ice on my googles.... Sorry just a little bad humor related to my picture and signature.

As I stated earlier, I greatly appreciate ALL replies. They all give me something to consider.

Rather be Golfing: It specifically say "on a form as provided by the Plan Administrator". The DRO does not meet that standard. In addition, what about 402(f) Notice. Since the attorney does not want anything sent to, or required from, the AP I can't see how the DRO can be viewed as meeting that standard.

My belief is that a message board like this is not what you should rely upon for a final decision. It is just one of several references that can be consulted. I almost always find it helpful in moving to the next step, either confirming the logic path I am on, or helping me see an alternative. No one can give definitive conclusions hearing only one side, which in this case is biased to me. So "My 2 Cents" I would say I value what you say, but be assured that I see your comments as a valuable aid, but not the conclusion. Hopefully I have stated this correctly.

As stated in my OP Mike, I found that sloppy, but not disqualifying. Sorry if that was not clear. My fault. My problem is that the Plan specifically say that the AP must be provided with the same elections and option that would be given to the Participant. The DRO eliminated that by defining the person's election. When I brought up that we would be sending out an election package, I was told this would be a violation.

Her: What, you don't have at least one lawyer on staff! I see no reason to discuss this with you.. Me: The Client has asked me to review for qualification of the DRO. I see problems which I hope to discuss with you. Her: Since you don't understand how the bar in "State" works, you clearly have no business dealing with this? Me: I have been doing this for well over 30 years. I do not write DRO's. I review them as a courtesy to the Client. As you can see, it was not very productive.

No, that discussion was not able to progress to that level. It was not amicable. The discussion had a part, very early on, where my credentials were questioned in a less than positive manner. Let's just say that everything I had to say had to include a reason why I should be able to say anything at all! Me not be a lawyer and all.

Thanks for the advice. I did call the attorney who is responsible for the DRO. She seemed clear that there would be no changes! I even offered to provide language to address the problems. Apparently, it is too much work to fix the DRO for her.

Ask the lawyer to send you a written signed letter, defining why the Plan terms and related regulations should be ignored. I did that once and the problem magically went away.

I have been asked to review a DRO, and have found a number of issues. While I have done this hundreds of times, this one is a problem. The first issue is the amount is defined as a flat dollar value without adjustment for interest. While this is fine, they fail to even define when the payment needs to be made! Basically, whenever the Plan Adminisitrator feels making payment is appropriate. Not disqualifying, but clearly sloppy drafting. Second problem is the the DRO makes the form of payment election for the beneficiary. The Plan does state that with a QDRO the Alternate Payee is to be provided with all elections that would be available to the participant. In addition, going by the DRO there would be no 402(f) Notice to the recipient. I believe these 2 conditions would be a violation, making the DRO not qualified. The language of the DRO states that if the Plan Administrator determines the Order is not qualified then the parties will cooperate with making those changes for the DRO to be qualified as defined by the Administrator. With that finally point in mind, I called the attorney who drew up the DRO and had it submitted to the court for signature. She proved to be the attorney that one article on QDROs identified. Totally adversarial, and disrespect of all points made because I am only an ERPA. Perhaps she is right, but I do have 32 years experience and her paralegal told me they have very little. In fact, they wanted me to draw up the QDRO for them initially. I said no as my job is to review, not create the QDRO. Of course, my declining the honor of writing the QDRO for them is deemed as a reason that I have no right to bring up problems. I feel I am stuck since I do not believe the DRO is qualified. If I am in error on that, please correct me. Assuming I am right, what should the next step be since the attorney clearly has no intention of working to resolve these issues. Any and all advice is greatly appreciated.