david rigby

But... what is the regulatory definition of "officer"? Hint: title means nothing.

Have you determined whether this EE is exempt from all definitions of Key Employee? IOW, you say the EE is "an officer", but have you reviewed the definition of both Key Employee and officer in regulation 1.416?

Interesting topic @Effen. I hope to hear how this question is resolved.

Math can be your friend. Determine how much is currently non-vested. Then do a reasonable estimate of the turnover/graded vesting over the next 3-4 years, as a means of estimating how much of the non-vested amount may be forfeited. You may find the actual "cost" of awarding 100% vesting now isn't very significant. The ER should also evaluate the PR value of taking credit for this (not required) action. If you have trouble doing this calculation, there are lots of actuaries that can help you.

@Luke Bailey is correct. In my 40+ years as a pension actuary, I've never seen a plan that was "frozen" except for comp.

Wow. @Carol V. Calhoun has posted (12/04/23) a thoughtful treatise/practice note on Substantial Risk of Forfeiture. https://benefitsattorney.com/articles/substantial-risk-of-forfeiture/

Does IRC 411(a)(4), and related regulations, have relevance?

I do not. But then, I don't have access to the applicable amendment(s) and/or plan document.

The answer will be found in the amendment that froze the Plan. If it is silent, the answer is probably "no".

Non-lawyer here, but it might mean the drafting attorney(s) don't understand QDROs. Or it might mean the parties need to go get a DRO drafted. Just sayin'.

Yeah, correct. The original post is so brief as to be almost worthless. To the original poster: you need legal advice from an attorney who is very familiar with QDROs. If you have an attorney who does not meet that qualification, keep looking.

By the way, notice in the April 2019 discussion, linked by @fmsinc above, the original post uses the term "retirement account", with no mention of whether it is a qualified plan or an IRA.

Duplicate post. Replies should go here: https://benefitslink.com/boards/topic/71448-hcfsa/

Creative action? Maybe send a letter suggesting (without really promising) that, absent a signed election form received by X date, the benefit will be distributed to you, with applicable withholding, and will be reported to the IRS as a taxable payment. IOW, see if they call your bluff.

Times a wastin'! The potential "what if" problem of the IRS saying, "How come youse guys reportin' so many?" is much less than what you are currently experiencing. Take advice from Nike: Just do it.

Does this previous discussion help? Oh, look who started the thread! By the way, I still stand by my recommendation: do nothing, or use the default investment. The plan is doing the investing, not the individual.

There are other ERISA lawyers. If you have any doubts (any!), then getting legal review may be worthwhile.

Suggestion: read the plan amendment that effected the plan freeze. The usual definition of a "hard freeze" is to determine the accrued benefit (usually expressed as an annuity that commences at Normal Retirement Age), and that amount does not go up or down. If there is anything that later changes that (such as amendment that could permit a higher benefit), the plan will no longer be "frozen".

Some missing info. Is there also an associated change in corporate structure? For example, did Company B acquire Company A? If so, how long ago did that occur?

This is your first step.

Presumably, this sole proprietor is creating a DB plan to target the 415-maximum benefit. Is that correct? It's not clear to me why such plan would be a cash balance plan. Seems that a traditional DB plan design would be more appropriate. But maybe it's just me.

Maybe, but it's an uphill fight. To see several prior discussions on amending a QDRO, go to the Seach box above, type the word "amend", click the dropdown arrow to "This Forum", and hit your enter button.

To be precise, such "non-applicability" contains a pre-requisite. For example, IRC 411 (minimum vesting standards), see subsection (e)(1) for the governmental plan exemption. However, please keep reading: subsection (e)(2) includes the statement, "...if such plan meets the vesting requirements resulting from the application of sections 401(a)(4) and 401(a)(7) as in effect on September 1, 1974." Thus, ERISA exemption is conditioned on meeting pre-ERISA requirements. There are several other similar IRC sections.

See IRC 404(o)(3)

Don't overlook the possible explanation that the W-2 was issued because someone did not know the correct process. That might be the first problem to solve.