GMK

Good call, ESOP Guy. That sounds right. And isn't this aimed at service providers who get more than $5k (I haven't looked it up), not about the sponsor's employees?

It might be useful to the court if you identified the divorce or other court document on which the DRO is based. And I'd provide your contact information in the event the judge needs any additional information from you. Other than that, I'd simply ask the judge to please sign the DRO and return it you.

If memory serves, ... you now have 5 separate accounts in the plan, one each for the benefit of each beneficiary. That would be 5 accounts, all in the name of the deceased participant, each one FBO a different beneficiary. And what QDROphile said.

It doesn't sound common or reasonable to me. If we got such a request for the plans we sponsor, we'd ask the auditor why they need this information. Unless the employees who work on the plan are paid from plan assets, what's the point of having this (inaccurate) estimate of time and dollars spent by the sponsor?

If we offered hardships (a comment showing a personal bias against them), I see no reason not to accept the claimant's reasonable claim about their tax rate. We certainly wouldn't ask for prior tax returns, etc., mainly because past records are not proof of current conditions. If you're concerned that participants might take too much of their own money out of their own retirement fund, then why are you offering hardship distributions? Maybe someone would try to game the system , but most hardship cases are going to be pretty straight forward. It's unlikely that we would hear: "Yeah, I have this "hardship" and need $800. Oh, by the way, since I'm in the 39.6% bracket (and don't have any other source of the $800), bump it up to $1,116.80 ... and maybe I should add another $50 for state income tax."

Good point. I read the OP to mean that she elected 20% withholding (for whatever reason), not that it was required, and that the question was about whether the gross up for taxes was an "extra" that could be distributed in addition to the $472 hardship limit or whether the gross up was part of the total distribution amount that could not exceed $472.

To paste, etc., you need to click the switch in the upper left corner of the header of the Reply window. This fuzzes out all the headers and allows you to paste. Then, click the switch again to bring all the editing functions back to life.

As BG said, she can only get $472 (not counting the fee). If she has 20% ($94.40) withheld, the payment to her is $377.60, which is $22.40 short of the $400 she wants. Can she reduce the withholding to 15%?

Agreed that 20% of $400 is $80, but if she needs $400 and 20% of the distribution amount is withheld for taxes, then she needs a distribution of $500. That is, 20% of the distribution ($500) is $100, which leaves her with $400. No? And this means that she doesn't have enough to cover the $75 fee, which as you say should be applied before or after the distribution.

We get a questionnaire and a spreadsheet for both of the plans we run. The questionnaire mainly has us check the one of several possible answers to each question that applies to us, which is a lot more inviting than having to fill in the blanks with our own answers. They load in some of the information from last year's submittal with an "Is this still correct?" box to check and space to update the information as appropriate. Columns in the spreadsheet that don't apply to us leave blank we can. (Yoda helped me with that sentence.) We set up a sheet with the information in our own spreadsheet file and send it to them. Usually they require us to use their column headers, which is no biggie.

Happy 8 / 8 / 16

^ You are absolutely correct that the plans have provisions for all kinds of distribution situations. All I'm saying is that the people who have to administer the plan should consider how big an added burden this is, if any, and whether they want to take it on. That gets balanced against things like how attractive the offer of a 401(k) would be to the best candidates (who are minors) for the company's job openings, and on and on.

Good point, BG. Anyway, the 2-year old should just dump the money into a Roth IRA and amass a pile of 'magic money' (a technical term some retirees use for their Roth accounts) for retirement. For the 401(k), there's no reason that a minor can't be allowed to participate. I'd consider if there are any extra administrative headaches for distributions to minors, and if I want to deal with them or not.

Receipt of a DRO is easy. It's when you get the document signed by the judge. Receipt of "notice" of a coming DRO is the grey area. Best is to have procedures for both cases in your plan's QDRO Procedures. Until you get the signed DRO from the court, you are not required to do anything for the eventual AP. As you say, however, there is the spirit of the law factor. So, our procedure has a 90 hold after receipt of notice if the Participant is eligible to receive a distribution (if there's no possibility of a distribution, there's nothing to hold). There's no judgement call (no "may"), so it applies uniformly. We understand that this hold is not justified by the law and regulations, but only by the spirit of the law.

She will be eligible for COBRA from employer 1 to continue that coverage after that employment ends. She has 60 days to sign up for this COBRA coverage which will apply retroactively to the day she loses the employer-provided coverage, so she waits to see if she needs it. If it turns out she needs the COBRA continuation coverage to cover something that happens before employer 2's coverage starts, then she signs up for COBRA and pays a month's premium. While it's expensive coverage for the gap period, she doesn't have to sign up and pay for it unless she needs it. Stay safe.

Isn't this still negotiable? Unless the judge has already ruled, couldn't they tear up the current papers and as ESOP Guy says, rewrite the terms to include a QDRO that covers the $30k plus the taxes. Doesn't have to be a 50/50 split of the plan assets.

I agree with you, Mike, except for the part where you put a QDRO and "a simple matter" in the same sentence.

Tom, the link gives me a 404 error (maybe it doesn't like me). Is there another link?

My word processors due knot no this spelling: ‘chequer’ so yore's must bee better ... (oar British?)

Our provider's deferral election change form has sections for electing a regular deferral rate and a catch-up deferral rate, ... so we use our own form that simply asks, 'How much do you want to defer?' If they hit a limit, the rest is catch-up. The initial enrollment form asks for a deferral rate election, and not a separate catch-up rate ... which is good.

Do the BenefitsLink mavens (to use the FGC term) have an experience of this ever happening? and if so, under what conditions? We have avoided stable value funds, because getting out of them, for example, if the plan wants to change providers, looks as time-consuming and expensive as a bad divorce. We could be wrong ...

Isn't the point of Safe Harbor to avoid having to do testing? or is it that since the computer runs the tests for every plan anyway, then if you're sure you'll pass, just go ahead and do what you want to do?

For example, see item 12 on page 3 here: https://www.dol.gov/ebsa/pdf/2014-5500-SFinst.pdf

Could you fill in 4% instead of 3%?

It's for data mining, and usually, where there's a mine, there's a shaft, no?