My 2 cents

I've lost track - is this the thread where the storm damage occurred a few years ago or is the damage to the pool recent?

I presume from the wording of the original post that the participant was the mother of the spouse's stepchildren (who are the beneficiaries of the spouse's will, which, for some reason, does not provide anything to that spouse's children, presumably from before the current marriage). So let's call the participant Mrs. X, the spouse Mr. X, the children of the participant little A and little B and the children of the spouse big C and big D (big C and big D presumably having been born before Mr. X was married to the participant, to a different mother than Mrs. X). Mr. X's will leaves his estate to little A and little B and nothing to big C or big D. Let us, for the time being, disregard what Mrs. X's will provides (but be it assumed that her will is unlikely to be more favorable to big C or big D than Mr. X's will). As the participant had not designated a beneficiary, the default provisions of the plan will kick in, surely making Mr. X the beneficiary (unless the applicable state law would treat the death of Mr. and Mrs. X as simultaneous, which should be looked into, their deaths having been so close to each other, possibly as a consequence of the same event). One defined benefit plan document that I am looking at provides for default determination of the beneficiary of the participant if "no Beneficiary designation is made by the Participant, or if the designated Beneficiary dies before the Participant or before complete distribution of the Participant’s benefits...". If the plan in question contained such a provision, then the default beneficiary (there being children) would be "the Participant’s natural and adopted children and children of deceased children, per stirpes". There would be no question that little A and little B would qualify as beneficiaries in the instance cited in the original post (being natural children of the participant). Whether anything would go to big C or big D would depend on whether they would be considered as adopted by the participant (which seems unlikely given their status under the spouse's will). Given that the spouse's will provides nothing to his own natural children, why should they be entitled to anything from his wife's retirement account?

I see the description as specifying that the assigned benefits become the separate property of the alternate payee (especially item (iii) in the original post). If the QDRO makes the benefit the separate property of the alternate payee (with, of course, the benefit amount being adjusted up or down to properly reflect the age difference, if any, between the participant and the alternae payee), then it becomes contingent on the survival of the alternate payee, not the participant. Of course, there would be no provision for a QPSA in the event that the alternate payeedies before commencement and is survived by a spouse, and the alternate payee could only elect a joint benefit if the plan does not restrict joint annuitants to spouses, but otherwise the alternate payee would be treated as though he or she were a participant eligible to commence receipt of benefits based on the age of the participant. Example: Participant is 52, AP is 48. Entire benefit is assigned to AP. Plan's NRA is 65. Monthly benefit is adjusted down actuarially to reflect that payments start in 13 years to a 61 year old instead of in 13 years to a 65 year old. If AP dies before payments start and plan only offers a QPSA, then the entire benefit is forfeited (unless there is some sort of reversion specified in the QDRO, which while it may complicate the math would seem to be permissible). Death of participant would generally be disregarded.

If it can be done, it would not be in relation to those one-time only elections to not participate (which have something, I think, to do with keeping eligibility to make IRA contributions), which do have to be made right up front. I know that it is permissible to offer defined benefit plan participants a choice between staying on the old formula or changing to the new cash balance formula. Wouldn't stay or go to the 401(k) plan be similar to that? Don't have a cite, though. Those choosing to participate in the 401(k) would not cease to be participants in the defined benefit plan - they would cease accruing additional benefits. As the defined benefit plan would not be terminating and they would remain in active employment, I would expect that there could be no ability to transfer the lump sum value of the protected accrued benefit under the defined benefit plan into the 401(k) plan, but I don't know that for certain. Does the question look any different if the potential election were framed as in the paragraph above?

You aren't looking for a citation that it would be taxable to the participant, are you? I expect that if it is paid to the participant, it is taxable to the participant. Paying money to an ex-spouse in accordance with a divorce decree not encompassing a QDRO would be satisfied using after-tax dollars. I am not up on the tax rules enough to know, but payment from personal assets to satisfy a divorce decree or alimony might be a deductible expense to the paying ex-spouse, might be taxable to the receiving ex-spouse. Payment under a QDRO would be a different story, since the money would have been paid directly to the ex-spouse, but that is apparently not the case here.

Should it be possible to pay unused vacation time out without having to deal with payroll taxes? That doesn't seem right. You would start with deciding to allow people to cash out some or all of the unused vacation time, and then allow deferrals into the 401(k) plan of some of the amounts otherwise available as cash. Would there be any other mechanism for this? It is my understanding that it is entirely legal to limit the amount of unused vacation time that can be carried forward, even to have anything over that limit be forfeited (rather than cashed out). Employees should be given adequate advance notice of the change in policy, to permit them to work in enough vacation days taken to not lose anything outright.

Do the current IRS regulations require application of the Section 415 limits to the gross benefit (before offset)?

Just guessing here, but wouldn't none of the amounts reportable as health insurance costs be considered W-2 earnings or elective deferrals, whether pre-tax employee amounts or employer amounts?

Find another broker! Really, you don't want to be doing business with someone who back dates documents!

"Former employees" are probably not a protected class. Still, if someone left of their own accord and had desirable skills...

Would "My basement floods every time it rains, and I want to do something about it" qualify for a hardship withdrawal? Does it really matter that it started when the house was damaged by the hurricane?

I had been presuming that this was a 401(k) plan, or at least a profit sharing plan. As there would (presumably) be no post-tax money that had been contributed by the participant to the participant's account, wouldn't the cost basis be $0?

Presuming that there is no hidden motive for investing plan assets in a particular off-shore LLC and that the desire to make such an investment is solely to gain additional diversification of the investments, wouldn't safer, wider diversification be available through one or more mutual funds investing in foreign equity? Not that anyone should listen to me in selecting investments, but there are large cap international funds, smaller cap international funds, developing country international funds, etc. Why invest in one foreign company (and an LLC, not a big established company) when, for the same stake, you can invest in hundreds? A US-based international fund (or two) would also generate fewer questions from the regulatiors. Besides which, is it really a good idea for a qualified defined benefit plan to "own" any companies, domestic or foreign? Equity holdings, yes, control no.

With the possible exception of changing from the use of three-tiered segment rates to the full yield curve and (I think) if using three-tiered segment rates, changing from basing them on the valuation date month to a lookback, I don't think that the IRS has offered any opportunities to change funding methods without obtaining approval. Example: July to June plan year is changed by amendment (is there another way?) to calendar year plan year. To go from a July 1 valuation date to a January 1 valuation date requires an application to change methods (at least per Gray Book). Note that if there were to be an application to change from averaged assets to market value, the IRS would probably not consider "we think that we would have a higher asset value with market value" to be a legitimate reason for the change. The argument would probably have to be framed in terms of market value providing a greater degree of transparency or something of that sort.

Yup. Having money often makes it easier to deal with adversity.

Being able to elect out of withholding does not keep the withdrawal from being fully taxable, the difference being that all of the amount due must be raised and paid the following April, since there would not have been any taxes already paid on the withdrawal. Is that advantageous? I don't get it. Naturally, all hardship withdrawals will be reported to the IRS by the plan on 1099-R forms, so not reporting the distribution and paying taxes on it is not an option.

Does the plan document say anything about entry date for a participant who terminated with vesting and was later rehired? Many plans call for immediate reentry (i.e., no 3 months wait) when a vested participant is rehired, with service being bridged irrespective of the duration of the break. It may matter whether the person had been paid their account balance back then.

Wouldn't taxation of a post-59 1/2 withdrawal be just ordinary income, under whatever circumstances led to the amount being paid, with no excise tax being due for a premature distribution? Always remember that taxes have to be paid on the withdrawal! If the 20% mandatory withholding is too big, you can get money back when you file next year. If it is too small, you have to pay the remainder due as taxes. If it is way too small, be prepared to write out a big check come April 15th (and hope that you don't owe a penalty tax for not having prepaid enough taxes)! Granted that the withholding may require taking a bit more out than if there were no withholding, but just because it was a hardship withdrawal does not spare you having to treat the entire amount as taxable. The withholding prevents a big surprise next year. Note that if the plan does not allow in-service withdrawals, the fund house should not block a hardship withdrawal.

Should not be necessary to explain difference between FAS 35 (ASC 960) and FAS 87 (ASC 715). At least some accountants are requiring that the ASC 960 liability calc use a long-term rate, not an ASC 715 discount rate. The auditor's report attached to the 5500 filing will usually require ASC 960 information, so it is not something to be ignored.

Some accountants require the use of a single interest rate based on the assumed long term rate of investment return. Others appear content to accept the use of the Funding Target as is. To a significant extent, it is up to the sponsor, who will usually defer on accounting matters to their accountant. The former FAS 35, now known as ASC 960, is needed to enable the accountant to issue their report, for attachment to the 5500 filing. Reason enough for drawing attention from the accountant!

Based on what I have read here: 1. The employers will continue to have a contractual obligation (no chance of getting a court to let them out of that) to pay into the multiemployer plan. 2. The employers are prohibited by law from making contributions if there are no employer trustees. 3. Nobody wants to be an employer trustee. Sounds like it is time to draw straws/engage in a heavy duty game of rock-paper-scissors/pay someone to do it/etc. No choice but for there to be one or more individuals serving as employer trustee, however arrived at.

Cannot "force out" participants at NRA under a db plan. Cannot force a lump sum under a db plan if over $5,000. You must be thinking of some other kind of plan.

If there will be employers remaining, they should get together and find three "volunteers" to look out for their own interests. Don't think "nobody wants to be an employer trustee" is an acceptable reason for closing down the whole thing. I suppose (not being a multi-employer practitioner) that if they can't find anyone to be a trustee, they should have a mass withdrawal and pay the Withdrawal Liability. What else could be done? But won't the employers continue to have a contractual obligation under their CBAs to contribute to the plan for the ongoing accruals of their employees? Maybe some union members would be willing to step up and become the Employer Trustees!

Some context might help (including information as to what the document means by that troubling expression and what it says one can or should do when employment is deemed severed).

Don't work on 403(b) plans. Can 403(b) plans have mandatory employee contributions?