smit1970

Thanks!

Client has two 403(b) adoption agreements - a TDA for the employee contribution (Plan 002), and what they call their DC plan for the employer match (Plan 001). Recordkeeper is TIAA. Client filed two 5500s in 2009, and then TIAA "linked" the account balances in 2010 and the employer started filing a single 5500 using the Plan 001 designation. No formal plan merger was completed, and no final 5500 was filed for Plan 002. They take the position that both plans are subject to ERISA. The employer changed auditors, and the new auditor is recommending a clean-up. Option 1: Take the position that the plans merged in 2010 when the accounts were linked (even though no formal corporate action was taken to merge the documents, and they continue to have two Adoption Agreements and two SPDs). Explore filing a delinquent final 5500 through DFVCP. Prepare a single plan and SPD going forward. Option 2: Take the position that they currently have two plans, and two 5500s should have been filed. Use DFVCP to file the missing 5500s for Plan 002, and amend the exiting 5500s to remove references to the assets from Plan 002. Then perhaps merge the plans formally and move forward with a single 5500. I understand from a plan adviser contact that this issue is pretty common with TIAA plans following the finalization of the 403(b) regs, so I would love to hear if anyone has encountered it before. Thanks much!

The AP sent the settlement agreement to the Plan. Thanks all for your responses.

Agreed MoJo. Thoughts on steps to rectify shorting the distribution?

The biggest issue with the settlement agreement is that it doesn't contain a segregation date. The Sponsor took the date of the divorce order as the segregation date. Otherwise it's not pretty, but we could argue that it suffices.

Thanks David. The PA knows the parties, and they are concerned about an action being brought by the AE for improperly accepting and administering the order. They don't want to suggest going back for a proper QDRO. I'm working with them on the QDRO procedures and training, but if I can make an argument that the settlement agreement could have qualified, how do you feel about just making it right at this stage? Would we need a second order this far down the line?

401(k) Plan received a divorce decree and separation agreement in March 2014, directing the parties to split the participant's account in the Plan (say $12,000). Participant was to retain responsibility for a loan on the account (say $4,000), so that Alternate Payee should have received $6,000, and Participant $2,000 plus what he repays on his loan. Plan sponsor didn't request a separate QDRO, nor did the parties provide one, and sponsor acted on the general instructions in the settlement agreement. Arguably the settlement agreement wouldn't have qualified as a QDRO, but they didn't realize that and administered it as if it was. However, they then erroneously segregated the account. Instead of paying the AE $6,000, they paid her $4,000 because they thought the parties were sharing responsibility for the loan (i.e., they divided the $8,000 balance after the loan was deducted). AE has now realized she was underpaid, and wants the Plan to pay her the remaining $2,000. Participant's account has enough to cover this amount. Any thoughts on how to correct? Would her amount need to be adjusted for interest? The settlement agreement was silent on interest, and no separate QDRO policy exists.

Has anyone considered whether an attorney needs to have a PTIN in order to prepare an 83(b) election for a client's employees?