jpod

My guess is that you will find that the default beneficiary is the participant's estate. Assuming that's the case, and putting aside RMD issues, for an account of that size you shouldn't even consider skipping the formalities. You should pay the money only to the executor (if a will) or administrator (if no will), once he or she steps forward.

Your facts are a bit murky, but it sounds like the business formerly operated through the LLC taxed as a partnership was incorporated contemporaneous with the retirement of one of the owners, and the non-retiring owner received a W-2 for his compensation after incorporating. If so, does the new entity have a different EIN and did the new entity adopt the Plan before the end of 2017? If it did, you combine the K-1 and W-2 amounts. If it did not, then I don't see any way to include the W-2 amount.

I was only suggesting that the PBGC might argue that the relief from personal guarantee was in effect a distribution/conveyance to the owners to the detriment of other creditors, including the Plan, although unless there is some case law out there to support that I think it would be a bit of a stretch.

Ok. I am out of ideas.

The Board can do whatever the heck it wishes to do. If you are asking whether the Board doing this can create a 409A problem for the employee, your facts aren't perfectly clear but my guess is that it will not.

Isn't the employee now a former employee and therefore entitled to his/her account balance from the Plan even absent a Plan termination? Would he be willing to spend money to secure a solid appraisal of the property and seek a prohibited transaction exemption from the Department of Labor, then borrow the money to enable him to personally purchase the property from the Plan?

PBGC can be very aggressive, assuming SOL has not expired. Did the owners personally guarantee any of the company's debt that was paid off with the sales proceeds?

The answer to both questions can be found in the terms of the plan and/or applicable state law.

Depending on the amount of self-employment compensation expected, and the appetite for tax deductions, a cash balance or other db plan might be an option.

Would a judge presiding in a divorce case have jurisdiction over a third party like a plan or the employer? That would surprise me. Isn't that why it was necessary to write Title I of ERISA to require plans to comply with a QDRO?

How could you not "touch this" if sloppy language in the plan document says that you must touch it?

If the employer takes the position that the plan is not subject to ERISA, and that position is correct, is the DRO even enforceable against the employer or the plan? If this analysis is correct, then isn't the(an) answer to ignore the DRO? (I would recommend advising the parties and the court of this and why it won't be honored.) Of course, it's possible that the plan document has all the usual QDRO rules, in which case my analysis sort of flies out the window.

If he is paying self-employment tax on the Board fees (and most likely he must), he can shelter those fees through a qualified plan, 401k or otherwise.

There are plenty of accountants running around who either aren't aware of the IRS position that a partner doesn't get a W-2, or are aware of it and ignore the IRS position. Or, the accountant has advised that they are handling payroll incorrectly but the client ignores the accountant's advice. It is quite common to find this situation and in the normal course the IRS isn't going to do anything about it.

I hope that the share of the plan you were to be awarded is enough to justify the expense of hiring an attorney and that your ex has assets to satisfy any claim you have against him.

You definitely need a lawyer. Before he "took another job" was your attorney with a firm that still exists? If so, contact that firm. If there is no such firm, or if there is such a firm but it also is unresponsive, hire another lawyer. You can worry about any recourse you might have against your old attorney and/or his or her prior firm later, but keep records of all your attempts to contact your prior attorney and/or the firm and how long you waited before contacting a new lawyer. With all that said, there are things that are not perfectly clear from your message which your lawyer (new or old) will certainly want to know: (1) Is there in fact a QDRO that was approved by a Court? (It's not clear what you mean by "QDRO paperwork.") (2) If there was a QDRO, are you saying that somehow your ex managed to get all of his money out of the plan before you filed the QDRO with the plan? (3) What does your divorce decree/separation agreement say about your ex's interest in this plan? (4) What documentation do you have showing what was in your ex's account at the plan at the time of the divorce? Good luck.

Larry, I think most of us agree with your analysis, but isn't the most practical solution (path of least resistance?) to just contribute as required, amend retroactively, and go through VCP? As previously noted I believe VCP relief is a slam dunk here.

Not going to dig and provide a cite, but don't you have a 410(b) problem if in 2019 this individual is eligible for the first six months and there is at least one NHCE who is not equally eligible?

Are you talking about a K-1 from the LLC? First point to note is that if he is the sole owner of the LLC there would be no K-1; you would look to his Schedule C. If there is a K-1 then he must have one or more partners. Second point, is the Schedule C or K-1 income earnings subject to self-employment tax? If not then it can't be eligible compensation. Third point, does the plan definition of "compensation" include self-employment income?

Been in your shoes a million times. The indemnification provision is nice, but the stuff will hit the fan only if the plaintiff doesn't pay her taxes, and by that point the indemnification may be worthless as a practical matter.

I've seen that dove-tail concept in pre-approved plans, but it makes me nervous, fairy dust notwithstanding. Much better to have ERISA counsel or some benefit plan advisor involved in negotiating the pertinent terms of the CBA, and then amend the plan document as appropriate.

Unfortunately that settlement agreement is not binding on the IRS.

I can't think of any reason why any portion would be a 1099-MISC item, but putting that aside anything that belongs on a W-2 would be a Box 1 item (plus boxes 3 and 5).

Are we talking about a 403(b) plan? If so, you aren't faced with the same limitations as you would have with a qualified plan, although I am not prepared to say "no problem whatsoever." You need to work through the pertinent provisions of 403(b) and the Treasury regulations.

Please stop.