RatherBeGolfing

Only if that duty has been created by the statute or possibly the QDRO procedures. If the plan requires receipt of a DRO (as provided in the statute), the mere existence of settlement agreement does not create a fiduciary duty for the Plan Admin. In that case, the alternate payee would have a claim against the participant for violating the settlement agreement. It does not create a claim against a plan that follows its written procedures, which would certainly be reasonable if they follow the statute.

The statute calls for a plan to "establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders". Some practitioners interpret the reasonable procedure part of the statute to mean that the procedures can be more liberal than the statute as long as they are reasonable. In other words a procedure that requires more than the receipt of a DRO is not reasonable, but it could be reasonable to allow a something more liberal like "notification of pending DRO". While I agree that the procedure should follow the statute, I have read very few (if any) that are that narrowly tailored. Chances are good that the procedures in question allow for something more liberal than actual receipt of the DRO, and in that case the procedure should be followed. Ignoring the procedures (even if they are questionable) could also open the door to a fiduciary breach claim.

Yep, I agree with K2 and Lou.

The answer should be in the plans QDRO procedures

I think we agree that the distribution is what the participant gets, and the fee is a fee not included as income on the 1099 , right? I'm fairly certain that most RKs will actually distribute the amount requested on an in-service and take the fee from the remaining assets.

Id say it is the opposite. The 1099-R reflects the distribution, which is $10,000. The fee is just that, a fee, not a distribution, so why would you need to gross up what you are asking for? The fact that the fee is charged because of the distribution doesn't make it part of the distribution.

If participant gets $10,000 cash and $50 is taken from the account as fees, the 1099 is $10,000. It just isn't reasonable to treat a fee from plan assets ,even if it is an individually assessed fee, as distributed and therefore income to the participant. I can imagine some service providers trying to play this game if they want to hide what they collect in fees. Very convenient to have it listed as a distribution rather than a fee...

Or "Well, we have a couple of employees we have never told you about because their employment agreement excludes them from all benefits so they were never eligible for the plan anyways...."

That would make sense to me. FWIW, my document defines "union employee" as an employee covered by a CBA and makes no reference to union membership.

In my experience, most broker type firms don't offer this service. Outside of platforms or bundled providers, it usually falls on the sponsor or TPA. I had one client a few years ago who said his broker took care of it, only to find out that they sent the IRS a check marked taxes with his SSN in the memo line and said they took care of the withholding

@Pammie57,The plan administrator is the responsible withholding party. The IRS can recover the withholding , with interest, from the withholding party. The IRS will most likely not take any action if the tax liability is actually paid by the recipient of the distribution. If the participant does not pay the taxes owed, the IRS can recover from withholding party. The 1099-R should reflect what actually happened. If no withholding was done, you report no withholding.

Off the top. I assume you report those as fees/expenses paid by the plan right? If so, why would the participant get a 1099 for that amount?

good point. I have always looked at it as prospective. FWIW, both the EOB and study materials for ASPPA credentials use the language "for the next 12 months" rather than "for up to the next 12 months" that is used in the reg.

I wouldn't have a problem with the current semester or quarter, even if it is somehow billed after it starts.

First impression, I'm optimistic that the limitations on service businesses for pass through will mean a limited impact on plans.

Is this an actual situation the client is facing? It has been a while since I went to school but in my experience you ALWAYS have an opportunity to pay tuition before the semester starts, and most schools will require payment before the add/drop period is over.

If the plan doesn't use the safe harbor definition of hardship, both could qualify. But neither meet the SH definition that is at question in the OP.

There is a difference between taxable income and wages reported in Box 1. The taxable income is $76,000, but the W-2 will show $75,000 meaning $1,000 has to be picked up as additional income. Even if you show $100,000 as deferrals in Box 12, the IRS will still only count $24,000 because that is the limit. The excess is reported so that the IRS knows to look for the corresponding distribution and taxes. You pick up the excess as additional income, not wages. Same as above, it is still counted as income but not wages for 2017 if distributed in 2018 (by April 15). That is why you use code P to show that it was taxed in a prior year.

Nope, there is no requirement to have that language in your plan. For an IDP with 100% vesting for all contributions, I wouldn't bother with the amendment. If the plan is amended in the future to include contributions that are not 100% vested, just add the forfeiture language at that point.

Depending on the arrangement and the catch, the income can be quite significant just working weekends. Each trip wont be a success but here in the gulf you are talking thousands for successful 2-3 day trip. He can easily exceed IRA limits working weekends and summer break.

Yes, because even excess must be counted for Box 12, and if it is in Box 12 it is NOT in Box 1. It is a deferral contribution even if it is excess, you just don't get the tax benefit of deferring compensation on the excess. Since it is a deferral contribution, it goes in Box 12 and is not in Box 1 as wages. This signals to the IRS that you exceeded the limit and must pick up the excess as additional income (even if you don't have a 2017 1099 for the distributed excess). So while it isn't in Box 1, the software should know (because the IRS sure knows!) that the excess is other income. You still pick up the excess as other income. The W-2 should look the same because you are required to list the excess as a deferral. As long as distributed by April 15, 2018 you would issue two 1099-R. One for the excess with code P (since it was taxed in the prior year), and one for the earnings with code 8 because earnings on excess are taxed in the year of distribution. To the IRS, the excess amount on the 2017 W-2 and the 2018 1099-R will resolve the issue.

I believe it is now a national initiative, with some regions being less "nice" than others. I recommend filing when you an "invitation" like this, especially if you used the online calculator.

I have seen both

What ETA said.

1) Yes, I have seen it a few times. Not an issue as long as that was what was agreed upon. I once saw one where (ex)husbands QDRO assigned 100% to the (ex) wife and vice versa. I found out years later from the client that they never separated after they got divorced, and she believed they were in financial trouble and QDROs were the only way they could access their respective retirement plans. 2) Is your involvement limited to drafting the DRO for the other attorney who will then submit it to the court? If that is the case, you are simply providing the product as requested. Request payment in advance and make sure that your concerns are duly noted.