CuseFan

Correct. As far as I understand it, this is not permitted. In my nearly 40 years (boy I'm old, when did that happen?) I have never seen a QDRO that allows A/P to elect a J&S and all that I have seen specifically prohibit it. The reason is the plan ends up paying a benefit based on 3 lives - participant, A/P and an A/P beneficiary, and I have yet to see a plan that pays a joint & survivor & survivor's survivor benefit.

That is the right answer. People get paid out pensions based on estimated/initially reported compensation (and hours) all the time, only to have actual data subsequently reported that requires a correction and adjusted payment - whether an additional lump sum (which we treat as part of the original lump sum) or a revised annuity payment with a makeup adjustment.

It's interesting that you are the person asking about this Peter. Of all the people on this forum, you would be the one I expected to most likely have assembled those statistics. It would be interesting to get everyone's honest (no Googling) guesses to see perception versus actuality (but then someone has to do the legwork/research, which is probably more than a Google otherwise Peter wouldn't be asking). My guesses: dismissed 20%, plaintiffs 10%, defendants 10%, settled 60%

First, all terminating plans must be fully up to date with the law regardless of deferred amendment due dates, so at a minimum the plan would need a SECURE, CARES et al amendment if that hasn't been done. If it's a defined benefit plan, then there might also be an amendment needed to allocate excess assets or pay immediate lump sums. As Bird noted, we're kind of just guessing here as what might be needed, so as suggested go to the horse's mouth (legal counsel) to get your answer. I agree, we also in general rely simply on the board action to terminate and only do a formal amendment if needed for something other than to simply say "the plan is terminated" - we never amend solely for that.

Agree with Lou, you cannot statutorily exclude from coverage and nondiscrimination testing but whether they must be covered/benefit depends on the terms of the plan with respect to their employer, which you said did not adopt and is not automatically covered.

If both plans - PS & CB - have two-year eligibility, but NHCE gets a TH because of earlier 401(k) eligibility, could you not parse out the NHCE as otherwise excludable? And regarding cross-testing, if the NHCE is substantially older than the owners, do not overlook cross-testing combined plans on the basis of contributions.

Correct, it is not a distribution, it must be a direct transfer to the QRP. The owner does not need to make an election as the participant but should make a resolution for the transfer as the employer unless initial termination resolution already addressed.

2a Spouse would have until RBD so can't really force out sooner, and once you start RMDs (issuing checks), she can sit on them all she wants but they are still taxable distributions to her, so that may change her mind. Disclaiming can mitigate that if possible. Why not take now, roll over, leave tax deferred for children/grandchildren/whoever upon her passing? Or take, pay the taxes on and then gift the rest as desired. Spouse should discuss with financial advisor, and plan has time for her to make up her mind.

Depends on the terms of the plan, particularly the definition of eligible employee, and if X & Y are now one company XY or still separate companies X & Y now within a control group. Plans often exclude employees related to a transaction until the end of the transition period referenced by Bill and often exclude employees of an affiliated employer unless that employer adopts the plan for its employees. Agreed, and it still amazes me how retirement plans continue to be ignored during due diligence and then subject to scrambling damage control thereafter - at least in the smaller company market.

Yikes. Maybe withhold extra from cash wages between now and year-end, or some other logical time frame? If document said TFB excluded and w/o the additional car allowance detail there'd be no issue, but agree this probably has to be included. Are there other TFB that are included? Otherwise, why would they get that specific on the exclusion?

If only my wife felt that way - LOL!

Someone more knowledgeable than me might think differently, but I think a QDRO can limit/force options for AP, it just cannot provide something the plan does not allow. With respect to a deferred benefit compared to an immediate benefit, most QDROs I've seen allow AP to wait to commence until participants commences, but must commence no later than that. That is, if participant retires and starts at age 65, AP cannot defer until age 72 RBD. And AP never has the option of a J&S.

The PPT rules are facts and circumstances with the presumption of a PPT if more than 20% reduction. If sponsor deems they did not have a PPT then normal 5500 reporting won't trigger any presumptive PPT flag for such. However, the plan sponsor could deem this a PPT as it was their action that initiated termination for an entire business unit (CG/sub company). There may not be a legal requirement but it might be the right thing to do, especially since those employees are going from having a plan to no plan. Another option that I've seen, continue to count their service with the new owner for vesting on accounts in the seller's plan, provided they leave their accounts in until fully vested. So if 40% vested with 3 YoVS at time of sale, if person stays with buyer for 3 more years and leaves account with seller's plan, they then become fully vested and can take full distribution and roll over if desired. This should not be very difficult to track for 6 people.

I still think just correct the reporting error and move on. If IRS questions - then the answer is yes, we saw that and corrected to report the proper vested % and $, no harm no foul on the participant.

Active/employed participants? On what basis is their A/B zero - is this a floor/offset where their benefit is fully offset? If you have to count them (need more facts to verify) then I would say they are deemed paid when all others are paid.

Make sure you are checking the correct section(s) of the plan document or AA.

An immediate lump sum to the A/P of a QDRO in such instance is only allowable if (1) the QDRO calls for it and (2) the plan allows for it. DB plan documents can allow for QDRO payouts of any amount at any time (but lump sums would be subject to any 436 or top 25 HCE restrictions), regardless of whether the participant is eligible for a distribution. Our pre-approved plans have that as a checkbox option.

If initial term was 5 years then I think re-amortizing is needed. If it was say 4 years and starting now completes payoff within the max 5 years then that might be OK. Or the employer could make the lump sum catch-up, but I think would have to include such in employee's taxable compensation.

I would just fix them and move on - it's only a reporting error. Unless additional amounts were forfeited applying the vested percentage a second time, which does not seem to have happened, nothing has been taken away from the participant.

On this basis I would argue a 1/1 count of 98 and no audit. Even on an accrual basis you could argue that if the residual contribution true-up was an accrued contribution as of the prior 12/31 that the payment thereof was a distribution payable as of 12/31 - so still not participants at 1/1, IMHO.

I remember a prior discussion thread on this with differing opinions but most opining that they thought it was OK. Someone better at finding prior discussions than me might post that for you.

Plans are either pre-approved or individually designed. Pre-approved plans can (and many/most? do) provide for individual profit sharing allocation groups. There may still be document providers out there that do not include this option for whatever reason, but in the small plan market this is becoming the norm in my opinion.

Yup, audit by checklist, gotta love it (or not)!

sorry, close watch on

Yes. The plan document should specifically say whether this is or is not permitted. If it is, as Effen alluded, there may be restrictions on the survivor percentage due to the minimum incidental death benefit rules of 401(a)(9).