JamesK

@jpod Section 3(42) of ERISA vests authority for defining "plan assets" with the Secretary of Labor. From that I think we can safely assume that the Secretary of Treasury and the IRS would be bound by the guidance on that definition.

@jpod, good point but I think the better argument is that the amounts withheld from borrower's paychecks become plan assets after only a few days. If they are plan assets, even though not deposited to the trust, then the plan has arguably been paid.

Good point regarding balance forward plans.

My coffee exited through my nose when I read your question. Tell the participant and AP that they are victims of their own representatives' incompetence and their only resort for a solution is through them. You can also let them know that the DRO they submitted is the customary way of dividing retirement assets. Have you ever seen a DRO for a defined contribution plan that did not allocate gains and losses through the date of distribution? If I did, I would have pointed it out because it is just not done (and for good reasons). These issues typically arise when there is a significant decline in the value of the investments. I hope that that is not the case for these individuals.

I find the facts to be a bit shocking. You never should have waited for 15 years to get this straightened out. One of the responsibilities of the court in a divorce matter is to give orders regarding the division of all marital property such as pension benefits. Like you, I don't understand why the court requires your ex's signature on the order unless it is simply a local rule or to ensure that there is agreement on the division of this particular asset. But the ex should not be able to delay the division for 15 years by being obstinate. Where was your lawyer while this was being worked out? Again, I am shocked but as with all matters, you are the one who needs to see that the matter is taken care of. Unfortunately, I think you have put your retirement at risk. I anticipate all sorts of procedural difficulties for having delayed so long in bringing this matter before the court for a final resolution.

Always helpful! LOL! Actually, TIN's do fall within the IRS's bailiwick. Good luck!

I took a look at IRS Memo 201413006 as well and that appears to be sound guidance for your problem. As you indicated, it does not cover the situation where there are no wages or other invoices to offset the overpayment. I see at least one sticky problem with any alternative. When you pay the federal withholding, FICA, and state income tax withholding on top of the $159.26, you create a circular calculation since any withholding paid on top will also be considered as wages. Usually, employers will go through one or two iterations at most, since each iteration results in a smaller addition. In any case, I don't think there is any authoritative answer to this problem. You could perhaps try to calculate the wages and withholdings so that it totals $156.26, but I find that hard to justify since the former participant clearly has already received value of $156.26 without regard to the tax withholding. The good news is that the amount is small enough that I doubt any taxing authority will challenge your decision. So your participant did a good job of screwing his or her employer and getting credit for additional withholding. The employer could pursue a collection action but the amount would not seem to justify it. I wish I could offer more useful advice than this, but unfortunately the facts make that difficult. See Part 4 of Publication 15-B for rules on withholding, depositing, and reporting for fringe benefits. It mentions that the employer has a right to recover but in context that seems to imply an ongoing employer-employee relationship. https://www.irs.gov/pub/irs-pdf/p15b.pdf

Is it possible to construe this as one plan with two different plan documents and two different investment lineups? I don't have the cite at hand, but somewhere in the regulations there is a fairly malleable definition of the breadth and scope of a "plan." Aside from the BRF issues, this may be a middle ground that meets everyone's needs and limits the exposure regarding mid-year changes to a QACA. That said, I am (like you) still wondering if there are some unspoken reasons for proposing the change. Or it could just be that those managers think they can come up with better investment options. Perhaps if you can address those concerns, then the rest of it will become a non-issue.

I would only add to Bill and Mike's comments that "Benefits provided through Company benefit plans" should not include Martin Marietta retirement benefits because it is not the "Company." In other words, this should only include benefits from your most recent employer. Also, to provide you with a little more context, pension plans do sometimes provide a disability benefit for participants who become disabled prior to reaching retirement age. Your benefit as AP under the MM plan should not fall into this category since it is not contingent on anyone's disability.

This seems like the less employee-friendly option but it sounds reasonable given the regulation cited above.

@LAHartline, I don't think I can help you with this question. It is really a question that should be clearly defined in the LTD policy, i.e., what offsets are permitted. So I think you will need to direct this question to the LTD plan administrator. Like any other employee benefit plan, you can request copies of the summary plan description and/or plan document. You will also have the opportunity to appeal any decision and obtain their reasons in writing. My gut reaction is the same as yours - that it would not be allowed. The reasons are that it is a benefit from another company, part of a marital settlement, intended to cover your retirement (and not provide ancillary benefits under your most recent employer's LTD policy), etc. I think you have good instincts but in the end everything relates back to the written terms of the plan(s).

I think you have to view this in two parts. First, the Plan might provide that benefit payments may not commence until you have made an election to commence payments. If that is the case, then there are no late payments and no added interest. After that is determined, only then would you need to be concerned about back payments and interest. Back payments are almost always made in lump sum although there is a possibility that the Plan could recalculate the annuity from a new annuity starting date. This assumes that your payments would have begun at some point in the past. But our most recent posts imply that you had an election when to commence payments. This in turn raises the question about the Plan's failure to provide you with any notice for commencement of payments. Off the top of my head, I am not sure how they would correct that other than to provide you with a lump sum for missed payments. If you elect to commence, for example, when you attain age 65, then there would seem to be no missed payments. I suspect that MM will work with you to provide your benefits and whatever options can be provided at this date. None of this answers the LTD offset question. You'll have to obtain guidance from MM's benefits department for that. I doubt the Plan offers the AP a disability pension so that may work in your favor regarding the offset question.

The QDRO does not have much to say about your right to commence or defer payments. The only relevant provision that I see provides that: "Payment of retirement benefits as provided herein may be made to the Alternate Payee before, or, or after earliest retirement age or separation from service of Participant." Par. IV.A. This seems to give you some control over the commencement of the benefits. The Plan document may have some additional language spelling out your rights with respect to this question. If the LTD is coming from MM, then there may (or may not) be provisions coordinating those benefits. If you are able to defer payments, then the monthly amount of your benefit presumably will increase. Without all the information, I don't think I can offer much more help than this. Try contacting the Benefits Department for clarification on your options regarding commencement of benefits.

Interesting question but I think you are going to need legal advice from the state attorney general's office or the attorney for the board itself. The better question would be whether other licensing boards in the same state provide retirement benefits. But I would first look under state law to see if the licensing board was given the authority to establish a retirement plan. Without that, I would be dubious of any conclusion to the contrary. Consider too that there might be a requirement under state law or GASB that the board's pension arrangement be audited. That might be headache right there that no one wants to deal with. While practices in other states might be illuminating, you would need to examine the particular facts and circumstances of your licensing board in light of applicable state law to come to a reasoned conclusion. Good question and good luck.

Please do pay attention to Pension Dork's comment as his or her points are important. You should indeed confirm the date on which your benefit should have started. That may or may not be related to your ex's starting date. Looking again at your QDRO, Paragraph II.B. states that the pension benefit is your sole and exclusive property. This means you have a "separate interest" in your ex's benefit (as opposed to a "shared interest"). Since your interest is separate from his, he would seem to have no reason to involve you in any matter involving collection of any overpayment. There are limits to when someone can involve another in a lawsuit and penalties for suing people who are uninvolved.

FWIW, most employers I've worked with prefer to have separate elections for regular and bonus payments if matching contributions are applied to both on a payroll by payroll basis, since deferrals on bonus payments can reduce the overall annual matching contribution for employees who defer the 402(g) maximum.

You can ask for anything. Since you are an alternate payee or beneficiary, my best guess is that they would be required to provide most or all of that information to you. It's impossible to say in the abstract though. I am not clear on the concern about whether the QDRO was "attached" to your former spouse's benefit. Obviously it should have been noted in their records. But again, since you should ultimately receive everything you are entitled to, is it relevant for your purposes? The Administrative Committee's decision will be communicated to you in writing and should state what evidence was considered in reaching their decision. If you are not satisfied with the Committee's decision, then you should be able to see everything that they were looking at when the decision was made. That way you will know if there is any missing or incorrect information or if the QDRO was not properly applied. What seems most relevant to me is any information that went into to determining your ex's benefit, the starting date for payment of those benefits, your share or separate interest in those benefits, and, if payments were not made in a timely fashion, how the make-up payments will be calculated. As discussed earlier, I don't see how your benefits will be affected by payments made to your ex (but I suppose you can cross that bridge when you get to it). I should also mention that the Pension Rights Center might be an option for legal representation. They recently initiated a project on how to simplify QDROs. Here is a link to their website: http://www.pensionrights.org/

I would need to see the definitions of those terms before I could provide a good answer. The earlier date might be the date he started work for MM and the later date might be the date he began to accrue service credits under the plan (i.e., his entry date). Usually one year of service is required but some employers have shorter periods. Just guesses though.

For what it's worth, I've never had a client who wished to change the limitation year on their 403(b) plan. But it makes sense that Treasury would at least provide for such a possibility. If a client did wish to change their limitation year, I would take the conservative approach and recommend that they attach such a statement to their return. It may seem redundant if there is also a plan amendment to support the change, but why not? If there is a requirement, then dot your i's and cross your t's. I am sure you could draft the statement using 50 words or less even while citing the regulation.

Since foreign companies may be part of the controlled group, this may affect your coverage testing under section 410(b). However, employees who are nonresident aliens and who receive no earned income from the employer that is from U.S. sources are treated as excludable employees. Treas. Reg. 1.410(b)-6(c). This means that - for the sake of completeness - you may need to count the number of foreign employees and then subtract them out as excludable employees. Some employers don't bother or use estimates since it does not change result. If you prefer precision, then you will want to jump through the hoops.

Wait and see what they come back with. I hope it is good news.

You might want copies of any parts of the Plan that deal with the QDRO approval, distributions, and, if you think it worthwhile, beneficiaries. You should also obtain a copy of the Summary Plan Description and the QDRO Policy Statement. Thanks for sharing your question. There are a lot of large companies cleaning up their pension data to make sure that they have all the information necessary to calculate benefits and commence payments to participants and beneficiaries. It sounds like that that's how Martin Marietta identified you.

To answer the simple questions, the plan will definitely be on the hook for payments that you should have received. Data maintenance can be an issue - even for big companies - but I am still shocked that this has not been caught and corrected sooner. The company should have recognized that your payments needed to commence when your ex-husband separated from employment or retired. The money will come from the plan's trust fund. Whether they overpaid your ex-husband or not is not something we can know from the facts you've given. If he was overpaid, it still won't affect your rights which are separate from his. FYI, it is up to the trustee whether or not seek repayment from your ex for any overpayments, so I wouldn't worry about it. As you noted, the major issues are "when should payments have commenced" and "how much." Based on paragraph IV.A., payments should have begun as of your ex's earliest retirement age or separation from service. I would wait for the benefits department to get back with their interpretation and see whether it reconciles with the attached QDRO. The company should be able to document "how much." That question is beyond the scope of what can usefully be covered in this forum. Any late payments should however be adjusted to provide you with interest from the date the payment should have been made. Even though there is language about appointing a beneficiary, my best guess is that it relates only to your share in the two Savings Plans. It would be very unusual for a defined benefit plan such as the Retirement Program Plan to allow for a joint annuity or a survivor annuity for an alternate payee. You can ask but be aware that, even if you can, it will reduce the monthly amount you will receive.

The question is whether the amount is constructively received in 2018. Since (I assume) there is no practical way for the employer to process the payment in the one minute remaining before the close of business on December 31, 2018, it seems highly unlikely that it would be constructively received on that date. Therefore, it would be taxable in 2019. If the exercise then goes through the ordinary administrative processes for payment of an exercised SAR and is paid before March 15, 2019, there should be no issue with Code section 409A since the short-term deferral exception should apply. Even if payment is deferred beyond that date, there are ways to self-correct the error. Either way, the SAR should be taxable in 2019. If this is the final year for exercising the SAR, you may want to look closely at the plan document to see if the SAR is deemed exercised at any point in 2018 so that the employer can pay it out in that year without receiving an actual election. Just a possibility but it depends on the plan design.

If your father was older than 70-1/2, then he should have been receiving "minimum required distributions" at least once a year. The payor of those amounts would have sent him a Form 1099-R each January to report the taxable amount and any tax withholding. The payor's contact information should be on that information return. Can you check his tax returns or with his accountant to obtain that payor information?