Nate S

No, the wife should not attempt to return the monies to the Plan, it sounds like the Plan may have followed its processes with full disclosure of timing, and the Plan may be able to reject the return. Assuming she did a 100% rollover the ex-spouse's feet-dragging attorney could likely attempt to serve a QDRO to the IRA custodian, instead of further aggravating the situation with a b**ls**t c.y.a. move like a contempt charge.

Found it myself, but get an ERISA attorney involved, and file for a determination letter if you do want to go this route. Premise: 1.411(a)-11; for participants whose benefits are NOT immediately distributable, upon Plan Termination, in the absence of participant consent (albeit because none is being sought-after), and provided that a commercial provider annuity option will not be offered; "...the participant's accrued benefit may be transferred without the participant's consent to the other plan if the participant does not consent to an immediate distribution from the terminating plan." This is an abrogated form of the involuntary cash-out provision allowing terminating dc plans to exceed the $5k threshold, or for db plans to transfer the benefit to the PBGC. It was an attorney led effort and recieved explicit determination from the IRS, so I would use only if you absolutely wanted to keep the 403b monies under the employer's oversight.

I didn't say it was, the OP did, last paragraph. However, I would still use that to determine if the additional allocation could be left in the HCE participant account, with a retroactive amendment to conform the Doc to the operations; or if the amount, plus earnings, should be forfeited. If nondiscrimination passes then the Participant may keep it since the Plan is to be administered to their benefit.

Confirm that the excess doesn't violate the bottom-up restrictions and leave anything that's ok in place. You can forfeit any excess that doesn't pass the targeted hierarchy.

Non-ERISA... and you're auditing what exactly that requires you to question non-discrimination?? Otherwise, yes a retroactive amendment to the Plan for the 'Principal' class of employee. Otherwise, out of the eight(?) ways you can run non-discrimination, one of them should pass just fine, unless the principal is only 22 years old.

What says they aren't already eligible for the 401k as a result of the entity merger? Was past service to be recognized by the remaining entity that would satisfy eligibility? Very easy to amend the 401k to bring the previously 403b-covered employees into the 401k instead. Then the termination of the 403b, or at least the 'freezing' of the deferrals stops new monies going there. You are correct that the 403 can't be merged into the 401k, but someone, more well-read than I, may be able to say if a 408 transfer could allow you to move the active employee 403 accounts into the resultant 401k plan.

Considering the extended time-frames for court processing of any matter, to the extent that a child-support QDRO would be applicable only to those payments that are specifically in arrears, once the DRO is deemed qualified, the Administrator should ascertain what the current balance of those specific payments is. Whatever entity is overseeing the support arrangement should be able to provide that confirmation. The participant and AP should be notified of the same, and provided a comment period under the Plan's claims process.

You can also apply to the DOL for a determination of ERISA status and then present that to the insurance company. I would also agree with @Carol V. Calhoun that a whole new plan is not necessary to redirect new monies to a different custodian; @Peter Gulia then notes some good options to get the insurance contracts cashed out. If the fees and presumably the investment returns are sub-standard, the employer has a fiduciary responsibility to get the monies moved. The insurance company can also try to defend its position against DOL complaints made by the affected participants for the same reasons.

I stand corrected, I was looking at them as two separate schemes, but should not have, thanks!

If you know the origination of the monies and you get to name the source, fine and dandy. However, across multiple TPA's, and just about every unbundled recordkeeper out there; after a provider change, or just a few years that knowledge is lost. OP isn't the originator, and merely asked what circumstances he needed to consider, not watch this devolve into a naming discussion.

OP was described as a max allocation scenario. And yes paying fees from forfeiture would also be a tax increase because you aren't getting the deduction otherwise regardless if its the allocation bucket or the fee bucket.

As described, it's an excess match; the plan designed SHM is providing the first 4%, the discretionary an additional 1% but only on deferrals in excess of 3% of comp.

Actually I was referring to amending for 2022, I don't know the new retroactive rules that well.

As I already noted, no it was not enough to reach .5% But yes! It was one of those report options, but it didn't pull it in unless the DC allocation was at least 11%. Wait, why can't I rely on the regulations when arguing with the IRS??? It seems like that and the law would be my two best sources!

Who says the prior recordkeeper was making the distinction? All the OP asked was why you could need to know. Since you're in that mode though, what if it was a negative election, whereby if the employee didn't direct the monies, the sponsor was going to transfer them? What do you call that? What actually happened was a sponsor directed transfer. But, it was done in a situation where the employee had the option of control. But as to the OP question above, it matters not.

Call it a plan-to-plan transfer, or a related rollover, it's still the transfer of monies from one plan of the same employer to another.

If it's related then a whole host of restrictions can still apply regarding in-service distributions, hardship availability, and joint & survivor protections. Most commonly restricted sources are safe harbor match, prior money purchase, and defined benefit/cash balance.

Yes, you would need to test ACP; you can test either the 1% excess itself or test the combined match. The safe habor match is excluded from testing up to 6%; if they are intent on doing the 5% match then it can be amended mid-year to increase the basic safe harbor formula to a 5% enhanced safe harbor match.

If you are operating within the terms of the Plan Document, no issue whatsoever; the only abusive issue would be if you were constantly using 11(g), or otherwise amending the Plan to allow for early entry or to reduce allocation conditions. Besides, all those unvested monies are going to reduce your deductible allocation and raise your taxable income.

Aren't IRS memo's wonderful??? See 401(a)(4) intent, employer reversion excise taxes, ROBS, etc. But back to 401(a)(26), does anyone know why Relius would pass 401(a)(26) with a 11% employer allocation to the DC plan? I took over a CB/DC combo, the non-HCE's were only getting $500 in the cash balance (not even close to 0.5%!); but once the DC allocation was 11%, Relius gave 401(a)(26) a pass. The EA(outsourced) hated it, couldn't determine where that came from, but was willing to deal with it since it was a takeover (prior provider also used Relius) & we were responsible for the testing.

You need more confirmation than the justification you wrote above?

Who says you're not passing already? 401(a)(26) is subjective, the .5% benchmark isn't formally a safe harbor...

I'm going to fall back upon, what does the Plan Document say? If a designation was filed, the PA must distribute the benefit as directed. If none, then the default priorities would be followed. If a court-order was presented, does it qualify as a QDRO? No. I've had child services successfully file for back child support; but even the IRS should be rebuffed unless they have a court order. And that means a federal circuit court, not their kangaroo tax court.(I give that as much courtesy as I do a DOL or PBGC "subpeona") If the PA absolutely requests a creditor response be provided, I ask them to setup the call with the creditors attorney, and then spend about 10 minutes laughing at them. Always more fun when its a DB plan and I'm the first to tell them that no one has any monies, all the assets belong to the Plan itself!

@Peter Gulia @ESOP Guy Oh, no worries on that front, we've made it very clear that their direction runs counter to any commonly accepted guidance available. I will be presenting a BRF demonstration of this scenario and was just curious if anyone had any thoughts about how to structure it? Would you use any equalizing factors such as compensation and/or service to show the comparative value of the payments received vs. withheld?

For a non-hce, absolutely. The requirement is that 401(a)(4) passes with and without considering any QNEC (11g exclusive) because a bottom-up QNEC will undoubtedly skew the results towards passing while not necessarily benefitting other non-hce's in the anticipated fashion. And a corrective contribution is likely going to a similarly profiled participant. But in the case of a HCE corrective, you have the opposite issue, and would need to consider it in the test.