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Here’s the situation, and I apologize for the length and if I am not getting all the terminology correct as I am not a professional. Mother and Father (from now referred to as M & F) are nearing end of divorce that started years ago. For reasons I’d rather not get into on this forum, I’m helping M. F, age 70, is 100 percent owner of company (4 plan participants including himself) with a defined benefit pension plan that is significantly overfunded. He has the vast majority of pension vested benefits. His vested benefits are 10 times that of employee #2 (longtime 30 year employee), employee #3 (family member), employee #4 (new employee). Despite M working for free for years for the company, she was never an official employee that had any interest in the pension plan. The pension overfunding is so large that it almost equals the amount of F’s current vested benefits. To soak up overfunding, F shifted a couple hundred thousand dollars into employee #3’s plan , which didn’t make much of a dent in overfunding, and since he is only 30 years old, maxed him out on his future expected benefits. F is trying to soak up the rest of the overfunding by having the plan buy term life insurance for employees, and pay the yearly premium. The plan has more than enough overfunding to pay the upfront premiums and pay the yearly premiums for the 30 year duration of the policies. As per law, the death benefit on the policy can be 100 times the monthly salary of the plan participant…so figure that as long as F doesn’t live till 100, his designated beneficiaries get a hefty life insurance payout. If he lives till 100, all the premiums went down the toilet, but hey he won anyways, he lived till 100! As part of divorce settlement, F has agreed to give M half of his vested benefits of pension plan in a QDRO. However there is significant value in the overfunding that F is extracting via life insurance purchases for his choice of beneficiary, and possibly other ways to monetize overfunding in future (such as selling the company or a part of it, and the overfunding)… at bare minimum, overfunding reverts to company at 10 cents on the dollar after excise/income tax. F refuses to make M or her choice of heirs a ½ beneficiary of this life insurance he is purchasing, and refuses to compensate M not even 1 dollar for the value of the overfunding. M is upset because it was through F’s own foolishness that he built up overfunding with their money and effort over the years and now he is getting value out of it and he is refusing to give her anything. Questions are as follows 1) Is there a way to transfer any portion of this Overfunding into M’s QDRO, whether through cash or pension assets? If so what are the legal ways to do it? 2) Can a judge order the pension plan trustee to transfer Overfunding cash or assets into a Wife’s QDRO? 3) Does anyone know of any instances in which Overfunding has been valued in a courtroom setting, and more specifically in marital law? For instance, at the very minimum that overfunding is worth 10 cents on the dollar if all the money reverts to the company and excise/income tax is paid…but F is purchasing life insurance with the overfunding to avoid the excise tax., and there is an expected value to that death benefit his choice of beneficiary is receiving. There also other creative options for monetizing overfunding. .Does anyone have any experience with convincing a judge or negotiating a settlement based on pegging a value to an employee’s interest in his pension plan’s overfunding? 4) Any other suggestions that would help M get value from pension overfunding that F is getting benefits from and may monetize in the future, but refuses to share with M? I have talked to a lawyer in pension funding, who has helped me get this far, but as you can see this is a very niche issue and any fresh perspectives or experience would be much appreciated. Thank you! -Rich

I have a small S-corp consisting of 2 employees, my wife and I plan is to retire in 5-6 months at age 62. Currently I have a defined benefit plan administered by a large firm. Due to significant market gains over the last few years, the plan will be over-funded by about 800K to 1M at the time of termination. Both employees are at 415 limits. From what I can find, a 401(h) plan seems to be my best option. I plan to roll over all excess assets into the 401(h) plan at the time of termination as per Code 420(F)(C)(i)(2). Unfortunately I am having trouble finding someone to set up this plan and take over administration of it. A local pension firm suggested I use this forum to perhaps find someone with experience in this area. If anyone has experience in this area please let me know. Thanks,