QDRO distribution in top heavy determination

[Guest rewarmus]

"Under Reg. 1.416-1 Q&A T-30, distributions added to the PVAB means all distributions made by a plan. I understand this to mean one would have to include QDRO distributions in the top heavy determination. Also, I believe a determination of whether or not the ex-spouse (assuming this person is the alternate payee) is a "key or former key employee" must be considered. If the ex-spouse was married to a more than 5 percent owner, then I believe the ex-spouse is considered a "key employee" for top heavy purposes. I believe this has to reviewed in each of the preceding 4 plan years as well to make this determination. Is my understanding correct?"

[david rigby]

I don't think the Alternate Payee gets counted as a separate participant for anything, certainly not for purposes of the 5500 form. I think you would "attribute" the prior distribution to the employee/participant.

[Guest rewarmus]

addendum to above: Section 318(a)(1)(A)(i) relative to members of family state a spouse (other than a spouse who is legally seperated from the individual under a decree of divorce or separate maintenance) is considered as owning stock. Does this apply only in the current year or does it include the 4 preceding plan years (when they were married)? In other words, is the ex-spouse always considered a "non-key employee"?

[Guest Mr. X]

I agree with Pax. Do not consider that the distribution was made due to a QDRO and that should answer your question.

[Kris Columbo]

Can someone please clarify how funds are supposed to be considered in a Participants 401k if they are sitting stagnant pending the parties QDRO process... Especially if the funds and process took nearly 5 years to finalize... The court orders specifically state that even if the Alternate Payee dies, the monies owed to the Alternate Payee would still be paid out to the Alternate Payee's personal estate and NOT remain the property of the Participant... That being said, then would this amount still need to be considered and used in the Testing and, does it further effect a plan that is already top heavy?  Are there any exceptions in a situation like this seeing as the monies would NEVER be the property of the Participant?  

Thank you for any suggestions.

[Mike Preston]

On 11/18/2021 at 12:28 AM, Kris Columbo said:

Can someone please clarify how funds are supposed to be considered in a Participants 401k if they are sitting stagnant pending the parties QDRO process... Especially if the funds and process took nearly 5 years to finalize... The court orders specifically state that even if the Alternate Payee dies, the monies owed to the Alternate Payee would still be paid out to the Alternate Payee's personal estate and NOT remain the property of the Participant... That being said, then would this amount still need to be considered and used in the Testing and, does it further effect a plan that is already top heavy?  Are there any exceptions in a situation like this seeing as the monies would NEVER be the property of the Participant?  

Thank you for any suggestions.

No exceptions.