Message Boards Digest

June 14, 2021

Here are the most recently added topics on the BenefitsLink Message Boards:

LookingFORhelp created a topic in Qualified Domestic Relations Orders (QDROs)

Is there such a thing as "almost" Qualifed DRO

"DRO submitted to Grumman April 2009. May 2009, DRO almost accepted by Grumman . The rejection letter states: Upon review, it has been determined that the order against the Pension Plan would meet the requirements of a Qualified Domestic Relations Order once the following modification has been made: Section 1 (c)- The correct name of the Plan is Northrop Grumman Pension Plan. Please make the modification accordingly. January 2010, a DRO with the corrected pension plan name was signed by the courts, filed, and sent certified to the PA. No further correspondence exists. The DRO was separate interest; awarding the benefits to the AP as my sole and separate property. The current PA, Fidelity took over administration of the Grumman Pension in 2017 and has no record of any paperwork of any kind relating to divorce, DRO, QDRO. The closest that they were able to find was a PDF attachment to the benefits called QDRO but when they click on it, they get file not found. They have informed me the benefits were never separated. Fidelity has been given all the documents that I had. I don't think that I have filed a formal claim. I have a Fidelity-Issued Reference Number dated 3mths ago the start of my 'inquiry" . Calls to Fidelity result in lots of conversations, everyone has been quite nice without ever giving me any information. They say there were delays due to not being able to reach the Participant to verify the information. Delays due to COVID and getting copies of the original documents filed with the county. delays with the issue being reviewed by employer/sponsor. Etc… Etc… Will they eventually have to tell me what is going to happen? Can this just drag out forever? Is there a formal process that I have to follow to get them to give me a determination? In 2007 as part of the bifurcated divorce action, the pension was listed in assets with a value of $1.2mil, so it wasn't a tiny account. I understand given that the plan was never separated, I have obstacles beyond the DRO qualification (IE: Fidelity says privacy laws won't let them tell me if the plan is now in 'pay' status which could create insurmountable problems for my 'separate interest') but no sense going into them if there is no QDRO. Bottom Line: Like many other people that have posted here, I am hoping that my case is unique and that my DRO is a QDRO even without the Qualification letter. Yeah, stupid, I know. All my plans for how to survive were based on those monies. Getting a lawyer and going to court are problematic. I am still a US citizen, I live abroad, severely disabled. There is no possibility of my getting back to the States. Just trying to get a read on a scale of 1 to 10, how screwed am I. Thank you for your consideration. This forum provides more clear and unambiguous information on QDROs than the whole rest of the internet combined."
3 replies so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

Qualified Birth and Adoption

"Plan includes the QBAD provisions. Apparently these distributions are subject to self-certification. Is there a provison that says soething like "unless the plan administrator has actual knowleddge to the contrary"? Just curious what the standard for verification is on these QBAD's?"
4 replies so far   |    Click Here to Add a Reply

K Erica Miller created a topic in Distributions and Loans, Other than QDROs

Qualifying Documentation for Residential Loan

"Hi, I have a participant that is requesting a residential loan but they will be building a home not purchasing a home. Can this be done with a 401k loan? and if they can, what documentation should we be requesting? A contract with the contractor that is building the home? I'm confident that the purchase of just the land parcel does not qualify for a loan and that is what they provided so far. Thanks for any insight on these rules"
3 replies so far   |    Click Here to Add a Reply

SSRRS created a topic in 401(k) Plans

TERMINATED employee recieved letter from SoCIAL Security re his 401k asset value

"Hi, A participant in a 401k Plan terminated years ago. He received currently a letter from the Social Security administration that informs him that he was a participant in the plan and that if he was never paid out, he is then entitled to his account value. The letter towards the bottom shows a grid that shows that the last reported year was 2007 and his account value was $49,251. Question: How would they know his account value? Usually the W2 shows only the deferral made for the year. Thank you!"
3 replies so far   |    Click Here to Add a Reply

52626 created a topic in Cross-Tested Plans

electing not to receive an allocation

"Employer has a cross tested plan. Employees in their own rate group. In addition, outside of the plan, they award gifts to employees once they reach a 5 year milestone. The employer wants to offer the gift or the profit sharing allocation. The employee chooses which one they want. The plan would need to remove last day requirement since the employer will fund the profit sharing once them employee meets the 5 year mark. Is this even acceptable? Allowing the employee to decide if they want the contribution or the gift? Even if a number of rank in file select the gift over the contribution, the employer makes a 3% safe harbor and this is sufficient to cover the gateway. Just doesn't seem right. Looking for reasons to tell the client to back away from this design."
2 replies so far   |    Click Here to Add a Reply

CSBill created a topic in 401(k) Plans

Record Keeper Change FROM TIAA

"I am looking for guidance on navigating transferring a 401k plan from TIAA. The plan was set to be transferred to another record keeper, however the new record keeper backed out of the process when they learned that the 15 outstanding loans in the plan are collateralized loans with TIAA. They are now saying they will not take the plan until all 15 loans have been retired, which will take 5 years and require shutting of new loans for existing participants. Unfortunately other record keepers have now taken the same stance. Is there a creative solution to this? Has anybody successfully navigated this hurdle in the past? Thanks!"
1 reply so far   |    Click Here to Add a Reply

Remote Kathleen created a topic in Distributions and Loans, Other than QDROs

Documentation for Rollover

"So this is the 2nd time this has happened in 2 days. I have a large financial institution demanding that I send them the Determination Letter for a plan that has less than 10 participants in order to roll over money to an IRA on behalf of an old employee. These plans are small and do not have their own Determination Letters with their name on it (I do not want to start sending around my company's Opinion Letter). The financial institutions refuse to accept any other documentation. Is anyone else having this problem? Possible solutions? Thanks!"
6 replies so far   |    Click Here to Add a Reply

PamR created a topic in 401(k) Plans

Deduction on 1040 for a partner in a 401k plan

"I know the deduction limit for the employer part of a 401k plan is limited to 25% but does that 25% limit flow to the partners 1040? I have a partner that maxed out at $57,000 plan does not go over the deductibility limit. However, his accountant is doing his 1040 and he says he is limited to 20% of his SE income. He made less than usual in 2020 so this is the first time I have seen this. I always check for 25% at the plan level, but am I supposed to be checking this limit for each partner in a partnership as well? Does anyone have any insight on this? TIA"
1 reply so far   |    Click Here to Add a Reply

jane murray created a topic in Defined Benefit Plans, Including Cash Balance

exclusion language

"Our volume submitter plan document allows for the exclusion of HCEs using the following language... Notwithstanding the foregoing, the term "Covered Employee" shall not include the following: any Employee who is a Highly Compensated Employee for the Plan Year Can the language be tweaked as follows to allow Jane Doe who is an owner HCE to participate? I would like to exclude all the other HCEs. Notwithstanding the foregoing, the term "Covered Employee" shall not include the following: any Employee who is a Highly Compensated Employee for the Plan Year with the exception of Jane Doe"
1 reply so far   |    Click Here to Add a Reply

rocknrolls2 created a topic in Multiemployer Plans

Employer Merged Its Underfunded Single Employer Plan into a Multiemployer Plan and Later Withdrew -- In Calculating Its Withdrawal Liability, Should the Employer's Payment of the Underfunded Portion Be Treated As an Employer Contribution?

"In case my previous post was too confusing, please allow me to replace it with the following: I represent a multiemployer defined benefit plan. Employer X previously maintained a single employer defined benefit plan for its collectively bargained employees. X negotiated the merger of its plan into the multiemployer plan in 2005. Under the merger agreement between the union covering X's employees and X, X agreed to make contributions for the underfunded portion of its single employer plan to the multiemployer plan over a 10-year period with interest. Instead, X paid the entire underfunded portion plus interest to the multiemployer plan in a lump sum in 2006. X withdrew from the plan in 2019. In assessing X for withdrawal liability, the actuary treated the lump sum contribution to the plan as an employer contribution in determining the amount of X's withdrawal liability. X has filed a request for review of the fund's assessment challenging the treatment of the lump sum contribution as an employer contribution. Did the actuary correctly characterize the payment as an employer contribution?"
No replies yet   |    Click Here to Add a Reply

401 Chaos created a topic in Multiemployer Plans

4204 Guidance for Asset Sales Avoiding Withdrawal Liability

"I'm looking for helpful secondary analysis / discussion of the usual 4204 exceptions for asset sales and how to think about various possibilities in a deal setting but not finding much. Anybody have recommendations? Am I just missing it or does the ERISA Outline Book not address this topic at all? Thanks"
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Jakyasar created a topic in Defined Benefit Plans, Including Cash Balance

ARPA-21 15 year amortization - new plan for 2020

"Hi I need to confirm the following as per my understanding. Looking into a 2020 db plan design with providing prior year service. Plan has a minimum required contribution (MRC) based on amortization of funding target. Not worried about MRC as they want to maximize contribution. Per law, 15 year amortization is effective for plan years beginning after 12/31/21 with an option of election for 3 prior years. I am thinking to elect to have 15 year amortization starting with 2020 plan year and also have the sponsor to adopt the election (election is required to adopt 15 years, as per my understanding). Am I missing anything here? Thank you,"
1 reply so far   |    Click Here to Add a Reply

Gilmore created a topic in 401(k) Plans

Safe Harbor and Dual Eligibility

"I was listening to a discussion the other day regarding dual eligibility in safe harbor plans. One individual mentioned that they had clients who allowed immediate entry for deferrals but had a 3 month wait for the safe harbor match. I know you can use disaggregation to require a participant to earn the statutory entry requirements before they are eligible for safe harbor, the caveat being that ADP testing is required for that group, which could include HCEs, and the plan would not be deemed to be non-top heavy, but I'd never heard that you could have dual eligibility as was described. Has anyone had any experience with that type of design? I had always thought that once you were eligible for deferrals you were eligible for safe harbor (at least the NHCEs), notwithstanding the disaggregation option. Thanks."
2 replies so far   |    Click Here to Add a Reply

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