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Message Boards Digest

November 8, 2017

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

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kmhaab created a topic in Retirement Plans in General

Risks to Individual Plan in Controlled Group

Company A and Company B are owned by the same individual and each have their own 401(k) plan (lets' call them Plan A and Plan B). Nondiscrimination testing has been done on a controlled group basis. It has come to light that the testing was not done correctly with respect to Plan A for the past several years (union and nonunion employees were not tested separately as required). Plan B has no union participants. The testing is in the process of being redone. What are the risks to Plan B here? If they fail to pass the tests now, when Plan A's union/nonunion employees are disaggregated correctly, is this a failure to pass for Plan B? I presume it would be, but what if the actions taken to get the plans to pass apply only to Plan A (i.e., Plan A makes QNECs)? Since we're talking about prior plan years, does Plan B have to file with VCP since they failed the nondiscrimination testing and didn't correct within the designated time period? Even if the correction actions are to be taken by Plan A only?
Number of replies posted  1 reply      Number of times viewed  38 views      Add Reply
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Carol V. Calhoun created a topic in Nonqualified Deferred Compensation

'Top Hat' Plan for Physicians' Corporation in Affiliated Service Group

A corporation wants to have a plan for its employees, all of whom are physicians. We ruled out the use of a qualified plan, because a lot of non-physicians working alongside the physicians but in a separate entity would be considered leased employees and/or part of an affiliated service group -- so any plan for just the physicians would fail nondiscrimination testing. We're stuck as to whether the corporation can have a nonqualified plan. In order to be a top hat plan, a plan must be for a select group of management or highly compensated employees, and it seems unlikely that a group consisting of all of the physician employees could be "select." Although the leased employees and common-law employees of another entity that's part of an affiliated service group with the corporation would be treated as employed by a single employer for Internal Revenue Code purposes, we're not seeing a similar provision under ERISA for top hat purposes. Thoughts?
Number of replies posted  9 replies      Number of times viewed  112 views      Add Reply
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AlbanyConsultant created a topic in 403(b) Plans, Accounts or Annuities

Need to Restate 403(b) Plan Before It Terminates?

I was explaining the restatement process to a plan sponsor with an ERISA 403(b) plan, and the director said that he intends to terminate the plan at the end of 2017 anyway (there are only 5 participants, all employed, so assume payouts won't be a problem), so he won't need to restate onto the pre-approved document. In 401k-land, plan documents have to be up-to-date as of the date of the plan termination. How would that translate here?
Number of replies posted  2 replies      Number of times viewed  35 views      Add Reply
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pjb1835 created a topic in 401(k) Plans

Termination of Prevailing Wage-Only Plan

Client wishes to terminate its prevailing wage-only plan and allow immediate distributions to everyone (roll over, cash, etc.) but amend the 401(k) plan to permit prevailing wage contributions going forward. Problems?
Number of replies posted  1 reply      Number of times viewed  43 views      Add Reply
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Connie created a topic in Defined Benefit Plans, Including Cash Balance

Defined Benefit Accrual for Sole Proprietor

In a plan with 500 hours required for the annual accrual, is it reasonable to credit an accrual when there is no net earned income? Likewise, is it reasonable to not credit an accrual on the basis of no income, therefore not 500 hours? Would you look at gross income before deciding on an answer? Do you know of any IRS guidance on this question?
Number of replies posted  3 replies      Number of times viewed  44 views      Add Reply


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