Message Boards Digest

November 21, 2017

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

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leesuh12 created a topic in Mergers and Acquisitions

Handling Differing Vesting Schedules When Plans Merge

Company A (surviving plan) acquires Company B and the plans will be merged effective 1/1/2017. For the company match, Company A (surviving plan) has a 1-5 year graded vesting schedule and Company B has a 4 year graded schedule Can Company B increase the existing matching vesting schedule to 100% vesting for existing participants and then be on the same vesting schedule as Company A (surviving plan) for any new matching contributions effective 1/1/2017? Or does the merged plan need to keep the Company B employees who were eligible before 1/1/2017 on the more favorable 4 year graded vesting schedule?
Number of replies posted  3 replies      Number of times viewed  48 views      Add Reply

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ERISA-Bubs created a topic in 409A Issues

409A Situation: Will Similar Awards in Different Years Be Aggregated?

We have some deferred compensation awards, subject to 409A, that were granted in 2016. We've discovered they violate 409A. The errors are such that they cannot be corrected, so several participants are in violation of 409A and subject to the 20% penalty. We've corrected the plan errors going forward and would like to award some of these participants similar awards for 2018. If we do that, will the 2016 and 2018 awards be aggregated, such that if the 2016 awards violate 409A, so will the 2018 awards, and ALL that deferred comp is subject to the 20% penalty?
Number of replies posted  4 replies      Number of times viewed  30 views      Add Reply
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austin3515 created a topic in 401(k) Plans

Easier Way to Determine Due Dates of Various Kinds of Tax Returns?

The AICPA has a chart online at that shows the due dates for many different kinds of tax returns, but it's so complicated. Does anyone know of a website where you can enter the entity type and fiscal year end, resulting in a calculated due date?
Number of replies posted  0 replies      Number of times viewed  40 views      Add Reply
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ombskid created a topic in Form 5500

2014 Form 5500 Not Filed Until 2017, Now Looking at $15,000 Penalty

Client has 2 plans. Thought he e-filed both plans for 2014 in 2015. We recorded both as filed also. He definitely e-filed both plans for 2015 in 2016 and we recorded same. Filed 2 plans in October 2017. We noted one plan still wasn't filed. Told him to go back and file 002 which he did. He just got a IRS penalty notice for 001 for 2014 for $15,000. System now says 2014 5500 for 001 was not filed in 2015. First filing he made in 2017 was the 2014 form that was still in the system. Questions: Is it worth it to try for reasonable cause or system or human error ... that he filed the other and thought he filed both, etc.? If DFVC is the best way to go, should it be filed again with just the DFVC checked?
Number of replies posted  2 replies      Number of times viewed  39 views      Add Reply
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rblum50 created a topic in Distributions and Loans, Other than QDROs

Termination of Employment by Participant with Outstanding Plan Loan: Accrued Benefit Offset

We have a 401(k) plan participant who has $25,000 in his account, 100% vested. He decides to take a $5,000 loan. Assume no additional contributions and/or earning to this account. He fails to make the repayments and is issued a 1099-R for the deemed distribution in the amount of $5,000. The loan amount of $5,000 will stay in his account until he either repays it, in which case he will have basis, or the loan is offset by his accrued benefit, in this this case $20,000 once he is eligible to receive a plan distribution. He now terminates from the plan with a $20,000 cash balance and a $5,000 participant loan receivable. At this point, his loan balance is offset by his accrued benefit. How much does he get? $20,000? $15,000? Also how is the final 1099-R handled? How would this offset be reflected on the 5500?
Number of replies posted  3 replies      Number of times viewed  32 views      Add Reply
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QDROHelpNeeded created a topic in Qualified Domestic Relations Orders (QDROs)

Do I Inherit My Mother's Benefit if a QDRO Was Entered in Her Favor?

My parents divorced in 1996. As a part of the divorce decree, a consent order was issued, stating that my father "shall pay the legal fees for and cause to be drafted as part of the decree a QDRO directing the Federal Office of Personnel Management to pay to the Wife, from the Husband's retirement, one half of the marital portion of the Husband's net annuity and, further, in the event of the Husband's death, to pay to the Wife a survivor's annuity based on the marital portion of the Husband's annuity." It then goes on to give a formula for how the "marital portion" is to be calculated. In 2003 my mother died unexpectedly and I settled her estate. I never knew there was a divorce decree until last month. I've also learned that my father waived any right he had to her retirement benefits in the same divorce decree. How can I find out if a QDRO was ever completed? Also, under these circumstances, would I, as my mother's only child and heir, inherit the benefits from the QDRO? Finally, based on the wording in the divorce decree, was it my father's responsibility to get the QDRO completed and paid for? If he never did, can it still be required of him to be done after my mother's death (how would I go about doing this)? (Some possibly relevant facts: My father is a federal government employee. He has not retired yet but may be doing so within the next few months. The divorce and everything pertaining to it was done in Washington DC. My mother died in North Carolina and my father is a Maryland resident.)
Number of replies posted  5 replies      Number of times viewed  60 views      Add Reply
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bpenfold created a topic in 401(k) Plans

Paying Federal and State Taxes on Distributions: Which EIN to Use?

When filing the Form 5500 for a plan AND when paying taxes for the plan, are both instances paid under the company's EIN or the Plan's EIN?
Number of replies posted  5 replies      Number of times viewed  47 views      Add Reply
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KTB created a topic in 401(k) Plans

Stock Distributions from Plan Accompanied by 'Pre-2016' and 'Post-2016' Data

I have a client who is taking stock out of a previous employer's 401(k) plan. The data given to us from the distributing plan was broken down between Prior-to-2016 and After-2016 amounts and cost basis data. The sources of money are after-tax and company matching. Why would the 2016 before and after be significant?
Number of replies posted  1 reply      Number of times viewed  31 views      Add Reply, Inc.
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