Message Boards Digest

November 22, 2017

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

Author's photo

Purplemandinga created a topic in 401(k) Plans

Looking for List of Notices Required for a Solo(k) Plan

Can someone point me in the direction of a web page or other resource that would detail the required notices for a one-participant retirement plan?
Number of replies posted  2 replies      Number of times viewed  44 views      Add Reply

Now is a great time to join Worldwide Employee Benefits Network (WEB)

Sponsored by WEB - Worldwide Employee Benefits Network
WEB members represent more than 25 professions and 30 areas of expertise within the pension and benefits industry -- administrators, consultants, attorneys, accountants, investment managers, communications experts and benefits managers. Join today.
Author's photo

kmhaab created a topic in Miscellaneous Kinds of Benefits

Modify Term of Stock Option Award?

Can a stock option award be amended to extend the term AFTER the original expiration date? Set aside any ISO/NQSO and accounting issues for now, I'm just trying to determine if it can be done. Award agreement states that option expires upon the earlier of 10 years from the date of grant, or the expiration date shown on the grant notice. Grant notice shows a date about 3 months earlier than 10 years from date of grant (related to date vesting begins). Example: Grant date is 12/31/2017. Expiration date (as shown in grant notice)is 10/1/2017. Can this award be amended to extend the expiration date to 12/31/2017?
Number of replies posted  3 replies      Number of times viewed  21 views      Add Reply
Author's photo

Bird created a topic in Investment Issues (Including Self-Directed)

Handling a Self-Directed Plan Conversion

When converting a self-directed plan we have several options:
  1. Cash conversion. Everything in the old platform is liquidated, and participants make new investment elections and their money is invested according to those elections. I think this is best from the participants' standpoint, since they get to pick what they want.
  2. Mapping. Everything is liquidated and mapped to "like" funds. This seems to be preferred, and I guess is "ok" from the participants' standpoint, since they are more-or-less getting what they elected, even if it may have been some time ago, and even if "like" may be stretching it. We're working on one now and it's interesting that the receiving platform doesn't want, and is more or less insisting, upon not having an enrollment meeting until after the conversion, basically to streamline everything. Participants will be notified and can change investments in the sending platform, before the conversion, so they'll have that opportunity, but I think it's kind of a crappy way to handle it; I mean, it puts all of the burden on the participants to get things lined up ahead of time when they haven't even had a re-enrollment meeting.
  3. Target date conversion. Everything goes into TD funds unless participants choose otherwise. My hangup here is that if you have the enrollment meeting before the conversion, and if someone elects something other than the TD default, then someone is supposed to identify that and change that election manually. Definitely not good for the "someone" who has to manually check all that. It seems like a mistake to have an enrollment meeting first because it creates that burden. OTOH, going back to #2, I think it kind of stinks for the participants because they're not given any choice in the matter, and then have to actively go in and change things if they want to.
I guess my question is, am I off-base on all of this? I guess the latter have become industry standards and I should just accept it.
Number of replies posted  6 replies      Number of times viewed  50 views      Add Reply
Author's photo

pmacduff created a topic in Distributions and Loans, Other than QDROs

Determining the RMD for a Non-Owner Under a Calendar Year Balance-Forward Plan

Non-owner participant has continued working past 70-1/2. Plan has delayed RMD rule for non-owners. Participant is retiring on 11/30/2017. First RMD for this participant is due by 4/01/2018. Termination and retirement distributions are normally done some time in May after the client has determined the allocation for the prior year. If the plan pays the participant an RMD now (in 2017) based on the 12/31/2016 balance and then the participant elects next May to roll over the entire remaining balance, must another RMD be made from the Plan account based on the 12/31/2017 balance before rolling to the IRA?
Number of replies posted  1 reply      Number of times viewed  36 views      Add Reply
Author's photo

buckaroo created a topic in Retirement Plans in General

Merger Scenario: OK to Continue to Treat 'Old Money' Under Prior, Stricter Schedule?

Plan B is merging into Plan A effective 1/1/2018. The vesting schedule for Plan A is better at every point. The plan sponsor wants to have the old (worse) schedule apply to the old money for all merging participants. Does the merger with different vesting schedules constitute an amendment of the vesting schedule? Must the new (better) vesting schedule apply to old and new money for a participant who works an hour of service after the merger date?
Number of replies posted  3 replies      Number of times viewed  55 views      Add Reply
Author's photo

t.haley created a topic in Correction of Plan Defects

How to Fix? Plan Later Determined to Be a Multiple Employer Plan, Not a Single Aggregated Plan

Client operated DC plan since 1983 as single employer plan with multiple adopting employers within the controlled group. Discovered in 2016 that adopting employers were not, in fact, in a controlled group, resulting in the plan really being a multiple employer plan. Client restated plan in 2016 (VS document) indicating that it was a multiple employer plan. Throughout the life of the plan, all adopting employers signed participation agreements. Is this a failure that we need to correct through VCP? Is this a document failure going back to the original effective date? What parts of the plan should be amended to reflect multiple employer status?
Number of replies posted  2 replies      Number of times viewed  36 views      Add Reply
Author's photo

coleboy created a topic in 401(k) Plans

Eligibility 101: Quarterly Entry Dates OK in This Situation?

Client wants a new plan to have an age 21 requirement for participation with no service requirement, but quarterly entry dates. Allowed?
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
Author's photo

jane murray created a topic in Distributions and Loans, Other than QDROs

Calculation of Maximum Loan Amount Following Repayment of Outstanding Balance

Participant has $150,000 in a 401(k) plan. The plan allows one outstanding loan at a time. Assume the participant took out a $50,000 loan in 2015. The current loan balance is $20,000. The highest outstanding loan balance in the past 12-month period was $30,000. The participant wants to repay the existing loan balance of $20,000 and take a new loan for the maximum possible amount. Is the maximum amount (after the repayment of the existing loan) $20,000, or is it $40,000? My calculations: $50,000 -- ($30,000 -- 0) = $20,000; but $50,000 -- ($30,000 -- $20,000) = $40,000.
Number of replies posted  17 replies      Number of times viewed  184 views      Add Reply
Author's photo

Purplemandinga created a topic in 403(b) Plans, Accounts or Annuities

QJSA Rules for 403(b) Plans?

Let's say I have an ERISA 403(b)(1) with an annual discretionary matching formula. The plan has never received a transfer of moneys that are specifically required to offer annuities as a normal form. The plan (by its terms) pays a deceased participant's entire vested benefit to the surviving spouse. Choosing an annuity is not a distribution option for participants. Would the plan be subject to the QJSA rules?
Number of replies posted  2 replies      Number of times viewed  24 views      Add Reply
Author's photo

401 Chaos created a topic in 409A Issues

Walk-Away Rights in Employment Agreements

Have a client who wants to provide an executive with an old-fashioned walk-away right upon a change in control. They might approach that as a very broad/watered-down "Good Reason" trigger but I think the current desire is to just give the executive a straight unilateral choice of quitting and getting existing severance benefit if he quits within two months of a change in control. Obviously that wouldn't fit within a "good reason" definition and so wouldn't seem to qualify for an involuntary separation exemption from 409A but I think they are willing to provide for a lump sum payment within 2-1/2 months of the CIC so arguably we could exempt it from 409A (or arrange for it to comply with 409A schedule if exercised). But I see these only rarely these days, so I'm questioning other aspects here. For example, is there any constructive receipt concern if the executive elects not to leave following a CIC -- e.g., that the IRS could argue that he should be deemed in receipt of the severance amount because he could have elected to receive it? (We would draft so that the right vests upon a CIC but would be forfeited if he didn't exercise and separate from service within 2 months.) I don't recall constructive receipt issues being a real concern when these provisions used to be more common but wanted to check. Also, along the same lines, I'm assuming this would operate the same way for 409A purposes as an executive having a valid good reason trigger or right and not exercising it -- i.e., 409A doesn't seem to have a problem if a service provided passes up a good reason right. On a related note, how does 280G generally deal with these sorts of provisions, particularly in a private company cleansing votes? Presumably the benefit would need to be factored into the potential parachute payments subject to shareholder approval since it could be exercised simply upon the CIC?
Number of replies posted  2 replies      Number of times viewed  16 views      Add Reply, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright 2017, Inc. All materials contained in this mailing are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than and are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy