Message Boards Digest

December 7, 2017

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

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Mr Bagwell created a topic in Distributions and Loans, Other than QDROs

Handling Already-Withhold Income Tax on a Distribution, Then a Buy-Back

Employee took a cash distribution in early 2017. She's been rehired and wants to restore her account because there was enough non-vested money forfeited to warrant the restoration. I'm good with her sending back the entire amount and with our restoring her account. What about the 20% withholding on the cash out? A 1099-R will be sent on the cash out. How does the employee rectify or "get back" the withholding?
Number of replies posted  7 replies      Number of times viewed  46 views      Add Reply
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Pension RC created a topic in Defined Benefit Plans, Including Cash Balance

RMD in Year of Plan Termination

A participant in a traditional DB plan retired and elected a life annuity to begin at age 65. When he is 85, the plan sponsor terminates the plan and lump sums are offered to all participants, including current retirees. The participant elects to rollover his remaining benefit, and the rollover is processed on June 15, after he's already received 6 life annuity payments during the year. Does an RMD equal to 6 monthly payments need to be paid before the rollover is processed?
Number of replies posted  10 replies      Number of times viewed  98 views      Add Reply
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shERPA created a topic in 401(k) Plans

Two Safe Harbor Plans: Section 410(b) Aspects

Law firm wants two 401(k) plans, one for equity partners and non-attorney staff, the other for associate attorneys, to avoid top heavy minimums for the associates. They also want to offer a SH match in the partners' plan. (TH for associates is still an issue as they also expect to do PS contributions.) I've advised that the associates' plan will need SH match because the associates' plan needs to be aggregated with the partners' plan in order for its CODA to pass coverage (most associates are HCEs and cannot aggregate SH and non-SH CODAs). Can the partners' plan offer the SH match to all participants, HCEs and NHCEs alike, while the associates' plan offers SH match just to NHCE associates, if there be any?
Number of replies posted  5 replies      Number of times viewed  51 views      Add Reply
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austin3515 created a topic in 401(k) Plans

How to Report a 60-Day Rollover on Form 1040?

I cannot find a simple straightforward explanation of how someone reports a 60 day rollover on their 1040. I know it has something to do with 16a and 16b, but is there another form? Do they simply enter $15,000 on 16a (assuming that is the gross amount of the distribution) and $0 on 16b? Is it just that easy?
Number of replies posted  2 replies      Number of times viewed  45 views      Add Reply
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dmb created a topic in Retirement Plans in General

Benefits/Rights/Features Testing Needed After Vesting Schedule Amendment?

We have a 401(a) DC plan that changed the vesting schedule from 100% immediate to a graded schedule only for employees hired on or after 2/1/2014. The 100% immediate schedule continues to apply for those hired prior to 2/1/2014. Is BRF testing is necessary?
Number of replies posted  9 replies      Number of times viewed  62 views      Add Reply
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Retire created a topic in Cross-Tested Plans

Safe Harbor Match with Cross-Tested Profit Sharing; Gateway Needed Here?

401(k) uses Safe Harbor Match. Cross-Tested Profit Sharing Plan is not Top Heavy. 4 employees have met 1/21 eligibility, all with more than 1,000 Hours of Service (no terminated employees) -- two are HCEs (one is the owner); 2 are non-HCEs. Both HCEs and one of the non-HCEs made 401(k) contributions. (The non-owner HCE was excluded from the safe harbor match). HCEs are receiving maximum PS contribution. Is Gateway required for the NHCE who didn't defer?
Number of replies posted  5 replies      Number of times viewed  46 views      Add Reply
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Beltane created a topic in SEP, SARSEP and SIMPLE Plans

Timing of Terminating 401(k) Followed by Establishment of SIMPLE IRA Plan

Employer has maintained a traditional 401(k) plan for years. Due to downsizing, wants to terminate the plan by resolution before 12/31/17 and, then, some time in 2018, establish a SIMPLE IRA plan. My understanding is that contributions to a SIMPLE IRA cannot be made in the same calendar year as any 401(k) contributions and that a SIMPLE IRA is not considered a 'successor plan.' Would all balances have to be distributed by 12/31/2017 to accomplish this? If the 401(k) trust accounts are not zeroed out until early in 2018, does this mean they would have to wait until 2019 to establish a SIMPLE IRA plan? If all distributions are made by 12/31/17 -- the Final 5500 then would be for 2017 -- would the effective date of the SIMPLE need to be no less than 60 days after the SIMPLE IRA notice is disseminated? I am thinking that, as long as no contributions to the 401(k) plan are made in 2018, they may establish a SIMPLE IRA arrangement and commence contributions after a 60 day notice period. IRC 408(p)(2)(D) also mentions 'or benefits were accrued', but I believe this is in reference to DB plan accruals.
Number of replies posted  1 reply      Number of times viewed  35 views      Add Reply
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Dave Baker created a topic in How to Use the Message Boards (a.k.a. Forums)

Can I set up a second account on the message boards? Why would I want to?

You might want to set up a second account on the Message Boards so that you can start a topic or reply to an existing topic without revealing any information about yourself. Think of it as an "anonymous" account.

For example, the "profile" for your existing account might already show your real name, the name of your firm, your interests, and so forth. This is a Good Thing, because it helps people know how to contact you offline, which is a Good Thing because they might be potential customers or clients as a result of having seen the wise and helpful things you've said in your posted messages (each of which shows your user name next to the body of the message).

Perhaps you've also taken the time to enter a "signature block" into your profile, so that each message you've posted has a block beneath it that shows your name, your firm name, your web site, your telephone number, etc. (To edit your profile, select Profile from the drop-down menu that appears when you click the arrow next to your user name, toward the top right corner of any page on the message boards.)

But perhaps, from time to time, you'd like to be able to start a topic or post a reply message under an existing topic without revealing any identifying information. Maybe you ...

  • want to talk about something that's controversial (Most of our clients just aren't providing enough benefits for the rank-and-file employees; should we tell them?)
  • want to help without anyone misinterpreting it as advice upon which they can rely and come after you in the event you're wrong (In your situation, you probably don't need a Required Minimum Distribution this year because... )
  • want to say something without any chance of compromising your customers or clients (An IRS agent says she can force us to provide her with a list of our clients -- has anybody else had this happen?)
  • want to ask or comment on something and, for whatever personal reason, you'd be more comfortable with saying it anonymously
You'll need an email address that's different than the one you're using with your primary account. It might be a different username (or "alias," in tech-speak) at your existing firm, if that's easy for you to set up -- "" in addition to your existing "".

Or, you could set up a free email account with any of the many companies that will provide one for you, such as from Google. Here's a list of the places that offer a free email account:

Once you have such a "secondary" email address, sign out of your primary account if you see your user name displayed toward the top right part of any page on the message boards. (To sign out, use the drop-down arrow next to your user name and select Sign Out. The web page then refreshes itself.)

Click the black "Sign Up" button you'll see toward the top right part of any page on the message boards. Assign a user name that's different from your primary user name. Enter your secondary email address (not the email address used with your primary account).

You'll need to be able to pick up email at your secondary email address at least once, because an automatic email is sent by the message boards software that has a link on which you must click, in order for you to use the secondary account (i.e., confirming your sign-up).

Once you've confirmed your secondary account, you can sign in using the user name you've assigned to it (or by entering the secondary email address; the message board software allows a sign-in using either way). Now, whenever you post a message while signed in with your secondary user name or email address, the secondary user name will appear next to such a message (rather than your primary user name).

Messages you've posted under your primary user name won't change at all. It's as if a completely different person has registered to use the message boards, so there is no effect on your existing messages.

By refraining from entering any identifying information in the profile associated with your new account, you basically have created an anonymous account for yourself.

  • Nobody will see your email address (which already is the case for all accounts)
  • Nobody will see the IP address from which you're posting a message (which already is the case for all accounts), except the message boards administrators (meaning yours truly, and two other people who work at BenefitsLink, as is already the case for all accounts), who would need to see the IP address only for some kind of temporary diagnostic purpose (e.g. you ask for help signing in)
When you want to return to your primary account, just sign out of the secondary account and then sign in using your primary account's user name or email address.

Questions? Post a reply message in this topic, or email me at

Number of replies posted  2 replies      Number of times viewed  46 views      Add Reply
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Vlad401k created a topic in Distributions and Loans, Other than QDROs

Reporting of Excess Catch-Up Contribution

Let's say there is a catch-up eligible participant who defers $25,000 instead of the allowed $24,000 for 2017. He then takes a distribution for excess deferral during 2017. The distribution is for $1,050 ($50 being the earnings). How would that be reported on 1099-R? Would $1,050 be the taxable amount on 1099-R? In this case, wouldn't the participant end up paying taxes on the amount of excess twice? Once when it's distributed (on the 1099-R) and also when he files the taxes and the tax software doesn't let him deduct more than $24,000 limit? Or would the software allow a deduction of more than $24,000 in this case (since there is a corresponding distribution for the excess)?
Number of replies posted  1 reply      Number of times viewed  37 views      Add Reply
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Thornton created a topic in Qualified Domestic Relations Orders (QDROs)

QDRO Paying 100% to Alternate Payee

Has anyone seen a QDRO that assigns 100% of the participant's account balance (401(k)/PS plan) to the alternate payee? I am an attorney; my practice to practice is limited to drafting QDROs for divorce attorneys. I always request a copy of the Judgment of Divorce, or at least the section containing the retirement plan division. I've been retained to draft a QDRO that provides for a different division than the Judgment of Divorce provides for. I told the attorney that the Judgment needs to be amended to comply with the QDRO. He refuses, saying amendment is not necessary and that I should just draft the QDRO as told. I believe that the Judgment must be amended to agree with the QDRO, and told him so. Am I being unreasonable?
Number of replies posted  5 replies      Number of times viewed  60 views      Add Reply
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401_noob created a topic in Cross-Tested Plans

HCE Definition for Gateway and Rate Group Testing

If a plan document defines HCEs by Top-Paid Group in the ADP/ACP testing section, would it define HCEs the same way for gateway and rate group testing? So could it say that for ADP/ACP testing the plan will use TPG to identify HCEs, but for rate group and gateway testing it uses calendar year definition to identify HCEs?
Number of replies posted  3 replies      Number of times viewed  40 views      Add Reply
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Spencer created a topic in Form 5500

Attach the Entire Audit Report to Form 5500?

We attach the entire audit report when filing large 5500s. We have a client whose TPA attached only the accountant's opinion (i.e., the letter) to the filing. I'm wondering what others do. (P.S. -- we also attach the Schedule of Assets Held and Reportable Transaction, even if they were included in the audit report.)
Number of replies posted  2 replies      Number of times viewed  34 views      Add Reply
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katieinny created a topic in Plan Terminations

Given the Cost of Filing a Form 5310, How Many Still File It?

We have a client with a one-person plan that just got through a VCP filing (due to loans that didn't meet the dollar amount and repayment requirements). We're going to terminate the plan. I believe a Form 5310 should be filed in order to protect the rollover of what's left. The steep $2,300 filing fee is a deterrent, though.Plan document seems to be up to date. I suppose there could be other problems. What are others doing?
Number of replies posted  5 replies      Number of times viewed  42 views      Add Reply, Inc.
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