Message Boards Digest

December 14, 2017

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

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KEC79 created a topic in 401(k) Plans

Make-Whole Payment to HCE for Tax on Excess Contributions?

Plan fails ADP testing for 2016 plan year. Company distributes HCEs' excess contributions in February 2017. Excess contributions are subject to tax in year of distribution (2017). Company provides a make-whole payment to HCEs to account for the tax owed on the distributed excess contribution. (Idea being that if the plan had passed ADP testing, the excess contributions would have stayed in the plan and would not have been subject to tax.) Payment to the HCEs is made outside of the plan -- structured as a bonus essentially. Anyone see a problem with this?
Number of replies posted  6 replies      Number of times viewed  59 views      Add Reply

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cbassociate2017 created a topic in Nonqualified Deferred Compensation

Nonqualified Deferred Comp Plan: Sponsor Can Make Vesting Elections on Behalf of Participants?

The plan offers two vesting elections that comply with the 409A fixed payment and timing requirement. So there is not a 409A compliance problem. But the company sometimes makes the election on a participant's behalf. Rather than giving two options, the company just goes with one. Is this allowed or must it be corrected? Should there be a retroactive amendment?
Number of replies posted  2 replies      Number of times viewed  43 views      Add Reply
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TPA Bob created a topic in Cross-Tested Plans

Restructuring under Grouping Method; Allocate to Group A but Not Group B?

Have a plan that uses the Grouping method, with two classes A and B. Each class passes coverage individually. The allocation method in each class is based on compensation (pro-rata). Plan is not top heavy. They are wanting to do a 5% allocation to Group B but not do any allocation to Group A. As each passes coverage individually and a safe harbor base allocation (pro-rata) is used for Group B, I don't see a problem. Agree?
Number of replies posted  3 replies      Number of times viewed  38 views      Add Reply
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TPApril created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Bankrupt Plan Sponsor; Form 5500 Needed for Fully Insured H&W Plan?

Company has gone bankrupt. They sponsor a fully insured Wrap Plan. Fees for most recent Form 5500 will not be paid. Is there any reason to file future 5500's, and who assumes responsibility?
Number of replies posted  1 reply      Number of times viewed  27 views      Add Reply
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John Feldt ERPA CPC QPA created a topic in Mergers and Acquisitions

Merger of Plans: One is Top-Heavy But Other Is Not

Two calendar year plans with unrelated employers, Company A and Company B with corresponding 401(k) plans, Plan A and Plan B. Plan A will be top-heavy for 2018. Plan B will not be top-heavy in 2018. Assume Company A sells its stock to Company B on January 1, 2018. All participants in Plan A are merged into Plan B on January 1, 2018. Thus, Plan A no longer exists after January 1, 2018. Will Plan B need to re-determine its top-heavy status for 2018 by including the 12/31/2017 data from Plan A? Do the Plan A participants get any top-heavy minimums for 2018? Or how is this handled?
Number of replies posted  1 reply      Number of times viewed  21 views      Add Reply
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K2retire created a topic in Retirement Plans in General

Help for Participant Whose Ex-Spouse 'Forgot' to Mention a Retirement Plan

I've been talking to an individual whose ex-spouse "forgot" to mention one or more retirement plans as assets in a divorce settlement. The ex is a physician who is the plan sponsor. She's talked with ERISA attorneys. Apparently there was a money purchase plan that terminated in 2010 and its assets were merged into a profit sharing plan that was in existence (we think) at the time of the divorce. ERISA attorneys suggest that she involve the IRS or DOL. I'm aware of EBSA's call centers that assist plan participants, though I don't know of anything similar on the IRS side. I'm at a loss to understand what either agency can do about the fact that the assets of the plan were not disclosed in a divorce settlement.
Number of replies posted  3 replies      Number of times viewed  30 views      Add Reply
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Earl created a topic in Retirement Plans in General

Parsonage Allowance Can Be Included as Comp under Contribution Formula?

Client is a private high school with religious affiliation. They want to include the Rabbi/Head of School's parsonage allowance in the determination of the company contribution (5% of pay). For common law employee that's not taxable income, so I see no authority to include this in wages. Agree?
Number of replies posted  2 replies      Number of times viewed  27 views      Add Reply, Inc.
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