Message Boards Digest

February 8, 2018

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

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Flyboyjohn created a topic in 401(k) Plans

Amendment for Early Entry of Soon-To-Be HCE

Calendar year plan eligiblility is 1 YOS, dual entry. Employer hires new non-owner today who will earn $1M in 2018 compensation (i.e., is not an HCE for 2018 but will be an HCE for 2019). Can we safely amend the plan to allow early entry for deferrals and employer contributions for 2018 without any discrimination issues, because the new employee will be a NHCE for 2018? Would we need to again amend to exclude this employee during the first half of 2019 (period prior to the normal 7/1/2019 entry) to avoid discrimination issues?
Number of replies posted  10 replies      Number of times viewed  92 views      Add Reply

Fundamentals of Qualified Retirement Plans for 2018, Part 3

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MsJLG created a topic in Qualified Domestic Relations Orders (QDROs)

Alternate Payee Has Questions About His 20-Year-Old QDRO

1998 QDRO was issued and approved. 401(k) plan administrator (or trustee?) created a separate account for my funds. I've not touched it. 2018 balance about 4 times what it was. I need cash. Best as I've been able to determine (lousy customer service), the plan still recognizes me as an alternate payee and my exemption from 10% penalty still applies. The plan won't allow partial withdrawal, all or nothing only. Of course the plan would withhold 20%. [1] Does the exemption from the 10% penalty apply to all, including the earnings? [2] When I file my tax return, how do I show the IRS it's not subject to the penalty (just ordinary taxable income)? [3] If instead I do a rollover into a new IRA (losing the QDRO status) and take 72(t) substantially equal periodic payments for a minimum of 5 years, when I turn 59-1/2 in just 3 years, can I make additional penalty-free withdrawals over and above the 72(t) distributions? [4] Am I missing anything, is there a chance the QDRO/penalty exemption "expired," etc.?
Number of replies posted  1 reply      Number of times viewed  41 views      Add Reply
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Pammie57 created a topic in 401(k) Plans

Deadline to Pay Off Loan After Participant's Employment Terminates

Participant is terminating next week and has an unpaid loan from the plan. How long does she have to pay it off now before it is considered taxable to her? I though it was 60 days after date of term, but did the new tax law change that?
Number of replies posted  6 replies      Number of times viewed  59 views      Add Reply
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hsctpa created a topic in 401(k) Plans

Possible Spinoff or Successor Plan?

We have a Safe Harbor plan that has two participating employers due to controlled group rules. The employer that is the Plan Sponsor will soon have 100% of the company stock bought by a separate individual. The new owner will continue as a participating employer in the plan. I understand that now that they are no longer a controlled group, they will need to be tested separately, which should be no issue since it is a Safe Harbor Plan. My question -- what if the new employer decides he no longer wants to participate in the current Plan? Can he just "spin off" the current plan as long as he keeps all the provisions of the original plan intact? Or, if at some point in the future, he decides he doesn't want to maintain the Safe Harbor plan, can he terminate the participation of his company in the plan and start a new plan? I assume this would have to be done at the beginning of a plan year, since it was done after the sale of the stock? Anything I'm missing?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply, Inc.
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