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Message Boards Digest

March 28, 2018

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

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coleboy created a topic in 401(k) Plans

Failed ADP Test

Client has failed the ADP test. Client and participants were notified on 3/15/17. Refunds were requested on 3/16/17. Will they be subject to the 20% penalty, given that all happened on 3/15?
Number of replies posted  10 replies      Number of times viewed  102 views      Add Reply
 
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AlbanyConsultant created a topic in Retirement Plans in General

ERISA Definition of Beneficiary as Regards a Spousal Waiver

A participant died last week. The plan administrator called to review her beneficiary form with me. It lists her two sons as the co-beneficiaries. "Oh," he said, "was her husband supposed to sign off on this somewhere?" Uh-oh. I explained how, without that signature (notarized), her balance goes to her husband (who is husband #2, not the father of the children; it's not clear whether he was married to her when she was hired or not, or when we suggested they update the beneficiaries with each restatement... not that it matters at this point). Now we have quite a few unhappy people. The plan document explains how a beneficiary is determined, of course, but one of the lawyers wants proof "under law," whatever that means. I thought this would be defined in ERISA somewhere, but I don't see it. The best I can find is 29 USC 1002(8): "The term 'beneficiary' means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder."
Number of replies posted  15 replies      Number of times viewed  118 views      Add Reply
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Fiduciary Guidance Counsel created a topic in Investment Issues (Including Self-Directed)

Which Retirement Plans Are Affected by Undoing the Fiduciary Rule?

Assume that, whether on May 7 or by some later date, a court issues a mandate to vacate the 2016 fiduciary rule. Which plan sponsor fiduciaries would be affected by that result? If one follows the rulemaking's 2015-2016 reasoning, it is small plans that need to be protected from communications by those who, but for applying the to-be-vacated 2016 rule, might not be held to fiduciary standards of loyalty and care. But how small is small? In recent years, I've seen plans smaller than the Labor Department's $50 million dividing line use registered investment advisers who sign contracts expressly accepting status and responsibility as an ERISA fiduciary. In your experience, where is the line between those unlikely to use a fiduciary adviser and those likely to use a fiduciary adviser?
Number of replies posted  0 replies      Number of times viewed  35 views      Add Reply
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Doghouse created a topic in 401(k) Plans

Correction of 401(k) Overcontribution

A participant received an erroneously large commission payment in 2017, which was repaid in 2018. 401(k) deferrals were taken from the erroneous payment. The amount was such that it caused the participant to reach his 2017 402(g) limit, so no 401k deferrals were taken for the rest of the year. Reversing the deferral contribution results in him NOT exceeding the 402(g) limit. In correcting this situation, I assume the company has an obligation to make up what his 401k contributions would have been for the rest of the year? Would this be at least 50% plus match and earnings? Of course, he is an HCE. Fortunately it shouldn't change the testing results much.
Number of replies posted  1 reply      Number of times viewed  57 views      Add Reply
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ERISAAPPLE created a topic in Retirement Plans in General

Cross Testing with 2-Year Eligibility

This is a little complicated, so I will spoon out the facts one by one. I have a DC plan with a 401(k), 3% safe harbor QNEC, and new comparability PS -- one participant per group. The plan year is the calendar year. The plan is top-heavy. The 3% safe harbor excludes pre-participation comp. Eligibility for 401(k) is one year (1000 hours) with semi-annual entry dates (Jan. and Jul.). Eligibility for profit sharing is 2 years (1000 hours each year). Also semi-annual entry dates. I am testing for 2017. One NHCE (let's call her Employee A) entered the 401(k) on 01/01/2017. Employee A did not have 2 years in 2017 and thus is not eligible for the PS. Another NHCE (Employee B) entered the 401(k) on 07/01/17. Employee B also did not have 2 years in 2017 and thus is not eligible for the PS. My understanding is Employee A is required to get the gateway, with the 3% SH QNEC counting towards that. Employee B only gets a safe harbor of 3% of comp. from 7/1 to 12/31, so he also has to get a top heavy for the whole year (his safe harbor on his half-year of comp. counts towards the top-heavy). The 3% safe harbor plus the top-heavy satisfy B's gateway requirement. Do I include either or both of Employees A and B in the numerator or denominator, or both, when doing the rate group testing? In other words, when I test the rate groups, how do I treat Employees A and B? Are they totally excluded because they are not eligible for the PS?
Number of replies posted  5 replies      Number of times viewed  61 views      Add Reply
Author's photo

cbendertpa23 created a topic in 401(k) Plans

Successor Plan Rule After 401(k) Plan Termination: When Does 12-Month Period Start?

A new client has terminated and distributed the assets in a previous 401k plan. Does the 12 month rule begin once the assets have been distributed or once the final 5500 is filed?
Number of replies posted  1 reply      Number of times viewed  56 views      Add Reply
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wifrbr created a topic in 401(k) Plans

Fix ADP by Recharacterizing HCE's Contribution as Catch-Up?

A 401(k) plan has failed the ADP test. Instead of refunds, a QNEC has been made by the plan sponsor. When calculating the QNEC, can I re-characterize some of the HCE's contribution as catch-up? For example, if one HCE (over age 50) has $5,000 in contributions, can I re-characterize this as catch-up to bring the HCE average ADP down and use that figure to calculate the QNEC, or do I have to use the HCE ADP average with all contributions under $18k?
Number of replies posted  3 replies      Number of times viewed  70 views      Add Reply
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Tom Poje created a topic in ftwilliam.com

Useful Empower Import Files

I assume the empower imports used with Relius are similar to other software. I have found a number of files to be very useful with ftwilliam. All can be copied and pasted into Excel and worked with. There is an AHIP file that contains the Schedule of Assets data. The following files all have import files into ftwilliam: A PSD file is Schedule D data. A PSA file is the Schedule A info, in a fixed file format (so have to work a little bit with it in Excel in order to get the data into a format for importing). PC2 is page 2 of Schedule C. PC3 is page 3 of Schedule C. I happen to have a MEP of 35 plans -- and having the ability to copy these files into Excel, sum up the totals and then (with a small amount of work pasting that data into ftwilliam import file) it saves a lot of time, along with being able to pull the SSA info from Relius in order to import it (this year the MEP has almost 200 folks for the SSA).
Number of replies posted  0 replies      Number of times viewed  18 views      Add Reply
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