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Message Boards Digest

April 11, 2018

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

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legort69 created a topic in 401(k) Plans

Missed Deferral Opportunity -- 25% QNEC vs. 3-Month Rolling

A plan sponsor has participants who missed 5 months of deferral opportunity due to a technical payroll glitch. The Sponsor wants to know if the Rolling Three-Month exception can apply to the last 3 months of the missed 5 months, where they would only have to fund a 25% QNEC for the first 2 months and not for the full 5 months?
Number of replies posted  0 replies      Number of times viewed  42 views      Add Reply
 
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legort69 created a topic in Form 5500

Still a 5500 Participant Due to Small Balance from Undistributed Dividends?

A few 401k participants withdrew their accounts on December 28. They subsequently received a dividend in their 401k account < $100 on December 31. Is there anything to support saying that they are not in the 5500 participant count as of the subsequent 1/1/XX? I assume no, but I wanted to see if anyone has run into this situation, because including them in the count will trigger an audit.
Number of replies posted  1 reply      Number of times viewed  50 views      Add Reply
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thepensionmaven created a topic in 401(k) Plans

Allow Safe Harbor Hardship Withdrawal Despite Outstanding Participant Loan?

We have a participant in one of our 401K plans that is requesting a hardship withdrawal that does meet the safe harbor criteria, but he has an outstanding loan. Does this preclude him from a hardship distribution, since the current loan has not been repaid?
Number of replies posted  3 replies      Number of times viewed  53 views      Add Reply
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msmith created a topic in Defined Benefit Plans, Including Cash Balance

Availability of Volume Submitter or Prototype PPA Restatements for DB and CB Plans?

I would be curious to know if anyone has receiving notification from their Document Provider, as to when the software will be available, to restate DB and CB Plans. Specifically, Volume Submitter or Prototype.
Number of replies posted  2 replies      Number of times viewed  46 views      Add Reply
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BG5150 created a topic in Retirement Plans in General

11-g Amendment Done for One Person -- SMM Required?

I had to do an 11-g amendment to give benefits to one person. Do I need to create an SMM for her?
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
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Belgarath created a topic in Cross-Tested Plans

Gateway Required If Entitled to Safe Harbor Nonelective Contribution Despite Having < 1,000 Hours?

PS has 1 YOS/1,000 eligibility. SH nonelective is provided to anyone eligible to defer, which is everyone. If someone never worked 1,000 hours, does the fact that they receive 3% nonelective require that they receive gateway? I'm thinking "no" because they can be disaggregated as statutorily excludable.
Number of replies posted  5 replies      Number of times viewed  57 views      Add Reply
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traveler created a topic in 457 Plans

Are Distributions from a 457(b) Plan Allowed to a Retired-but-Rehired (Part-Time) Employee?

New client is a governmental entity that sponsors a 457(b) plan. An employee has attained normal retirement age under the plan and retired. He did not take a distribution at retirement. Four months later, he becomes re-employed in a part-time position, which means he is not eligible to contribute to the 457(b) plan. The employee is asking for a distribution. The plan provides that upon severance from employment, a participant is entitled to receive a distribution of his account. Severance from employment is defined as a voluntary or involuntary termination of employment. The regulations under 457 provide that an employee has a severance from employment with the eligible employer if the employee dies, retires, or otherwise has a severance from employment with the eligible employer, and refers to the 401(k) regulations for additional guidance concerning severance from employment. Because of the individual's status as a rehired employee, and the reference to the 401(k) regulations, I am concluding that his rehired status makes him ineligible for a distribution. I am being told that in the past the client has taken the position that a 'retirement' is sufficient to allow for subsequent distributions, even if the individual is working for the entity as a part-time employee. I can't find any guidance on 457 plans that would allow for a distribution based on the prior retirement when the individual is currently working for the entity.
Number of replies posted  2 replies      Number of times viewed  47 views      Add Reply
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Gruegen created a topic in 401(k) Plans

EACA Notice Requirement for Mid-Year Lookback

Plan became an Eligible Automatic Contribution Arrangement (EACA) under IRC 414(w), effective January 1, 2015. Plan document states that only employees hired after January 1, 2015 are covered employees under the EACA. Several years later, the plan sponsor decides it wants to amend the plan document effective October 1, 2018 to change the covered employees under the EACA to be all employees who do not have an affirmative deferral rate election. This is sometimes referred to as a lookback or sweepback. As a result of the lookback, employees who were hired prior to January 1, 2015 and who never made an affirmative deferral rate election will become covered employees and be enrolled at the plan's default deferral rate. It doesn't appear that Treas. Reg. 1.414(w)-1(b)(3)(iii)(A) directly addresses the EACA notice requirement for the those who will receive their initial EACA notice as a result of the lookback. When must employees impacted by the October 1, 2018 lookback receive their initial EACA Notice? Possibility #1: within a reasonable period of time prior to the beginning of the 2018 plan year (i.e., November, 2017)... If that's the correct interpretation, it virtually eliminates mid-year lookbacks to EACAs because the decision by the plan sponsor to implement a lookback won't be made by that time. Possibility #2: within a reasonable period of time prior to the date that the employees with no affirmative deferral rate election become a covered employee under the EACA (i.e., within a reasonable period of time prior to October 1, 2018).
Number of replies posted  1 reply      Number of times viewed  21 views      Add Reply
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ERISAAPPLE created a topic in Retirement Plans in General

IRS Notice CP-220 Received, Wants More Excise Taxes -- How to Appeal?

A client filed a 5330 to pay an excise tax for unpaid minimum contributions. The client received a Notice CP-220 that assesses an adjustment to the excise tax. We have no idea how the IRS got its numbers, and we want to appeal. There is nothing on the face of the notice that explains how to appeal. Does anybody know how? Do we just write back to the address on the notice and say we want to appeal?
Number of replies posted  0 replies      Number of times viewed  16 views      Add Reply
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