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Message Boards Digest

April 25, 2018

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

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AlbanyConsultant created a topic in 403(b) Plans, Accounts or Annuities

Start a New 403(b) Because Old Provider's CDSC Is Too High?

A financial advisor asked for help where an ERISA 403b plan is with one of the less-than-friendly 403b providers, and the plan sponsor is fed up with them. However, the plan sponsor learned that most participants will get hit with a large back-end fee if they move their money at this point. I suggested that we create a second set of accounts at a more friendly recordkeeper and call it all one plan under a new document (which I've done with plans on this provider before), but the financial advisor said that he has had better luck freezing the accounts where they are and creating a new 403b plan that allows transfers into it from the old plan (but not back the other way!). All new contributions will only go to the new accounts, and the FA can monitor when the sales charges have dwindled down to zero or some other acceptable number and advise each participant individually as to when to move to the new accounts. Eventually, when everyone moves over, they can terminate that plan. I have to say, the idea of not having to fight with Ye Olde Unfriendly Recordkeeper for information is appealing, but this seems like it's too good to be true. So we'd be leaving them with two plan documents (presumably that rk is going to help with the restatement of their plan, but I don't know that for sure), two 5500s, and each person getting two statements, and of course 2x the risk for an audit. The current accounts do allow loans, which might make things a little harder. What other pitfalls could there be in this arrangement?
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply
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Sheila created a topic in Health Savings Accounts (HSAs)

HSA/FSA Benefit Year vs. Calendar Year

The IRS sets FSA and HSA limits based on calendar year. Our benefit year is 10/1 to 9/30. Can we set up our plans so the limits follow the benefit year rather than the calendar year? I've not seen this done but I've been told that our legal department has approved this process if we stay consistent.
Number of replies posted  1 reply      Number of times viewed  28 views      Add Reply
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Purplemandinga created a topic in Employee Stock Ownership Plans (ESOPs)

Controlled Group Due to ESOP Ownership?

Company A is a corporation and owns 100% of another corporation Company B. 100% of Company A's stock is held by an ESOP, no employee has a more than 5% ownership interest in the ESOP shares. Does a controlled group exist?
Number of replies posted  3 replies      Number of times viewed  38 views      Add Reply
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Gilmore created a topic in Correction of Plan Defects

Handling a EGTRRA and PPA Non-Amender

Sole prop, one-participant plan, since inception 1/1/2005. Original document is a GUST document. Has been amended for all good faith required amendments up to EGTRRA, but was not restated for EGTRRA or PPA. Is the appropriate VCP correction to adopt retroactive EGTRRA and PPA restatements (without any PPA good faith amendments), and can this be accomplished with one "VCP Kit"? In other words, one set of forms, including Form 14568-B, checking off the appropriate boxes for the EGTRRA restatement and the PPA restatement, with one $1,500 fee? Also, will the IRS disallow the application if the sole prop cannot locate the advisory letter for the GUST volume submitter?
Number of replies posted  2 replies      Number of times viewed  47 views      Add Reply
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Santo Gold created a topic in Retirement Plans in General

Owner-Employee Wants to Sell to Partner, Then Become 'Independent Contractor'

A small office has 2 owners and 2 employees. As of 7/1/18, one of the owners is selling his share of the business to the other owner. The former owner will still continue to work as an independent contractor for the business and will report to the same office and be paid via 1099. As of 7/1/18, should the former owner be considered an employee given that he is still doing mostly the same work as before even though he is being paid via 1099 and considered himself an independent contractor? He also expects to make some payments to the business to cover a portion of the costs of the other 2 employees who may do some work for him that could include work not related to the company business (but directly for him). The company has a 401k plan that he participates in so whether he is an employee or not needs to be determined after 7/1/18 to know if he can still actively participate in the plan. If not an employee and if he starts his own business (self-named) as a sole prop, given he is paying some fees for the other 2 employees, do you think there is a concern that he would have to include them in his own 401k plan?
Number of replies posted  12 replies      Number of times viewed  88 views      Add Reply
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