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Message Boards Digest

April 26, 2018

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

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SadieJane created a topic in Retirement Plans in General

Outsource the Disability Determination to a Physician?

For retirement plans that provide a benefit due to disability (e.g., accelerated vesting, earlier distribution than otherwise available), many employers would prefer to avoid the new disability claims Regulation, if possible, but may not find it practical to leave the determination to the SSA or an LTD carrier. What are your thoughts as to whether the following would work?

Amend the plan to provide that a licensed physician will make the disability determination; the physician would be presented with the Plan's definition and would have to certify the individual satisfies that particular definition. Plan Administrator will not take any action other than confirming that the certification has been signed by a physician.

In that scenario, is the Plan Administrator sufficiently removed from the determination process such that the disability claims regulation would not apply?

There are several related issues. Does the answer differ if the plan provides that the physician must be acceptable to the Plan Administrator (a common term and one that is often preferred by employers) -- i.e., would this approach work but only if the Plan Administrator has no discretion as to the physician? Does it matter if the plan is a qualified plan or a non-qualified plan (both are subject to the claims regulations)? Some plans use this approach if the sole reason for a disability determination is whether there is a disability for purposes of a "qualified distribution" for Roth purposes, but that's essentially a tax issue, not a Plan benefit issue, so the fact that it works in that scenario may or may not have relevance for the broader question.

Number of replies posted  2 replies      Number of times viewed  50 views      Add Reply
 
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Chippy created a topic in Form 5500

Filing under Delinquent Filer VCP

An 8/31/2016 5500-SF was never filed. Client received a letter from IRS saying it never has been received. They're going to file it today under DFVCP. The letter gives them the option of filing under DFVCP, and asks for the date applied. What date would the plan sponsor provide? The date the 5500 actually is filed? Also, do they pay the fee right away, or do they wait for a reply from the DOL?
Number of replies posted  3 replies      Number of times viewed  44 views      Add Reply
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Church Treasurer created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Small Employer Wants to Limit Health Benefits to Full-Time Salaried Employees

A small employer (church) with less than 15 W-2 employees offers health benefits to their full-time, salaried employees. They have two hourly employees that work about 30-35 hours during a 9-month period of time. My understanding was they would need to be offered health benefits. Do you agree, and could you provide regs to support this?
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply
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ERISAAPPLE created a topic in Distributions and Loans, Other than QDROs

In-Service Distributions Allowed Only if Rolled Over?

Can a plan allow for in-service distributions, but limit the distribution to a rollover to an IRA? I realize this doesn't make sense, because once the money is in the IRA the participant can just take a distribution. Also, they are not looking to avoid the 20% withholding. The client wants to allow in-service distributions, but does not want to allow participants take their cash and go on vacation or whatever. My question then is whether there are any rules that would prohibit a plan provisions that would allow participants who are employed to request and receive a rollover distribution, but the employed participant cannot take that distribution as a taxable, cash distribution. They also do not want to have any in-plan IRAs.
Number of replies posted  11 replies      Number of times viewed  94 views      Add Reply
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AlbanyConsultant created a topic in Distributions and Loans, Other than QDROs

Required Minimum Distributions -- Can We Choose a Non-QJSA Source?

I've got a participant in a plan that has deferrals, safe harbor, profit sharing, and merged old money purchase money. The participant is an owner and needs an RMD this year. Can he opt to have his RMD come from his profit sharing 'portion' and therefore avoid the QJ&S hassle? If he can do that and then move to deferrals and safe harbor, that should buy about two or three years, and I'm hoping he retires by then and takes it all. (I know he'll have to do the QJ&SA mambo at that point, but at least it's only once.)
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
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Dalai Pookah created a topic in Correction of Plan Defects

Are Deferral Failures Discrete or Collective?

A plan failed to allow deferrals for some participants beginning in 2015 and continuing to 2017. On plan correction, how do we interpret Rev. Proc. 15-28, which allows correction using a 25% QNEC if within the SCP time limit for significant errors (last day of the 2nd plan year)? It's clear that for 2015, the 50% QNEC correction applies, because 2018 is beyond the 2-year deadline. But what about 2016 and 2017? Are each of the missed deferrals treated as discrete and therefore eligible for the 25% safe harbor correction or are all missed deferrals considered part of a continuous whole and all subject to the 50% QNEC correction?
Number of replies posted  1 reply      Number of times viewed  35 views      Add Reply
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AdKu created a topic in 401(k) Plans

How to Report a Direct Rollover from a 401(k) Roth Account to a Roth IRA?

I have spent some time reading the reg. & the code that deals with Designated Roth Account with no satisfactory result.

https://www.law.cornell.edu/cfr/text/26/1.402A-1 https://www.irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts

According to the "Instructions for Forms 1099-R and 5498 (2017)" at page 5, I need to use Form 1099-R and enter the designated Roth account amount rolled over in Box 1, 0 (zero) in Box 2a, and Code H in Box 7.

https://www.irs.gov/pub/irs-pdf/i1099r.pdf

I don't believe this will be satisfactory to inform the investment firm that will be receiving the designated Roth account distribution about the basis.

Number of replies posted  1 reply      Number of times viewed  38 views      Add Reply
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