Message Boards Digest

May 16, 2018

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

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Kurt Stockbauer created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Level-Funded Premium Plans Do Not Allow State Continuation (Mini-COBRA)

Small group medical client in Missouri has only 5 employees who changed from an ACA fully-insured plan to a Level-Funded Premium plan effective May [1] It turns out that they have a former employee (who resides in Kansas) who may be interested in continuing her former group medical coverage; this employee's coverage terminated with this employer effective March 31. This former employee was informed of her right to continue her coverage under Missouri law in April. Unfortunately, the insurer for the Level-Funded Premium plan does not offer state continuation coverage, so now the employer cannot offer this former employee coverage under state law. The employer is concerned that this former employee may decide to sue. Does anyone have any experience with a similar situation or have any advice to give?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply

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cpc0506 created a topic in 401(k) Plans

Form 5500 Reporting of Uncashed Checks

The alliance that holds the assets for a client of ours just added funds to the plan due to uncashed checks from 2012. Yes, I said 2012. The amount totals $195 for 3 participants. How are these funds reported on the 2017 Form 5500-SF if the client has chosen not the restore the funds to each participants' account with the understanding that if the terminated participant comes looking, they will need to provide the funds? Do the participants need to be reported again on a Form 8955-SSA that they still have benefits due, since they were reported as having been paid their vested balance in 2012?
Number of replies posted  4 replies      Number of times viewed  62 views      Add Reply
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ndj2377 created a topic in Defined Benefit Plans, Including Cash Balance

Plan Termination But Client Doesn't Want to Apply for a Determination Letter

We are assisting a client with terminating their plan. The plan is small (just over 100 participants). They are trying to decide whether or not to seek an IRS determination letter with the termination. They are confident their plan document and administration of the plan is in order -- the last determination letter received was 2012. Does anyone have experience with clients that do not seek a determination letter and if so, does this increase the likelihood of a PBGC or IRS audit? Most clients we work with go through the process of obtaining a determination letter. They are under 300 participants, so the PBGC audit would not be automatically triggered. Any details of similar terminations would be appreciated.
Number of replies posted  5 replies      Number of times viewed  71 views      Add Reply
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Tom Poje created a topic in Retirement Plans in General

Next Year's Limits

With the release of the consumer price index last Friday, and based on the current high-3 average -- feb-mar-apr), the limits just jumped to the next level:

$19,000 maximum deferral

$280,000 maximum compensation

$56,000 415 limit

Of course there are 5 months to go, but I don't see any major drop coming in the index....

Number of replies posted  4 replies      Number of times viewed  53 views      Add Reply
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Trisports created a topic in Defined Benefit Plans, Including Cash Balance

How to Calculate Annuities When Marital Status Unknown?

Traditional DB plan, several participants were supposed to be put in pay status at age 65 but the prior record-keeper failed to initiate the payments. We are now calculating retroactive annuity payments. The plan does not have information about any participant's marital status. Some participants cannot be located and some won't respond. On what basis should we calculate the annuity if we don't know their marital status? Single? Married? If married, what age should we use for spouse? The plan document is silent and I cannot find any guidance on whether there is a default method to use when calculating the annuity.
Number of replies posted  2 replies      Number of times viewed  44 views      Add Reply
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wifrbr created a topic in 401(k) Plans

Normal Retirement Age for DB/DC Combo -- Must Be the Same for Each Plan?

A plan is a DB/DC combo plan. Must they have the same Normal Retirement Age? Right now the DB has 62 and the DC has 65.
Number of replies posted  4 replies      Number of times viewed  65 views      Add Reply
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Keli created a topic in 401(k) Plans

401(k) Loan Taken Out, Then Participant Dies

My brother borrowed from his 401k loan last year March. He didn't repay it. He died in November. What happens to his remaining money in his 401k?
Number of replies posted  3 replies      Number of times viewed  73 views      Add Reply
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Tom created a topic in Distributions and Loans, Other than QDROs

Delinquent Loan Means Reporting Required as a Prohibited Transaction?

Loan was initiated by owner of a business for himself in 2017. Loan repayments were not started by his payroll clerk. And so six months go by without any loan repayments. The loan was re-amortized over the remaining life of the loan and repayments started. A VCP filing is being prepared. Question for the 2017 5500 -- is there a prohibited transaction to report? It seems this just adds insult to injury as the IRS will likely approve the fix under VCP and the use fee will be paid. Seems like double jeopardy to also report it as a prohibited transaction.
Number of replies posted  1 reply      Number of times viewed  37 views      Add Reply
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MoJo created a topic in 401(k) Plans

QJSA Required for Employer Contribution Account while QJSA Not Required for Elective Deferrals?

Assume a 401(k) plan provides that employee deferrals are distributable only in a lump sum when a distributable event occurs, and that employer money (match, non-elective) is distributable ONLY in the form of an annuity and ONLY after a distributable event AND attainment of the plan's Normal Retirement Age. Clearly the annuity distribution option must comply with the QJSA requirements (J&S Annuity and/or spousal consent). What about the deferral distributions? Is spousal consent required for that distribution as well? The regs say a "plan" is subject to the QJSA requirements when the annuity distribution exists (with the exception of a plan that is a "transferee" of money from a plan that was subject to the QJSA rules) and then ONLY that source need comply with the QJSA rules. The plan design described earlier seems in some ways analogous to the "transferee" source scenario, but the regs say the "plan" is subject to the rules when the annuity exists. It doesn't seem that the rules were written with this plan design in mind. My team is rather conservative and believes that the "plan" as a whole is subject to the QJSA rules when an annuity exists, and the ONLY exception is the "transferee" plan exception -- which allows only the transfered source to be QJSA constrained -- which this scenario isn't. Agree?
Number of replies posted  6 replies      Number of times viewed  41 views      Add Reply
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rr_sphr created a topic in 401(k) Plans

Why Must a Plan Sponsor Follow the Terms in the Plan Document?

I need something pretty basic on this topic to give to the top decision-maker of my firm. She tends to know how she wants things done regardless of what the plan document says. Our TPA seems to be okay with what's being done even though we aren't following the terms in the plan document.
Number of replies posted  4 replies      Number of times viewed  42 views      Add Reply
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52626 created a topic in Correction of Plan Defects

401(k) Plan Failed the Coverage Test, Now How to Decide Who Gets Back In?

401(k) plan excludes a group of employees. Historically this has not been an issue. For 2017, when running the coverage test for the excludable employees, coverage fails. This will require the employer to bring in a substantial number of excludable employees to pass coverage. These employees will all receive a QNEC. The issue is, which employees must be brought in to pass coverage? Can the plan use the date of hire as the basis for determining how to bring in? We looked at hours worked (those employees having a number of hours closest to 1,000) but this results in an OUTRAGEOUS QNEC. Using date of hire or compensation would result in a lower cost. I can't find any guidance as to the process that must be followed in determining who must be brought in to pass coverage.
Number of replies posted  2 replies      Number of times viewed  22 views      Add Reply
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austin3515 created a topic in 409A Issues

Ever Make Sense to Implement Deferred Comp Plan for a Small Business Owner?

Johnny owns 100% of his business and is looking for more deductions. He wants to look into a deferred comp plan for himself. I realize that there is no value in it for him, especially in a pass-through entity, but I'm looking for an article from a large accounting firm or ERISA firm that explains either why it makes no sense or gives reasons as to why it might in fact make sense in certain limited scenarios.
Number of replies posted  0 replies      Number of times viewed  13 views      Add Reply, Inc.
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