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Message Boards Digest

May 30, 2018

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

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BJF created a topic in Distributions and Loans, Other than QDROs

Transfer of Employment Among Controlled Group Members: Distributable Event?

We have an participant who worked for Company A (of a controlled group) and her job was transferred to Company B (of a controlled group). Company A sponsors a DC Plan with section 401(k) and Company B sponsors a DC Plan with employer source (only) funds. Said participant is seeking to take a withdrawal of her balance from Company A 401(k) Plan. A question arises about her having a distributable event. IRS guidance -- https://www.irs.gov/pub/irs-drop/n-02-4.pdf -- at Section III seems to suggest that if both companies have section 401(k) then no distributable event is present. However, company B only has employer source funds and no 401(k). Am I interpreting correctly?
Number of replies posted  3 replies      Number of times viewed  55 views      Add Reply
 
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Lawrence created a topic in 401(k) Plans

Credit for Service After Change in Sponsor's Organizational Structure: 'Same Desk' Rule

Sole proprietor has a Safe Harbor 401k plan and has himself and the two other employees participating. Employer forms a C Corp and starts a new Safe Harbor 401k plan, terminating the Sole Proprietorship and Sole Prop 401k plan and transferring all employees and balances to the Corp 401k plan. Employees are doing the same jobs as before. Per the "same desk" rule, is service with Sole Prop required to be counted under the Corp plan?
Number of replies posted  1 reply      Number of times viewed  32 views      Add Reply
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EHE created a topic in Qualified Domestic Relations Orders (QDROs)

Processing a QDRO -- Does Your TPA Firm Require a Hard Copy of the Order?

Do you permit participants to submit QDROs in electronic format (with a raised seal visible), or do you require a hard copy original? Why?
Number of replies posted  13 replies      Number of times viewed  87 views      Add Reply
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BG5150 created a topic in Retirement Plans in General

Controlled Group, Two Sole Props; What's the 25% Limit?

We have a controlled group of husband and wife with separate businesses, but with a minor child. Husband has a PS plan. Wife adopts it. His income is $225,000. Her income is $25,000. They file jointly (if that matters). What is the deduction limit? Is it the overall plan limit of $62,500 (225k + 25k / 4)? Or is it limited to each company separately? In other words, can she get a PS contribution of $15,000 and can he get the balance of $47,500? Or does it have to be $55,000 (max 415) for him and $6,250 for her?
Number of replies posted  1 reply      Number of times viewed  47 views      Add Reply
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mming created a topic in 401(k) Plans

415 Limit and the 100% of Comp Limitation

A 50-year-old participant had comp of $24,000 for the 2017 plan year, and he deferred all $24,000 of it. Because catch-up contributions can be disregarded for the 415 dollar limit, can the participant be allocated up to another $6,000 in employer contributions, bringing his annual addition to over 100% of comp?
Number of replies posted  3 replies      Number of times viewed  63 views      Add Reply
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jkharvey created a topic in 401(k) Plans

What to Do with Mistakenly Excessive 401(k) Deferrals?

For whatever reason, too much money has been deposited into a deferral account at the end of the plan year. Perhaps it was a duplicate payroll submission or an error in the amount submitted. It definitely was not an intentional prefunding. Should one simply allow that amount to stay in the participant's account and be used to reduce the next scheduled 401k deferral? (I don't think this is permitted.) Or should the employer allocate it as a discretionary contribution? Should the amount be moved into a suspense account to be used to reduce a future employer contribution (not as an employee deferral)? Or move it into a suspense account and first use it to offset any current year's receivable of employer contributions?
Number of replies posted  5 replies      Number of times viewed  61 views      Add Reply
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ERISAAPPLE created a topic in Defined Benefit Plans, Including Cash Balance

Service and Employment Requirements for Accruals under a Cash Balance Plan

I have seen more than a few Cash Balance Plans that require either 1,000 hours of service or employment on last day of the plan year to receive an accrual for that year. I haven't seen a plan that requires both 1,000 hours and last day of the PY. Is that permissible in a CB plan? Can a CB plan just require last day of PY with no hours requirement? I am not aware of any rule that says a plan can't do this, but for some reason doubt is creeping in.
Number of replies posted  5 replies      Number of times viewed  41 views      Add Reply
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Pension Panda created a topic in Distributions and Loans, Other than QDROs

Hardship Request Involving Principal Residence: Participant Wants to Buy Ownership Interest of Soon-to-Be Ex-Spouse

A participant requested a hardship distribution to buy out his soon to be ex-spouse from half of the principal residence. There is no DRO involved here at this point. The plan sponsor indicated they didn't see any problem with this request as a "purchase of principal residence" purpose for hardship. The Plan Sponsor believes this is a purchase of his principal residence from the other owner. I realize a DRO request is the way to go here for many reasons, but my question is, in the general case can a participant request and obtain a hardship withdrawal to buy out a second owner of a principal residence? He will be 100% owner at the end of the transaction.
Number of replies posted  2 replies      Number of times viewed  27 views      Add Reply
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