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June 1, 2018

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

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kmhaab created a topic in Plan Terminations

Terminating Pre-Approved Plan; Must Update Document?

I am unclear as to whether a pre-approved plan must be updated to reflect any changed qualification requirements prior to termination of the plan. A favorable Determination Letter was received for the pre-approved plan for the 2nd remedial cycle (addressing the 2010 Cumulative List of Changes). Does it need to be updated for the 2017 Cumulative List prior to termination?
Number of replies posted  1 reply      Number of times viewed  38 views      Add Reply
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R. Butler created a topic in 401(k) Plans

Eligibiltiy Upon Rehire

Plan has a 90-day service requirement and monthly entry dates. Plan includes rule of parity provisions, but not a one year hold-out rule. Plan further provides that eligible employees who had not satisfied the eligibility requirements will become a participant in accordance with the requirements of the plan. Employee is not treated as a new hire unless service is disregarded under the Rule of Parity provisions. Employee completes 45 days of service prior to terminating. Employee is rehired 2 years later. Employee was gone more than 12 months so I don't think service spanning applies. No service is excluded under the Rule of Parity. My understanding is that because service spanning doesn't apply and because no service is excluded, the rehired employee must work 45 more days and then enters on the first day of the month after that. Is that correct?
Number of replies posted  1 reply      Number of times viewed  37 views      Add Reply
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kmhaab created a topic in Correction of Plan Defects

Correction Required for Former Participant After Account Completely Distributed?

Is a corrective contribution required for a former participant who has taken a complete distribution and no longer has an account in the plan? Section 602(5)(b) of Rev. Proc. 2016-51 states, "Corrective contributions are required to be made with respect to a participant with an account under the plan." But I cannot find anything specifically addressing individuals without an account.
Number of replies posted  3 replies      Number of times viewed  50 views      Add Reply
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coleboy created a topic in 401(k) Plans

Eligibility Rule Under an ftwilliam Plan Document

Client's plan uses an ftwilliam document. The adoption agreement says "completion of 6 consecutive months of continuous service (not to exceed 12 -- hours of service failsafe applies)". I've never seen this before. Would the service spanning rule apply in this case?
Number of replies posted  5 replies      Number of times viewed  75 views      Add Reply
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JRN created a topic in Employee Stock Ownership Plans (ESOPs)

ESOP Question: Non-Allocation of Section 1042 Shares

Assume A and B are participants under ESOP and that A and B have combined $100K of cash in their ESOP accounts. A and B sell shares to the ESOP and they both elect 1042 tax treatment on all of the shares sold. Is there any way that the ESOP can use the $100K cash in A's and B's accounts in this transaction? I'm thinking the answer is "No" because A and B elected 1042 for all of their sold shares; hence there would be no shares to allocate to their individual accounts for the $100K. In other words, if we took the $100K out of their accounts to help fund the ESOP purchase, we'd have to be able to allocate something back to their accounts, presumably shares acquired by the ESOP in the transaction. But there would be nothing we could allocate back to their accounts because all of the acquired shares are 1042 stock. So, it seems to me that the $100K just needs to stay earmarked in their accounts. The ESOP can use the cash in other ESOP participants' accounts to purchase the shares, but A and B stay in cash. Thoughts?
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply
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Susan knight created a topic in 401(k) Plans

Participant Dies with Former Spouse Still Named as Beneficiary Despite QDRO

My husband and I divorced. A QDRO was entered and approved, which said I gave up my right to his retirement benefit. He has passed away. After our divorce, he never named a new beneficiary on his life insurance or his 401k. Neither one of us remarried. He had no children. Do these benefits still come to me?
Number of replies posted  4 replies      Number of times viewed  67 views      Add Reply
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GregM created a topic in Form 5500

What Happens If Form 5500-SF Filed Late, If Not Required in First Place?

Recently when going through my finances I noticed that I forgot to file my 5500-SF on the efast.dol.gov website in 2015 and 2016. I had filed 5500-SFs in years prior, and had planned to continue do so, even though I am a one-participant plan with assets of less than $250,000 (so technically it was not necessary to file the form). I panicked and submitted the 2015 and 2016 forms anyway. I later realized there's a substantial penalty for late filing. These late forms are now visible from within efast. Will the fact that I submitted late 5500-SF forms to the efast website trigger an audit? Will I be charged a penalty? And if so, is there a way I can pay any fees in a advance of receiving a bill from the govt? I noticed in the DFVCP penalty calculator it states "Form 5500-EZ filers are not eligible for the DFVC program." which concerns me greatly. I have yet to receive any late filing notice but I fear the clock might be ticking.
Number of replies posted  2 replies      Number of times viewed  50 views      Add Reply
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Stash026 created a topic in 401(k) Plans

Is Participant Required to Repay a Defaulted Loan?

I know a participant can continue to make repayments on a defaulted loan (if an after-tax account is set up), but are they required to?
Number of replies posted  7 replies      Number of times viewed  59 views      Add Reply
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K-t-F created a topic in Retirement Plans in General

Just an EASY control group question

It doesn't seem fair that a person who owns two totally separate businesses must include both of them in coverage and testing. That said, my client is a financial advisor (an independent RIA). He also owns a real estate business. Controlled group?
Number of replies posted  9 replies      Number of times viewed  66 views      Add Reply
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