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Message Boards Digest

June 20, 2018

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

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jaxon1225 created a topic in 401(k) Plans

Employee Deferrals from Off-Cycle Bonus Pay

Client has provided employees with bonuses at year-end for many years. While the plan document states that W-2 compensation is eligible plan compensation, the client did not withhold employee deferrals from the bonus pays as they would with any normal payroll. Instead, because employee feedback was that most employees did not want employee deferrals withheld, the client began communicating that employee deferrals would not be withheld unless the employee completed an election form specific to the bonus pay. Each year, only about 3% of employees completed the election form. Would a QNEC be required for employees that did not have employee deferrals withheld from the bonus pay? To your knowledge, how far back would the corrections need to go?
Number of replies posted  5 replies      Number of times viewed  47 views      Add Reply
 
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TaxLawyer1978 created a topic in 401(k) Plans

What Is 'Retired' for Purposes of Required Minimum Distributions?

Reg. 1.409(a)(9)-2 provides that required minimum distributions from a qualified plan (e.g. 401(k)) must begin April 1 of the calendar year following the later of the calendar year in which the employee turns 70-1/2 or the calendar year in which the employee retires from employment with the employer. The term 'retirement' is not defined for purposes of 401(a)(9). If a law firm partner is still technically a partner in a firm, but doing hardly any work, is he considered retired? Or does retirement mean actual total termination of employment?
Number of replies posted  9 replies      Number of times viewed  80 views      Add Reply
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Pammie57 created a topic in 401(k) Plans

Maximum Deferrals During Short Plan Year

Client has initial plan year of 9/1/2017 through 12/31/2017. Are participant deferrals capped pro rata? Or, if a participant defers $18,000 during the 4 months, is it OK because the $18,000 is an annual limit per participant?
Number of replies posted  3 replies      Number of times viewed  43 views      Add Reply
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Manatee created a topic in Defined Benefit Plans, Including Cash Balance

Withdrawals OK from DC Rollover Account in DB Plan, While Still Employed?

We have several small DB plans here that have had balances from terminated DC plans rolled into them (prior to my time here). The plans have provisions to accept rollovers. There doesn't appear to be any specific language regarding the eventual distribution of the rollover money, except an election to exclude it from amounts considered for purposes of small automatic cash-outs. The rollover money always has been treated as an account balance unrelated to the DB calculations, and RMDs from the rollover have been based on the account balance method (correct according to a 2009 thread here). [1] Absent any plan language about in-service withdrawals, may the participants access their rollover money without terminating, retiring, or receiving RMDs? [2] Is there any advantage to this over simply rolling the DC balance directly into an IRA? I understand this might be desirable if someone wants to use their DC money to increase their annuity from a DB plan (assuming the DB plan provides for this), but I don't see the advantage to attaching it to the DB plan if it's just going to remain an account balance.
Number of replies posted  4 replies      Number of times viewed  46 views      Add Reply
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ERISAAPPLE created a topic in 401(k) Plans

Mid-Year Termination of Safe Harbor Top Heavy Plan

Client has a top-heavy plan that uses the 3% Safe Harbor QNEC. The plan year and limitation year are the calendar year. If the client properly terminates the plan mid-year in 2018 (e.g, plan passes ADP etc.), would the top heavy contribution be required on compensation accrued up until the date of the plan termination or compensation paid for the entire 2018 calendar year?
Number of replies posted  5 replies      Number of times viewed  58 views      Add Reply
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pensionam created a topic in 401(k) Plans

Sponsor's Contributions Exceed 404 Limit, But No 415 Violation

Client already filed its corporate tax return and is over the 404 limit on deductible contributions. I believe the corporate tax return needs to be amended and the client must pay a 10% excise tax on the amount of the excess. It's a calendar year plan so the plan year currently at issue is 2017. Unfortunately, all of the Profit Sharing contribution was deposited in 2017. I'm hung up on this: what happens with the overage? Does it get applied to the 2018 plan year or does it need to be applied to 2017 because, although it's over the 404 limit, it wouldn't be over the 415 limit? If it has to be applied to 2017, can they still take the deduction in 2018 since they weren't able to for 2017?
Number of replies posted  5 replies      Number of times viewed  54 views      Add Reply
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mwyatt created a topic in Defined Benefit Plans, Including Cash Balance

PBGC Annual Premium Payments - Annoying Inaccurate Letters Being Sent to Clients by PBGC

We've had a few clients get letters acknowledging that the Comprehensive Premium Filing was transmitted but that a premium balance is owed. In the most recent case, we uploaded an XML file 5/31/2018 and sent in a paper check with voucher on the same date. Letter is dated 6/10/2018, but when I look on Account History I see that the premium has been credited (with 5/31/2018 date, so can't actually tell when posted). It's annoying to need to spend time dealing with the client's obvious concern that the premium wasn't received, when the PBGC system shows is all settled. I can see sending this letter out if a month has transpired, but 10 days seems to be generating needless worry! Your experience?
Number of replies posted  1 reply      Number of times viewed  21 views      Add Reply
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