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Message Boards Digest

July 6, 2018

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

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thepensionmaven created a topic in 401(k) Plans

What's Good for Dr. Goose Must Be Provided to Nurse Gander: A Requirement of 'Benefits, Rights and Features'?

I don't know how many times I have told different clients (mostly doctors) that they cannot make employer contributions during the year and wait until 9/15 of the following year to make employer contributions for the NHCE participants. Could you provide me with a cite to the rule or rules that support that conclusion?
Number of replies posted  4 replies      Number of times viewed  59 views      Add Reply
 
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Pammie57 created a topic in Distributions and Loans, Other than QDROs

Terminated Participant Wants to Move Funds from One Plan into Another Plan Sponsored by Same Former Employer

The participant has terminated her employment with the company. The company maintains a 401(k) plan and she has a balance. Apparently the sponsor recently terminated a cash balance apparently. This terminated participant wants to roll her cash balance plan money into the 401(k) plan. Her 401(k) balance is less than $5,000 and can be rolled over to an IRA without her consent. A rollover into the 401(k) would put her 401(k) account balance at more than $5,000. Her goal is to leave it all in the 401(k) plan. I have no idea why. Because she's no longer employed, I am thinking that she cannot roll any money into the 401(k) plan -- even though the plans are with the same company, they should be treated separately for distribution purposes. So I think she needs to open an IRA and roll her 401(k) money into it. Correct?
Number of replies posted  2 replies      Number of times viewed  56 views      Add Reply
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Purplemandinga created a topic in 401(k) Plans

Best Effective Date for Restatement After Transfer to New Service Provider

Say a plan transfers from service provider A to service provider B. What is best practice for the effective date of restatement to new document on the transfer to Provider B? Is it the day blackout lifts? Is it the day cash transfers from service provider A to service provider B?
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
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JackS created a topic in Retirement Plans in General

Value of Employer-Paid Pet Insurance: Part of Plan 'Compensation'?

A plan sponsor provides pet insurance to its employees as a benefit. The employer pays the premiums and the employees are taxed on them. Their plan excludes "Fringe Benefits" from the definition of plan compensation. Does anyone know if this "income" should be excluded form plan comp or included in plan comp?
Number of replies posted  1 reply      Number of times viewed  72 views      Add Reply
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BonJo created a topic in 401(k) Plans

401(k) Named Beneficiary Turns Out to Be Daughter, Not Surviving Spouse

My mother's husband of almost 12 years recently died. He had a 401k worth approx. $400k. He was always telling my mom that if he ever died, she would be rich. I assume this means that he truly believed his 401k retirement would go to her. Mom received a call this morning advising her that when her husband set up this 401k account in the early 90s that he listed his oldest daughter as beneficiary, and that my mom would receive nothing. It's my belief that he assumed the 401k would automatically go to my mother when he died, because they were married. My mother is trying to get a meeting with an attorney to start seeing about fighting this. Does she stand any chance?
Number of replies posted  6 replies      Number of times viewed  98 views      Add Reply
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Christopher created a topic in 401(k) Plans

SIMPLE 401(k) to Traditional 401(k)

A client has an existing SIMPLE 401(k) plan and wants to switch to a traditional 401(k) plan. My understanding is that because a traditional 401(k) is considered to be a successor plan (a.k.a. alternative defined contribution plan) under 401(k)(10)(A), the deferrals from the SIMPLE 401(k) cannot be distributed when switching to a traditional 401(k). Correct?
Number of replies posted  2 replies      Number of times viewed  45 views      Add Reply
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ErisaGooroo created a topic in 401(k) Plans

EACA with Automatic Escalator

401(k) Plan with EACA provision plan has default percentage at 2%, with auto escalation of 1% up to 8%. Auto escalation feature does not apply to HCEs (this special provision is written in the plan document). The plan sponsor has used the 90 day permissible withdrawal provision (elected in the AA) afforded to EACA but NOT the 6 month extension to cure ADP/ACP failures. All other requirements of EACA have been satisfied except for what is mentioned here. Ultimately, the Plan Sponsor wants to have the ability to use the 6 month extension without auto escalating the HCEs due to ADP testing issues. With the uniformity requirement, I don't think that is possible because they exclude the HCEs from the auto escalator. BUT then I started to wonder about the use of the 90 day permissible withdrawal feature (which the plan sponsor has used in the past) in a plan that may not be EACA at all (uniformity requirement). [1] Does the exclusion of HCEs from the auto escalation feature prevent the arrangement from being considered an EACA and therefore no 90 day w/d provision allowed? [2] Would excluding the HCEs from the automatic enrollment provision altogether allow the plan to be an EACA with use of 90 day w/d provision and 6 month extension on ADP/ACP? My thought here is that the HCEs would no longer be considered a "covered employee" and there no issue with uniformity requirement.
Number of replies posted  4 replies      Number of times viewed  44 views      Add Reply
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jim241 created a topic in Church Plans

Church Plan Wants to Increase Normal Retirement Age

A non-electing church plan wishes to increase normal retirement age for most participants, effective for already accrued benefits. I know the plan is not subject to 411(d)6, so no cutback issue. Any other issues besides potentially upsetting participants?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
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Eve Sav created a topic in 401(k) Plans

Employer Profit Sharing Contributions for Student Loan Repayments?

There are some articles floating around related to encouraging younger employees to participate in 401(k) plans while paying down substantial student loan debt, by making an employer contribution (described as a match) to the 401k plan. This is to encourage retirement savings, when younger employees are too saddled with college loan debt to participate in the 401(k) plan. These have been described as an employer contribution conditioned to student loan debt payment, as a flat dollar incentive, or percentage of pay. This appears to be a very different employee benefit from employer provided student loan incentive benefits that "match" student debt payments, which (as far as I know) continue to be taxable to the employee with the student loan debt. My client is interested in this as incentive for attracting millennial employees, and encourage them to pay off debt sooner, so they can afford to make 401(k) contributions. But I find little information on this topic. I don't any mechanism exists to call this a match, when there are employee elective deferrals, so I assume this would be a "profit sharing" contribution. I suppose one could create allocation categories with one of them being "participants who are paying college debt", providing a flat dollar allocation or% of pay allocation only to that group... and exclude HCEs (in the event there are any in that category). Some companies are selling this as an administration service, but the participants are required to refinance their student loans through the service provider, which gives rise to additional concerns for me. Has anyone designed such a 401k plan provision?
Number of replies posted  2 replies      Number of times viewed  32 views      Add Reply
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