Message Boards Digest

July 20, 2018

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

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B Gene Stair created a topic in 401(k) Plans

Need Solo 401(k) Assistance

Client needs assistance sorting out issues concerning an existing solo 401(k) plan. Concerns: Proper original setup and ongoing service. Can anyone help?
Number of replies posted  2 replies      Number of times viewed  61 views      Add Reply
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AlbanyConsultant created a topic in Form 5500

Plan Sponsor Changes EIN; File 5500 Must Be Filed, Showing Zero Participants?

Plan sponsors change their EINs for reasons. When we complete the 5500-SF, we note on Line 4 that in the previous year, they used to be a different name and different EIN; presumably that is there to help EBSA track the filing when the EINs don't line up. A year or so later, the plan sponsor gets a letter that a filing is missing. When we finally speak to someone, they tell us that the old EIN needs to have a final 5500-SF filed showing the participant count going down to zero and the assets transferring to the plan under the new EIN. "But it's the same plan." Doesn't matter. In their tracking, that EIN is still open and needs a filing until the participant count (and the asset values, but that's secondary, it seems) goes down to zero and a final filing is received. We have been instructed to correct this issue by actual IRS agents by sending in amended filings showing this, even after they acknowledge that we have entered the information on Line 4 of the new EIN's filing that references the old EIN. So we have started proactively filing final 5500s for plans where the EIN changes (and "first filings" under the new EINs) when we see this happening. We've gotten no correspondence back on any yet, but there are so many questions... What about timing requirements? What is an appropriate date to use as the transfer, and when does that mean the 5500 is due? Whose crazy idea is this, and are they serious? And so on. Anyone else running into this? When it happened once, I was willing to just go with what the agent told me to close the issue. But when it got to several times, and now that our filings that continue the pattern seem to be going through OK, I'm wondering if this is some new directive that I missed.
Number of replies posted  4 replies      Number of times viewed  66 views      Add Reply
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TPA Bob created a topic in Correction of Plan Defects

In-Service Distribution Prior to 59-1/2

We have a plan that allows for in-service distributions once a participant has achieved 10 years of service, at any age. Plan contribution sources are 401(k), employer non safe harbor contributions, and participant rollovers. A participant who was under the age of 59-1/2 has received all of his employer and rollover monies and also some 401(k) monies which are restricted. Under EPCRS the correction is to take reasonable steps to secure repayment of the excess amount. We are assuming the participant does not have the capacity to return the funds. In that case, as the overpayment to the participant was a premature distribution, the employer is not required to make up the difference. It appears that a VCP filing will be necessary (and self correction not available). Comments or thoughts?
Number of replies posted  3 replies      Number of times viewed  46 views      Add Reply
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mming created a topic in Cross-Tested Plans

Reallocated Forfeitures on Comp-to-Comp Basis: Average Benefits Testing Still Required?

A 401k plan has a safe harbor design using matching contributions. The plan is not top heavy. There are no profit sharing contributions but there are a small amount of forfeitures to be allocated to participants who work at least 1,000 hours and are employed at the end of the year. New comparability (with each participant as a group) is normally used to allocate the forfeitures, however, doing the average benefit test and including the deferrals and match produce results much worse than if the forfeitures were allocated on a comp-to-comp basis. If the forfeitures are allocated on a comp-to-comp basis, would the ABT still be needed to be done? Can this type of allocation be considered nondiscriminatory?
Number of replies posted  4 replies      Number of times viewed  41 views      Add Reply
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bmore1147 created a topic in 401(k) Plans

New Bills Introduced to Congress

Congress introduced a few bipartisan bills that could have an impact on NDT -- anyone had a look yet? Specifically, S3221, "Retirement Felexibility Act." This one specifically is designed to incentivize the using ACA and auto escalation and provide some flexibility on SH contributions? I am curious as to the flexibility of SH contributions to satisfy testing; it appears to look similar to QACA -- see below.


(a) In General.--Subsection (k) of section 401 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:


'(A) IN GENERAL. -- In the case of a cash or deferred arrangement maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), for purposes of paragraph (13), the arrangement shall be treated as meeting the requirements of subparagraph (D) thereof if under the arrangement, the total elective deferrals (as defined in section 402(g)(3)(A)) with respect to any employee do not exceed an amount equal to the applicable percentage of the limitation otherwise applicable under section 402(g).

'(B) APPLICABLE PERCENTAGE. -- For purposes of subparagraph (A), the applicable percentage with respect to an arrangement is --

'(i) 40 percent in the case of an arrangement which does not meet the requirements of paragraph (13)(D) and is not described in clause (ii) or (iii),

'(ii) 60 percent in the case of an arrangement which is not described in clause (iii) and which would meet the requirements of paragraph (13)(D) if -- (I) 'equal to at least' were substituted for 'equal to' in clause (i)(I) thereof, (II) '2 percent of compensation, and such matching contributions meet the requirement of subsection (m)(11)(B)' were substituted for '6 percent of compensation' in clause (i)(I) thereof, and (III) '1 percent' were substituted for '3 percent' in clause (i)(II) thereof, and

'(iii) 80 percent in the case of an arrangement which would meet the requirements of paragraph (13)(D) if-- '(I) 'equal to at least' were substituted for 'equal to' in clause (i)(I) thereof ...

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