Message Boards Digest

August 31, 2018

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

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Karoline Curran created a topic in 401(k) Plans

Require Deferral Amounts to Be Dollar Amounts, Not Percentages?

The financial advisor for a plan only allows participants to make deferrals in dollar amounts, not percentages, to make it easier for the CPA who does payroll and enters the contributions into the investment house's website. Is this an issue, or is restricting them to a dollar amount not ethical?
Number of replies posted  8 replies      Number of times viewed  84 views      Add Reply

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AdKu created a topic in Form 5500

How Many Times Can Form 5500 Be Amended?

How many times can you amend Form 5500 for a single plan year? Are there amending timing issues? Facts: A client 2016 Form 5500 was resubmitted in 2018 because DOL required the Independent Auditor to fix his audit report to follow certain GAAP guidelines. Some months later in 2018, DOL send a letter to the client requesting to apply for VFCP to properly correct the late employee deferral contribution remittance that was reported on the 2015 and 2016 plan year. The 2016 plan year Form 5500 that was filed with DOL had the total late contribution for 2016 plan year only. VFC program requires to report the total of both the 2015 and 2016 late employee deferral contributions on the 2016 Form 5500 until such year the plan applied for VFCP. Is it OK to amend the 2016 Form 5500 for the second time in 2018?
Number of replies posted  1 reply      Number of times viewed  49 views      Add Reply
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Belgarath created a topic in Employee Stock Ownership Plans (ESOPs)

Effects of New Stock Appreciation Rights Program on Existing ESOP

So suppose a S-corporation has an ESOP that owns 100% of the stock. The employer is considering implementing a "SAR" plan. Does this SAR plan have any impact on the ESOP? What little I know about a SAR plan is that under some circumstances, it MAY be possible that they would be considered a retirement plan; so would there be issues with 404, 415, etc.? Assuming that's not a problem, it seems it could be considered compensation that might indirectly affect the ESOP, depending upon whether it represents currently taxable W-2 income or not.
Number of replies posted  7 replies      Number of times viewed  38 views      Add Reply
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calexbraska created a topic in Correction of Plan Defects

Correction of Failed Coverage Test

We failed coverage testing for our match. We decided to correct by giving QNECs to non-highly compensated employees (non-HCEs). Do we need to give QNECs to all the non-HCEs? Can we pick one group to contribute to and leave out another group? What about people who are no longer employees -- do we have to include them? Can we include some but not all of them? We have a group of people who are arguably benefits-ineligible that we'd like to exclude, but there is an argument that they're eligible, so if we are required to include all the non-HCEs, we may have to give them QNECs as well.
Number of replies posted  0 replies      Number of times viewed  24 views      Add Reply
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Barbara created a topic in Defined Benefit Plans, Including Cash Balance

Application of 25-Highest-Paid Participants Restriction: OK to Roll Over Lump Sum Payments?

We have a frozen DB plan where the 25 highest paid restrictions come into play. We understand that participants who are restricted may elect to take a lump sum payment each year equal to the sum of 12 monthly life annuity payments. May these 12 monthly payments aggregated into a lump sum be rolled over to an IRA?
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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K2 created a topic in 401(k) Plans

Idea: Adopt Second Profit Sharing Plan to Avoid Required 3% Top-Heavy or 5% Gateway Contributions

A company has a 401k PSP with a Safe Harbor match. Participation rate is less than 50%. Owner of company is looking to max out, but giving 3% TH or 5% gateway to all employees is expensive. This is a 50-person, 5-HCE plan. Proposal is to create a second plan. The two owners and a subset of young HCEs would be in that PS-Only plan with 2 year eligibility. Both plans would be TH, but the majority of people would be in a SHM only plan that would satisfy their minimum. Would a contribution to the standalone profit sharing plan eliminate my free pass on TH minimum in the SHM?
Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply
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Karoline Curran created a topic in 401(k) Plans

Penalty for Late QDIA/Fee Disclosure Notices?

Are there penalties for late distribution of QDIA/fee disclosure notices? A September 30 plan should have gotten both notices by today, but the recordkeeper is running late and says the notices will not be received timely. The client is worried about a penalty from the DOL.
Number of replies posted  0 replies      Number of times viewed  11 views      Add Reply
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EBECatty created a topic in Other Kinds of Welfare Benefit Plans

Trouble Handling Demutualization Proceeds of Terminated Plan; Employees Already Gone

Employer had Trigon/Anthem health insurance for many years. It never received shares in the demutualization process; they found their way to the state unclaimed property fund, which eventually sold them for cash, and just recently distributed the cash to the employer. Problem is, the employer terminated all its employees several years ago. Some now work for a related entity over which the employer has no control. The employer getting the demutualization proceeds has no employees, no group health plan, etc. At least some, but not many, of the demutualization proceeds were from employee premium payments. Many were from the 1990s and payroll records have been lost/destroyed. The DOL guidance doesn't seem to squarely address the situation. There are cases where funds from a terminating welfare benefit plan are transferred to another welfare benefit plan covering the same employees, but I can't find anything where the plan was out-and-out terminated and no employees remain. Regs say upon termination of a welfare benefit plan, the remaining assets will be distributed in accordance with the plan. Here it was just a group health and dental policy. Is it a reversion if the employer takes the money back? Subject to excise tax? A PT? Is the only option track down former employees and give them a check for an arbitrary amount? Can we give the money to the other related employer to use toward these employees' current premiums/benefits?
Number of replies posted  6 replies      Number of times viewed  42 views      Add Reply, Inc.
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