Message Boards Digest

September 6, 2018

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

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Sym401k created a topic in Defined Benefit Plans, Including Cash Balance

Set Up Cash Balance Plan for 2018 Despite SIMPLE IRA Sponsorship?

Just looking to confirm if a company currently is making contributions to a SIMPLE IRA they are precluded from setting up a Cash Balance Plan for 2018? We would need to terminate the SIMPLE by November 2 and set up a new plan effective 2019?
Number of replies posted  2 replies      Number of times viewed  30 views      Add Reply

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ldr created a topic in 401(k) Plans

Refusal to Make a PS Contribution by a Division of an Employer

A client, which happens to be an Indian reservation, has a commercial entity that sponsors an ERISA-covered 401(k) plan. That commercial entity has no HCEs. The employer decides that overall for 2017, it will contribute 5% as a profit sharing contribution for the year. Per the plan document, profit sharing is totally discretionary and is supposed to be allocated on a salary ratio basis. However, each division within the company is responsible for being a profit center and one division says it doesn't have the resources to make any contributions for 2017. This means that about 2/3 of the employees get a 5% of pay contribution and 1/3 of the employees get nothing. Again, there are no HCEs. Top Heavy status is not an issue. Passing 410(b) coverage testing is not an issue. Does anyone see any problem with this? Is it permissible for the 1/3 to get nothing in profit sharing for the year?
Number of replies posted  16 replies      Number of times viewed  91 views      Add Reply
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Jennifer D. created a topic in Distributions and Loans, Other than QDROs

Hardship Criteria for Loan

I have a terribly persistent participant who is convinced that you cannot put criteria on obtaining a loan from your retirement plan. Specifically, her plan requires hardship proof. Does anyone have the IRS reg that states you can put these types of criteria on your loan program?
Number of replies posted  8 replies      Number of times viewed  64 views      Add Reply
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Zoey created a topic in 401(k) Plans

New Company, New Plan, Special Participation Date

A new company, established in July 2018 (calendar fiscal year), wants to set up a new 401k plan for 2018. Assuming they are too late for a Safe Harbor plan for 2018 since the company was established with more than 3 months left in the year (to qualify for the exception to the 3 month rule) and now won't meet the notice requirement for a 10/1 effective date, we are going with a traditional 401k plan, with safe harbor provisions effective for 2019. The employer doesn't want his part-time employees in the plan. EVERYONE however, has the same July 2018 hire date, including the owner. Has anyone used language in the plan document, stating something to the effect that everyone employed on July 1, 2018, shall be eligible, providing that they are 21 years old and would "normally work 1,000 hours during the plan year"? Do you think this will fly? (I've used the age only requirement condition before, but haven't used an hour requirement condition under the special participation date before.)
Number of replies posted  10 replies      Number of times viewed  81 views      Add Reply
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WCC created a topic in Distributions and Loans, Other than QDROs

Let a Distribution Check Go Stale on Purpose?

Participant was forced out of the plan with a balance of under $1,000. Participant received the check which was made payable to him, but did nothing with it for 90 days. He realized he missed the 60 day rollover window and would rather not claim the funds as income. Can he intentionally let the check go stale and ask the record keeper to send a new check? Will that start the 60 window over again? I am guessing no, but thought I would ask the experts. The record keeper refuses to reissue a check to the IRA provider.
Number of replies posted  2 replies      Number of times viewed  52 views      Add Reply
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pam@bbm created a topic in Distributions and Loans, Other than QDROs

Rehired Participant Wants Distribution

A 56-year-old 401(k) plan participant terminated employment in May after working with the company for over 30 years. He was rehired in July to a position that is not an eligible class for participating in the plan so he is considered an inactive participant. He did not request his distribution during the time he was gone, but now he wants it. The plan doesn't allow in-service withdrawals and is silent on the subject of a rehired participant taking a distribution due to the prior separation of service. I don't believe he's eligible for the distribution now. Other than amending the document to allow for in-service, can anyone give me some guidance on this or a regulation?
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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ERISAAPPLE created a topic in 401(k) Plans

EACA with Auto Escalation: Notice Requirements?

Plan year is calendar year. Quarterly entry dates. Auto Escalation occurs on anniversary of entry dates. Is the notice still required within 30‑90 days before plan year? Example: Jane enters the plan on October 1, 2018, makes no election, and employer automatically withholds 3%. On October 1, 2019, provided Jane makes no election, employer will automatically withhold 4%. Result: Jane must receive the notice for the 2019 plan year between October 1, 2018 and December 1, 2018. The Adoption Agreement allows the employer to elect escalation on anniversary of entry dates. The basic plan document says the notice is provided 30‑90 days prior to plan year. This is an EACA, not a QACA. This doesn't seem right!
Number of replies posted  0 replies      Number of times viewed  12 views      Add Reply
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MarZDoates created a topic in 403(b) Plans, Accounts or Annuities

Merge Money Purchase Plan Into a 403(b) Plan?

Can a Money Purchase plan be merged into an ERISA 403(b) plan? Both plans are sponsored by the same employer.
Number of replies posted  2 replies      Number of times viewed  24 views      Add Reply
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katie58 created a topic in 401(k) Plans

Calculation of Matching Contributions: Who is Responsible?

A client recently changed payroll vendors. The payroll vendor calculates their match and notifies the client of the funding amount. During the client's recent audit, it was determined that the Compensation Limit was not capped at $170,000 when determining the match. The payroll vendor said it was not something they track. They indicated that the recordkeeper would catch that during the testing process. So basically the payroll vendor knows that the match is incorrect, but does not believe it's their responsibility to monitor this. The recordkeeper states that they assume that the match calculation is correct, unless they have been told differently. They indicated they do not test for match accuracy. I always assumed that the party calculating the match would take into consideration the annual compensation limits. What do you think?
Number of replies posted  9 replies      Number of times viewed  62 views      Add Reply, Inc.
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