Message Boards Digest

September 12, 2018

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

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ERISA-Bubs created a topic in Nonqualified Deferred Compensation

Can a Company Offer Coverage Under Nonqualified Deferred Compensation Plan to a Non-Service Provider?

Company A is selling Sub X. Executive works for Sub X. As part of the deal, Company A is going to provide nonqualified deferred compensation to Executive. However, after the transaction, Executive will not be an employee or independent contractor to Company A. [1] Are there any problems with Company A providing a nonqualified deferred compensation arrangement to Executive, considering Executive is not a service provider to Company A? [2] What is the governing law here? Code Section 409A is all about service recipients providing nonqualified deferred compensation to service providers. We don't have that relationship here. Or, do we, since Executive was a service provider to Company A's Sub X, and it is that relationship that lead to this situation?
Number of replies posted  3 replies      Number of times viewed  30 views      Add Reply

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Debbie Rath created a topic in 401(k) Plans

Top Heavy Minimum Under These Circumstances?

Is a top-heavy contribution required to the non-owner HCE based on the following?
  • 401(k) plan.
  • 3% non-elective safe harbor contribution with excludes key employees and HCEs.
  • Non-owner HCEs are making deferrals but excluded from all employer contributions in plan document.
  • Plan is top-heavy.
Number of replies posted  6 replies      Number of times viewed  64 views      Add Reply
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RestAssured created a topic in Investment Issues (Including Self-Directed)

New Custodian Doesn't Like In-Plan Roth 401(k) Conversion

A client performed an In-Plan Roth Conversion (IPRC) a few years ago. He was in a segregated account and even "carved out" that portion and opened a separate segregated acct just for that newly-Roth money (which is still inside the plan). Fast forward. Client now is changing investment custodians. The new custodian says it won't accept this Roth-segregated plan account because it's Roth conversion money. Ever heard of such a thing? What can we do, besides finding a new custodian? My client is worried that when he finally rolls all his money out of the plan, he will be taxed again on that part which has already been taxed.
Number of replies posted  2 replies      Number of times viewed  31 views      Add Reply
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Belgarath created a topic in Nonqualified Deferred Compensation

Nonqualified Deferred Comp Plan: Any Limit on Percentage of Highly Paid Participants?

A business has 500 employees, of which 90 are highly paid. Assume it's a giant medical practice. Is such a plan limited to a "select group of management or highly compensated employees" similar to a 457 plan, or are there no limits on who/how many can be covered?
Number of replies posted  5 replies      Number of times viewed  54 views      Add Reply
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ldr created a topic in 401(k) Plans

Effect of Irrevocable Opt-Outs by Certain HCEs on the Top Heavy Calculation

A plan has 3 doctors plus staff. Although all of the doctors are HCEs, only one is a Key Employee (the 100% owner). The other 2 doctors have signed irrevocable waivers of participation and are not part of the plan. They are in the census in our software program, classified as being in an ineligible class of employees. When we run the Top Heavy calculation, we get error messages saying that we have failed to meet the TH requirements because these two doctors are not getting a TH minimum contribution. If they have signed the irrevocable waiver, it is our understanding that they are not eligible for any portion of the plan at any time, including the TH minimum. Correct? We have read the plan document, and we have a call in to the software provider to see if we are coding things incorrectly. In the meantime, we wanted to ask the experts if these two doctors are supposed to be counted for any purposes in anything in the plan, Top Heavy or anything else?
Number of replies posted  3 replies      Number of times viewed  37 views      Add Reply
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msmith created a topic in 401(k) Plans

2016 Was a Rough Year: Failed ADP Test, and Top Heavy Contribution Not Made

I have a takeover plan (from a payroll company!) that never corrected a 2016 failed ADP Test and the Plan Sponsor was never told the Plan was top heavy. If correcting the 2016 Plan Year under SCP, can the QNEC also be used to correct the top heavy minimum allocations (same as the current year use of QNEC to satisfy TH minimums)?
Number of replies posted  1 reply      Number of times viewed  24 views      Add Reply
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ciscokidyo created a topic in 401(k) Plans

Matching Employee Contributions When Several Kinds of Employee Contributions Can Be Made

Company matches 6% of employee contributions. There are pre-tax and after-tax, Basic, Supplement, and Roth. I don't know what's the best choice. Do you split?
Number of replies posted  4 replies      Number of times viewed  38 views      Add Reply
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thepensionmaven created a topic in Retirement Plans in General

S Corporation: Deadline for Making Employee Contributions to 401(k)

I know a sole proprietor and/or partner has until the due date of their tax return to make the contribution, including deferrals. I do not believe this applies to a shareholder of an S Corp, maintaining a SHNE 401(k) with common-law employees. I believe the employee contribution would have had to have been made by 12/31 and the employer contribution would have to be made 9/15 on extension. Correct?
Number of replies posted  3 replies      Number of times viewed  36 views      Add Reply, Inc.
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