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Message Boards Digest

September 18, 2018

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

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RatherBeGolfing created a topic in 401(k) Plans

Another Allocation/Contribution/Deduction Timing Question

Client has a calendar year 401(k) plan with a SH match, no profit sharing contribution in recent years. Client initially wanted to do SH only for 2017. 2017 corporate return was filed with the deduction for the SH match. Client now wants to reconsider the profit sharing allocation for 2017, but the CPA has some concerns since they already finalized the 2017 return and would need to make the deposit today (Monday, Sept. [17] in order to deduct it for 2017. I'm considering the available options and the first that comes to mind is to make the contribution sometime between now and 10/15, which would let me allocate and count the PS for the 2017 annual additions but take the deduction in 2018. If I do that and max my principals out at their 2017 annual additions, I can still max them out for their 2018 annual additions and deduct both in 2018 as long as the total contribution deducted in 2018 (2017 PS and 2018 annual additions) does not exceed 25% of 2018 covered comp. Correct?
Number of replies posted  2 replies      Number of times viewed  43 views      Add Reply
 
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Snicky created a topic in 401(k) Plans

Rehired After 14 Years -- Count Earlier Service for Vesting Purposes?

I have a rehired employee who terminated employment back in 2004 (he worked 1997‑2004). He was rehired in August of this year. I don't want to credit the prior years of service and I want to have him start over for vesting purposes. But am I allowed to do so? If so, is there anything I can do to amend the plan document to stop this from recurring with other rehires? Currently the plan uses a a volume submitter document.
Number of replies posted  4 replies      Number of times viewed  89 views      Add Reply
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PensionPro created a topic in Retirement Plans in General

Calculating Allocations for Self-Employed Participants in an Integrated PS Plan

I am looking for a two tier integrated spreadsheet for calculating profit sharing allocations under a plan sponsored by a partnership. Some partners' plan compensation will be over the taxable wage base but some will be below it.
Number of replies posted  6 replies      Number of times viewed  54 views      Add Reply
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Cynchbeast created a topic in Retirement Plans in General

Handling EIN for Proposed DB Plan's Trust If Plan Was Never Implemented

In 2014, we obtained an EIN for a DB trust for a prospective client. In the end, they never adopted the plan. They have recently contacted us again to start a DB plan. Can or should we use the EIN we got over 4 years ago or should we apply for a new one?
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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ERISA-Bubs created a topic in Nonqualified Deferred Compensation

Effect of Early Retirement Window under Qualified DB Plan on Participants in a Nonqualified Plan

We have a tax-qualified defined benefit pension plan. We're going to implement an early retirement window under which people get extra age and service if they retire during a specific time period. We also have a nonqualified defined benefit plan that's linked to the qualified plan. It provides additional benefits in excess of what is allowed under the qualified plan. The benefit someone receives under the nonqualified plan is directly affected by the benefit one receives under the qualified plan -- the more someone gets under the qualified plan, the less he gets under the nonqualified plan. We don't want the benefit under the nonqualified plan to be affected by someone taking advantage of the early retirement window. In other words, just because I'm getting a larger benefit under the qualified plan for participating in the early retirement window, I don't to get a small benefit under the nonqualified plan. Are there any issues with amending the nonqualified plan to so provide?
Number of replies posted  1 reply      Number of times viewed  19 views      Add Reply
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BombyxMori created a topic in Qualified Domestic Relations Orders (QDROs)

Plan's duty when QDRO inconsistent with divorce decree?

Is there any consensus on whether a plan should rely on a QDRO when the administrator has reason to know that the QDRO conflicts with the underlying divorce decree's division of property?

If you receive a QDRO, you review it, determine if it meets the requirements of a QDRO under ERISA, and if so, you implement it. Does that change if you get extraneous information, like if you also happen to receive the divorce decree and the QDRO does not appear to reflect it accurately? Does a duty to investigate arise? Or is the plan required to implement the terms of the QDRO and not look beyond this?

From what I have seen, different states have different rules about modification of a final divorce decree. Accordingly, different state courts have come to some different conclusions about the validity of a QDRO that conflicts with the divorce decree, based on whether state law allows it as a modification. But this issue arises in disputes between the parties to the divorce. It seems to me that it can't be the case that a plan has a duty to inquire or to know, under the state law of various states, whether a QDRO should have been entered or not, if, in fact, it was entered. If you receive it and it is signed and court-certified, but you also receive the divorce decree, and they're inconsistent, does a plan ever have a responsibility to determine whether it was a permissible modification of the divorce decree?

The 2010 regulations at 2530.206 seem to suggest that plans shouldn't take this into account. "[A] domestic relations order shall not fail to be treated as a qualified domestic relations order solely because the order is issued after, or revises, another domestic relations order or qualified domestic relations order." Would you read this to mean that, when the QDRO is subsequent to the divorce decree and is inconsistent with it, that it shouldn't fail to be a QDRO on that basis?

However, if it is void under state law because it impermissibly modifies the final divorce decree, then it is not an order "entered pursuant to state law," is it? But are plans ever responsible for raising that? Or is that strictly for the parties thereto to work out?

Number of replies posted  3 replies      Number of times viewed  61 views      Add Reply
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Stash026 created a topic in Distributions and Loans, Other than QDROs

Changing Frequency of Loan Payments

A participant is making quarterly repayments, but the large cost has become too burdensome and he'd like to have it taken out via payroll deduction instead. What interest rate should be used by the plan in order to handle the request? The rate at the time the loan was taken or the current rate? Also, he's asked if the loan could be paid back over a little bit longer time period (it originally was set for 3 years).
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply
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HCE created a topic in 409A Issues

409A Issue: Accelerating Payments Under Short Term Deferral Exception

We have a payment that is supposed to be paid 10 days after vesting, so it's subject to the short term deferral exception. We want to accelerate the vesting, which would mean we are accelerating the payment as well, but it still would be subject to the short term deferral exception. I recall some guidance saying this still violates the anti-acceleration rules even though at no time was it technically was deferred compensation (since it was under the exception in both cases). I can't find it now. Am I remembering correctly?
Number of replies posted  2 replies      Number of times viewed  24 views      Add Reply
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tja created a topic in Governmental Plans

Pick-Ups for Specific Classes of Employees Under Governmental Plans

One of the requirements for a pick-up arrangement is that the "employer must specify in writing (e.g., minutes of meeting, a resolution, or an ordinance) that "contributions on behalf of a specific class of [its] employees ... although designated as employee contribution, will be paid by the employer in lieu of employee contributions." Is there any guidance on what constitutes a "specific class of employees"? It appears that the employer need not cover all employees, just a "specific class." For example, can the employer commence pick-ups after two years of service and have different rates of pick-up for different classes of employees covered by the plan? Can the employer prospectively change the amount of the pick-ups, provided the employee doesn't have a cash or a deferred election right?
Number of replies posted  1 reply      Number of times viewed  13 views      Add Reply
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