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Message Boards Digest

September 28, 2018

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

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mjf06241972 created a topic in Retirement Plans in General

Sponsor of Solo 401(k) Hires Employees: Must Now File 5500SF?

I have a solo 401k plan that now has employees. The solo plan has filed Form 5500-EZ for past several years. Can I transition the tax return automatically to the 5500SF because they now have employees or do I have to do anything with the 5500-EZ?
Number of replies posted  5 replies      Number of times viewed  61 views      Add Reply
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Eaglehoops created a topic in Distributions and Loans, Other than QDROs

New 1099R Distribution Code for Reporting Loan Offsets

I'm looking for confirmation on the new 2018 1099-R distribution code 'M' for reporting loan offsets from qualified retirement plans:
  1. If a participant receives a cash distribution that includes a loan offset, we now issue two 1099Rs: one for the actual cash received that would reflect withholding on that portion (distribution code of 1, assuming non-Roth, under age 55), and a second one to report the loan offset with any applicable tax w/h applicable on that portion (same assumptions, distribution code M1). Prior to this new code coming out, we reported this scenario all on one 1099R. Is my understanding correct?
  2. If the cash was from a Roth account and the outstanding loan balance was also from the Roth account, we don't include code M since only 2 codes are allowed. Roth loan offsets would continue to use codes B1 using the age example above. Correct?
  3. Do we have to go back and correct 2018 1099Rs on loan offsets processed prior to this new code coming out?
Number of replies posted  0 replies      Number of times viewed  32 views      Add Reply
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Purplemandinga created a topic in 401(k) Plans

Excise Tax for Nondeductible (Excess) Contributions

A plan made a profit sharing contribution to the 2017 calendar year plan that utilized incorrect compensation during nondiscrimination testing. Let's say this contribution was $50,000. When the nondiscrimination was corrected, the correct allocation should have been $10,000. So $40,000 was forfeited for use in future years. The problem here was the tax deductible contribution threshold for 404 lowered to $40,000 from its original amount of $160,000. Is there a way to avoid paying excise taxes on Form 5330 for $10,000 of contributions that were over and above the 404 limit?
Number of replies posted  5 replies      Number of times viewed  55 views      Add Reply
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Pammie57 created a topic in 401(k) Plans

Sale of Business (Stock Sale) as of October 1; Effect on ADP Test?

A small business client has a 401k Plan that has to pass the ADP test for 2018. They are not Safe harbor. As of 10/1 the 100% owner is selling the stock to two previously rank and file employees. The plan has always passed the ADP test in prior years because the owner only deferred 2 percent more than these employees did. As of the end of the year, who is considered an HCE for the ADP test? Do the two new owners join the former owner in the HCE group, or does the previous owner become part of the NHCE group for ADP testing? Three other eligible NHCEs defer nothing. Any way around this for the year of sale? It looks like a possibility of the plan failing ADP. There is no match to consider.
Number of replies posted  7 replies      Number of times viewed  72 views      Add Reply
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Princess(k) created a topic in Communication and Disclosure to Participants

Fee Disclosures -- Incorrect Administrative Expense Shown

I have a client for whom the original service agreement indicated all fees were to be paid by the employer. The participant disclosure reflected so. THEN, the employer changed the agreement with a portion paid by the employer and the remainder deducted from participant accounts. The participant fee disclosure was not updated and has described for the last 4 years that all fees are paid by the employer. Quarterly statements are sent in which participants can see the amounts deducted attributable to fees. At this point, I have updated the disclosure to properly reflect a portion paid by the employer and the remainder deducted from participant accounts. What other action must be taken?
Number of replies posted  0 replies      Number of times viewed  15 views      Add Reply
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cathyw created a topic in 401(k) Plans

New Plan with Mid-Year Effective Date for Deferrals

If we set up a profit sharing plan with CODA now, make the plan effective 1/1/18 but the 401(k) provisions effective 11/1/18, do we need to include in the ADP test an employee who terminated employment before 11/1/18?
Number of replies posted  3 replies      Number of times viewed  59 views      Add Reply
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5500Nerd created a topic in Form 5500

VSP Schedule A for Form 5500

VSP (as well as other carriers) report on their Schedule As as if the contract is experienced-rated even though the contracts are confirmed non-experienced. This causes confusion and frustration for plan sponsors. Delta Dental used to conduct their Schedule As in this manner and has reverted to just reporting the premiums, commissions, etc. for non-experience. By chance, has VSP made any declaration on why they have switched their approach?
Number of replies posted  0 replies      Number of times viewed  12 views      Add Reply
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