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October 2, 2018

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

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Stash026 created a topic in 401(k) Plans

Change of Employer Identification Number

I just took over a plan who changed their EIN number during 2017. I'm not sure why. Anyone have any experience on notifying the IRS of this change, so we don't have an issue when filing the Form 5500?
Number of replies posted  5 replies      Number of times viewed  62 views      Add Reply
 
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EBECatty created a topic in Correction of Plan Defects

SCP or VCP to Extend Permissible Loan Term

I've seen a few prior threads on this but wanted to get current input. A plan's loan policy allowed 15 year loans for primary residences. Loans longer than 15 years (but assume still reasonable) were made. Plan sponsor is fine with amending the loan policy to allow longer primary residence loans (both for outstanding and future loans).

Section 6.07 of EPCRS (including current version now in 2018‑52) allows for correction of loans in violation of 72(p)(2)(B) and (C), but here the primary residence exception applies and allows for a reasonable loan term. No violation of (B) or (C). VCP would seem to be required, but 6.07 only mentions correction by re-amortizing, which isn't the plan sponsor's preferred course because the original term is permissible under 72(p).

I suppose the alternative is to retroactively amend to conform to prior operations under the more generic VCP provisions of Section 4.05.

Section 2.07 of Appendix B allows certain retroactive amendments under SCP. Section 2.07(2) allows a retroactive amendment under SCP to add loans to a plan whose terms did not allow them. But it does not mention amending under SCP to extend the term of an otherwise permissible loan.

Is VCP required to retroactively approve the longer term? if so, would Section 4.05 be the appropriate section?

Try SCP and document file stating that extending the loan term seems more analogous to SCP under Appendix B?

Number of replies posted  0 replies      Number of times viewed  20 views      Add Reply
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The Guru created a topic in Distributions and Loans, Other than QDROs

Participants Won't Cash RMD Checks

Several 401(k) plan participants haven't been cashing their required minimum distribution checks for a few years. The plan administrator is moving the funds from the stale checks into a forfeiture account, to be used to pay plan expenses. Kosher? I suppose the participants already have been taxed on the distributions.
Number of replies posted  2 replies      Number of times viewed  53 views      Add Reply
Author's photo

Liam created a topic in Form 5500

Refund of Loan Principal Overpayment -- Where to Report on Form 5500

I'm working on a 2017 Form 500 for a plan and have a small issue. One participant got a refund of $50 loan principal overpayment in 2017 for a 2016 loan. How can I characterize this refund on 5500?

I was thinking about putting that $50 as negative ($50) in other income or $50 in the Benefit payment -- directly to participants. I looked into the 5500 Instructions:

Line 2c. Other income. Enter all other plan income for the plan year. Do not include transfers from other plans that are reported on line 2l. Other income received and/or receivable would include: [1] Interest on investments (including money market accounts, sweep accounts, STIF accounts, etc.). [2] Dividends. (Accrual basis plans should include dividends declared for all stock held by the plan even if the dividends have not been received as of the end of the plan year.) [3] Rents from income-producing property owned by the plan. [4] Royalties. [5] Net gain or loss from the sale of assets. [6] Other income, such as unrealized appreciation (depreciation) in plan assets. To compute this amount subtract the current value of all assets at the beginning of the year plus the cost of any assets acquired during the plan year from the current value of all assets at the end of the year minus assets disposed of during the plan year.

Line 2e(1) Directly to participant. Payments made (and for accrual basis filers) payments due to or on behalf of participants or beneficiaries in cash, securities, or other property (including rollovers of an individual's accrued benefit or account balance). Include all eligible rollover distributions as defined in Code section 401(a)(31)(D) paid at the participant's election to an eligible retirement plan (including an IRA within the meaning of Code section 401(a)(31)(E)).

How should this be reported on the 5500? I'm leaning toward the Benefit payments directly to participant.

Number of replies posted  4 replies      Number of times viewed  48 views      Add Reply
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Mr Bagwell created a topic in 401(k) Plans

Counting Service for Sorta Unrelated Company

Plan A and Plan B are not a controlled group, but there is some common ownership. The employers would like hours of service under either plan to count for both plans. For example, Bob is hired by Company A and then terminates with 2 years of service. Goes to work for Company B, performs a year of service. So the goal would be that the 2 years of service for Company A would mean Bob would have 3 years of service for vesting purposes under Plan B. Do-able? If yes, one would need to write a special provision into the plans, I am supposing.
Number of replies posted  4 replies      Number of times viewed  61 views      Add Reply
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PensionPro created a topic in 403(b) Plans, Accounts or Annuities

Nondiscrimination Testing Needed for 403(b) Plan with Limited Definition of Compensation?

We have a 403(b) plan that excludes commissions and bonuses for deferral purposes. Is there any nondiscrimination testing involved or is this OK?
Number of replies posted  4 replies      Number of times viewed  41 views      Add Reply
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M Norton created a topic in Retirement Plans in General

Compensation Calculation When Employee is 'Leased Employee' for Part of Year of Entry

Money purchase plan has single entry date. If someone meets eligibility during the year, they become eligible as of the beginning of the plan year. Plan sponsor uses a temp agency to "test drive" workers. If they like a worker, they hire them after 3 or 6 months. Once hired as a regular employee and no longer temp, so it is possible for a worker to meet eligibility during the plan year and have worked as a temp for part of that plan year. The question is, how to calculate the contribution for a participant who was a temp worker for part of the year? Do you have to get the compensation paid by the temp agency for that period? Or do you just use the compensation paid by the plan sponsor from the date the worker became a regular employee?
Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply
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