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October 10, 2018

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

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lappinlandis created a topic in Cafeteria Plans

Pre-Tax Arrearages Collected Following Year

Our company allows medical (actually, all) deductions to go into arrearage when an employee is on an unpaid Leave of Absence. I always recover the deductions in the same year, but now am being asked if we can spread these out over a longer period, which would move us into the new calendar year. Somewhere in my brain is the belief that pre-tax deductions recovered in the next calendar year become taxable, but an hour of Googling has turned up no information. Can someone please verify (or refute) this for me?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
 
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Bri created a topic in 401(k) Plans

Late Deposit of a Single Week's Elective Deferrals Earlier This Year

Plan is a large employer. There's a 50-on-5 match, payroll period basis. Not safe harbor, and they do choose, operationally, to make the match deposits each week. Everyone's deposits for 2017 were fine except for an owner's, who missed one week's worth for some reason -- $375 in 401(k) deferrals and a $187.50 match. (He's salaried and these amounts were consistent every week.) If this were a small plan, they'd have the 7 business day safe harbor. Since they are prompt with their deposits, there's at least some sort of argument that, "Hey, we *could* say one deposit was 30 weeks late. Or we could say that the next 29 deposits were all 1 week late -- but within 7 business days." Anyway, that's not exactly where I'm going with this one -- I would like to at least suggest that the fact that the guy's been getting match contributions all along, that those almost serve to "cover" the 401(k) amount due by the deadline for the deposit. At no point during 2017, was his account underfunded relative to his payroll withholdings. The plan sponsor has a requirement to keep pace with the funding of the deferrals, and not the match (which could be deposited up until tax filing day in 2018). I suppose a potential snag is that if this "early money" went in before the paycheck that was missed, then it could be construed as accelerating funding of the plan. Can you tell I'm trying to avoid reporting $375 on the 5500 and preparing a 5330?
Number of replies posted  2 replies      Number of times viewed  58 views      Add Reply
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akollman06 created a topic in Defined Benefit Plans, Including Cash Balance

'Meaningful Benefits' under Code Section 401(a)(26)

We are the actuaries on a plan the IRS is reviewing to see if the plan meets 401(a)(26) meaningful benefits. The IRS actuary is taking the position that meaningful benefits are determined by taking the end of year total accrued benefit, dividing it by years of credited service and then dividing by testing compensation. The actuary then compared this result to see if it meets the "0.5% meaningful test." Using the accrued benefit seems contrary to our understanding of 401(a)(26). All information we have on this points to using just the annual credit (as an annuity) and dividing by testing pay. Does anyone have any thoughts on this? Also, has anyone else seen this interpretation by the IRS?
Number of replies posted  4 replies      Number of times viewed  59 views      Add Reply
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ERISAgeek111 created a topic in Correction of Plan Defects

VCP or VFCP: What's the Difference?

What is the difference between a VCP filing and VFCP filing? I understand one is for operational failures, and the other for fiduciary violations, but can they ever overlap? Are you ever required to file both?
Number of replies posted  3 replies      Number of times viewed  38 views      Add Reply
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AsppaMan created a topic in 401(k) Plans

Why Does ACP Test Apply to Voluntary After-Tax Contributions?

Why are voluntary after tax contributions tested under ACP? It's a contribution an individual is making after tax out of their own pocket. Why would it be tested with match contributions?
Number of replies posted  4 replies      Number of times viewed  57 views      Add Reply
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Puffinator created a topic in Correction of Plan Defects

Two Issues: Can Use a Single Form 5330?

Issue [1] Ineligible participation: Plan sponsor allowed an ineligible employee to participate in the plan too early during 2017. For whatever reason, the client does not want to retroactively amend to correct this specific person's participation. This plan processed a refund of the deferral and forfeiture of the affected employer match today, 10/9. (Yes, today. Don't get me started on that story.) Issue [2] ADP-ACP refunds: The plan is also tested; failed ADP-ACP (of course) and corrective refunds are being processed. Again, it is October. Obviously, well past 3/15. 12/31/2017-ending plan year... Both issues occurred in the same tax year and being corrected in subsequent (current) year. Can we report both of these bad boys on one 5330?
Number of replies posted  0 replies      Number of times viewed  11 views      Add Reply
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