Message Boards Digest

October 18, 2018

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

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Chippy created a topic in Plan Document Amendments

Changing Sponsorship to a Participating Employer Following Sale of Plan Sponsor

My current plan has 3 participating companies, all part of a controlled group (the plan sponsor and two other companies). The plan sponsor and one of the participating companies was sold, with one company remaining. Can I amend the plan so the remaining company becomes the plan sponsor?
Number of replies posted  5 replies      Number of times viewed  40 views      Add Reply

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pixmax created a topic in 403(b) Plans, Accounts or Annuities

Troubling Exclusions in 403(b) Document

I just picked up a 403(b) document for a tax-exempt entity. It excludes employees who work less than 36 hours per week, with a 24 month waiting period (elapsed time method) and a 3-year cliff vesting schedule. Does at sound right? For deferrals, it would seem to violate the universal availability requirement. As for the match, assume that someone has been there for 24 months and has worked 1000 hours within a 12 month period -- wouldn't they be eligible? Finally, with a 2-year wait, can the plan have a vesting schedule?
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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52626 created a topic in 403(b) Plans, Accounts or Annuities

Tax-Exempt Organization Has a 403(b) Plan but PEO Wants It Terminated

501(c) organization maintains an ERISA 403(b) plan (deferrals plus employer contributions). It's considering a move to a PEO, which sponsors a 401(k) plan. The PEO is recommending the termination/freezing of the 403(b), and the adoption of their 401(k). But nothing prevents the organization from continuing to sponsor a 403(b), correct? And it's not required by law to adopt the PEO's plan, correct?
Number of replies posted  1 reply      Number of times viewed  25 views      Add Reply
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msmith created a topic in Retirement Plans in General

Carrying Contributions as a Receivable

How many plan years would you would carry a matching contribution as a receivable (whether or not discretionary)? What about a money purchase contribution? We have advised the client to discuss the deduction issue with their CPA.
Number of replies posted  3 replies      Number of times viewed  48 views      Add Reply
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Phlyers created a topic in 401(k) Plans

Catch-All Provision for Crediting Prior Service with Future-Acquired Companies?

We have a sponsor and an adopting employer who are acquiring the assets and employees of numerous companies. They want to credit prior service. Is it permissible to have some sort of catch-all language that credits prior service with any company that is purchased (now or when one is purchased in the future), instead of amending the plan each time and listing the particular companies? The ftwilliam document says to list each company. I think I've seen Relius documents that have such a provision, though.
Number of replies posted  2 replies      Number of times viewed  48 views      Add Reply
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herb lindberg created a topic in Employee Stock Ownership Plans (ESOPs)

Early Payment to Alternate Payee

Our ESOP document has provisions that duplicate the federal rules for payment to QDRO alternate payees. We received a DRO which became a QDRO. Payment to the alternate payee will be in 5 years. When handling QDROs in the past, we have segregated the alternate payee's funds to a third party. Federal law allows for early payment if we choose, correct? In this particular case we believe the alternate payee could use the funds early. Could we negotiate a 'discount' on the funds the alternate payee would receive? Would this set a precedent for future QDROs?
Number of replies posted  1 reply      Number of times viewed  24 views      Add Reply
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K2 created a topic in Defined Benefit Plans, Including Cash Balance

Notice to Participants About Upcoming DB Plan Termination (Not Covered by PBGC)

I want to terminate a plan as of Deceember 31, 2018, and to freeze accruals as of November 15, 2018. I plan to submit an application for approval to the IRS. The plan is not covered by the PBGC. I have a 204(h) notice prepared, ready to send out on October 31. Is a Notice of Intent to Terminate required when a plan is not covered by the PBGC? Or some other notice to the participants that the plan is terminating? If so, is it needed 60 to 90 days in advance? I know about the IRS-required notice to interested parties (10 to 24 days prior to my IRS application submission). Also, can I submit my application to the IRS before the plan termination date?
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply
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30Rock created a topic in 401(k) Plans

Must Take Out a Loan Before Getting a Hardship Distribution? (Pre-2019 Rules)

Under current safe harbor hardship rules (prior to 2019), I understand there is a requirement that a participant first borrow from the plan before a hardship distribution can be made. But isn't there an exception such that, if the loan will create an additional hardship, the plan can waive the loan requirement? How would a recordkeeper apply such an exception. Merely rely on the employee's certification?
Number of replies posted  2 replies      Number of times viewed  39 views      Add Reply
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ldr created a topic in 401(k) Plans

Proposal to Combine Plans of Separate Companies: Makes a MEP, or a MESS?

We have very little experience with MEPs. A client owns two separate businesses and maintains a 401(k) plan for each business. One has fewer than 100 employees but the other is quite close to the level where an independent audit would be required. A new investment advisor is recommending that a MEP be created out of the two plans, and says there would be lower fees from the recordkeeper. Is this potential new MEP considered one plan with one Form 5500 to file? Would the plan need an independent audit (because it would have more than 100 participants once the two companies are considered together)?
Number of replies posted  12 replies      Number of times viewed  72 views      Add Reply
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maylavinia created a topic in 401(k) Plans

Loan Overpayments on First (Paid Off) Loan Applied to Second Loan

Just discovered that an employee with two 401K loans paid off the first loan a year ago. We received no notice of pay-off. The employee did not notice it on the loan history website. 29 overpayments were applied to the employee's second loan without authorization from the employee or notice to the employee. This is the second time the company we hired to manage the 401K has done this with an employee in two years. Is it legal? The employee would have preferred to stop making TWO payments after the first loan was paid off, and to make only one payment per the amortization schedule for the remaining loan. This practice seems to be a breach of fiduciary duty as well as being illegal.
Number of replies posted  5 replies      Number of times viewed  47 views      Add Reply, Inc.
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