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Message Boards Digest

October 30, 2018

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

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SSRRS created a topic in Defined Benefit Plans, Including Cash Balance

First RMD Before Terminating a Defined Benefit Plan

A one-participant owner-only DB plan wants to terminate and roll the assets to an IRA. I recall someone mentioning that, because the plan is terminating and rolling the assets to an IRA, the first RMD could use the DC method. Is this indeed allowable? What if, for the current year, he needs to take two RMDs (because the first was deferred) -- can he take both RMDs based on the DC method and then roll the remaining assets to an IRA?
Number of replies posted  4 replies      Number of times viewed  58 views      Add Reply
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pensionam created a topic in Defined Benefit Plans, Including Cash Balance

RMD Start Date Question: 70-1/2 in 2017, But No Vesting Until 2018

New owner-only plan effective 1/1/2017. Owner reaches age 70‑1/2 in 2017. Vesting is 6-year graded. Vesting prior to effective date of plan is excluded. As of 12/31/2018, the owner would be 20% vested. When would the first RMD need to be distributed? Since we deal with mostly small plans, our actuary uses the 12/31/2017 accrued benefit x 12 to get to what the RMD lump sum requirement is for 12/31/2018 rather than monthly installments. I'm hung up on the fact that although the owner is 0% vested as of 12/31/2017, he is 20% vested as of 12/31/2018. Would a distribution be required for 12/31/2018 or not until 12/31/2019? The argument from our actuary is that since the calculation is done based on the prior year accrued benefit, the first distribution wouldn't be required until 12/31/2019.
Number of replies posted  2 replies      Number of times viewed  54 views      Add Reply
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Santo Gold created a topic in Retirement Plans in General

Owner Receives 1099 Pay; Can She Sponsor Her Own Retirement Plan?

I am meeting with a company about starting a 401k plan. Details are sketchy but I've been told that it's a husband and wife who own the company. The wife (who I am told is very much involved with the business) receives 1099 pay from the company. No W-2, no other compensation. [1] I've never seen this arrangement before; is this acceptable? [2] Assuming the spouse has no company wages and hence would not benefit under a new 401k plan sponsored by the company, should I suggest that she sponsor her own plan, based on her 1099 pay? I know that controlled group issues would come into play.
Number of replies posted  2 replies      Number of times viewed  66 views      Add Reply
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jkharvey created a topic in Distributions and Loans, Other than QDROs

Is It Discriminatory to Charge Higher Distribution Fee for Smaller Accounts?

The standard distribution fee from the plan is $75. If a participant is "forced out," however, the fee is $125. The force-outs are always the amounts that are less than $1,000. The original theory behind the additional fee was that there is additional work involved in setting up the rollover IRA. For amounts, however, that are not rolled to an IRA, I am concerned that this fee could be looked at as discriminatory because it's essentially only going to be applied to NHCEs.
Number of replies posted  4 replies      Number of times viewed  49 views      Add Reply
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Belgarath created a topic in Cafeteria Plans

Can a Small (3-Person) Employer Elect to Be Covered by COBRA?

Nowhere near 20 employees, but the employer would like to ELECT to be covered by, or provide, COBRA benefits. Can they do this?
Number of replies posted  2 replies      Number of times viewed  25 views      Add Reply
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