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Message Boards Digest

November 5, 2018

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

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spencerhastings created a topic in Correction of Plan Defects

Wrong Definition of Comp Used for Several Years -- Can Correct One Year at a Time?

Plan has been using the wrong definition for compensation to calculate deferrals since 2016. We'd like to correct this under SCP by the end of the year. Does anyone know if plan failures can be separated by plan year, so that we can correct only the 2016 error now? Or do we have to treat the error like one failure that started in 2016 and correct everything now?
Number of replies posted  3 replies      Number of times viewed  87 views      Add Reply
 
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ErisaGooroo created a topic in Distributions and Loans, Other than QDROs

Housing Allowance Distribution Counts Toward Required Minimum Distribution?

A minister's housing allowance is excludable from gross income for income tax purposes. Considering Treas. Reg. 1.401(a)(9) Q&A-9, would a distribution made for a housing allowance count toward satisfying the RMD for a participant?
Number of replies posted  6 replies      Number of times viewed  77 views      Add Reply
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M Norton created a topic in Retirement Plans in General

Temp Worker's Service Must Count Toward Eligibility Upon Becoming Employed?

Sponsor of large plan uses a temp agency to "test drive" potential employees for 3‑6 months. After the trial period a worker may be hired to become a regular employee of the plan sponsor. We have advised the sponsor that the time while the worker was working through the temp agency must be counted toward eligibility for plan participation. Does anyone have a citation or code section that supports that position?
Number of replies posted  6 replies      Number of times viewed  120 views      Add Reply
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Dougsbpc created a topic in Defined Benefit Plans, Including Cash Balance

Combined Top Heavy CB/DC - Gateway?

Suppose you have an employer who sponsors a cash balance plan and a safe harbor 401(k) plan. The plans are top heavy and the 401(k) plan provides a safe harbor match. Both plans would pass 401(a)4 and 410(b) combined testing. The top heavy minimum is 5% and provided in the 401(k) plan. The non-elective employer contribution in the 401(k) plan requires 1,000 hours and last day. The CB plan only requires 100 hours to accrue a benefit. There is a non-key NHCE who terminated employment in 2018 with 400 hours of service. She is covered under both the 401(k) plan and cash balance plan. Must she receive a 5% top heavy minimum in the 401(k) plan because she did accrue a benefit in the CB plan? Then must she receive the 7.5% gateway as well?
Number of replies posted  0 replies      Number of times viewed  33 views      Add Reply
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Vlad401k created a topic in Distributions and Loans, Other than QDROs

Distribution to U.S. Citizen Living Abroad

We have a participant who lives abroad but is a U.S. citizen. The participant filled out the required W-9 form for the distribution. How would this distribution be taxed? Would it be subject to 20% federal tax withholding and no state tax (even if the participant previously lived in a state that had state tax)?
Number of replies posted  3 replies      Number of times viewed  30 views      Add Reply
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With Appreciation.... created a topic in 401(k) Plans

12b-1 Fees Paid After Plan Liquidation

Right now 12b-1 fees are returned to participants by the institutional trustee. After a plan is terminated and liquidated, what can the trustee do with 12b-1 fees it receives in arrears? This is further complicated when a plan sponsor has dissolved and there is no entity to which 12b-1 fees in arrears can be returned. Can the trustee/former trustee feel comfortable that this is no longer a prohibited transaction because the plan and/or the plan sponsor no longer exist?
Number of replies posted  0 replies      Number of times viewed  25 views      Add Reply
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