Message Boards Digest

November 9, 2018

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

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msmith created a topic in Plan Document Amendments

PPA Restatement Effective Date?

What is everyone using for the PPA restatement effective date? Are you going back to the original effective date because there was no IRS reliance on the prior document?
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401 Chaos created a topic in 401(k) Plans

Seeking Clarity on Year-End Deadline for Using Forfeitures

Would welcome thoughts on this: Large 401(k) Plan with significant assets and forfeitures throughout the year has elected to use forfeitures to reduce employer matching contributions and expenses. Although significant, all the forfeitures can generally be exhausted by covering employer matching contributions except for late in the year forfeitures that administratively aren't fully captured until early in the following year. Plan uses Relius volume submitter form which provides that all forfeitures should be allocated no later than the end of the plan year following the year in which forfeitures occur.

I'm looking at the ERISA Outline Book and it's references to the Spring 2010 edition of the IRS's Retirement News for Employers. In that, the IRS says the following:

1. No forfeitures in a suspense account should remain unallocated beyond the end of the plan year in which they occurred.

2. No forfeitures should be carried into a subsequent plan year.

3. For those plans that use forfeitures to reduce plan expenses or employer contributions, there should be plan language and administrative procedures to ensure that current year forfeitures will be used up promptly in the year in which they occurred or in appropriate situations no later than the immediately succeeding plan year.

So, I generally interpret that to mean you need to use up the forfeitures quickly and apply them to the extent you can by the end of the plan year in which they occur; however, if the plan docs say it is ok, it is generally permissible for some amount of forfeitures to spill over to the next plan year where not administratively feasible to allocate and use to offset matches 100% by end of the plan year in which they occurred (e.g., forfeitures happening in November or December). Does that seem generally acceptable / correct?

Plan sponsor is asking if it can break with prior tradition and not use any of the 2018 forfeitures to cover matches and expenses in November and December and instead carry full amount (so 11 months of forfeitures) over to 2019 then use in Q1 or Q2 in 2019. I think some plans do that routinely and not sure the IRS would have huge issue but it seems counter to the general guidance here. Am I off base? (Assume that the lagging forfeitures from late 2017 carried over into 2018 were applied to expenses so have been used.)

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pensionam created a topic in 401(k) Plans

Pre-Tax or Roth Deferrals But Not Both?

Has anyone ever had a plan sponsor do this? Our standard document doesn't have this option but has a write in section where we could add language. I've never seen it before but I don't see it being an issue compliance wise. The plan sponsor can't figure out how to get their payroll system to do both so this was their solution.
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TPATC created a topic in Retirement Plans in General

Revoking a TEFRA 242(b) Election

A participant with a TEFRA 242(b) deferral election has died with a substantial deferred MRD balance. He is currently in the middle of a fixed 30 year installment schedule. (Died after RBD.) If Spouse beneficiary revokes the installment schedule, this will revoke the 242(b) election. Is Spouse then required to take the make-up MRD distributions of the participant within 2 taxable years, or do the make-up MRD distributions ONLY apply to the MRDs that the BENEFICIARY has deferred AFTER the participant's death? ERISA Outline Book indicates only the post-death MRDs would have to be made up, but I have not found a supporting reference for this.
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