Message Boards Digest

November 15, 2018

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

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Stash026 created a topic in 401(k) Plans

Trustee Refusing To Approve Distribution

I'm running up against an issue that I've never had before. The financial institution requires the Plan Trustee to sign off on any distribution. We have a terminated participant who has requested a distribution of his account (which includes 401(k) deferrals) and it appears that the Trustee is refusing to authorize it. I'm not sure if there's a reason behind it, bit what are the ramifications if the Trustee refuses to ultimately approve it? Thanks in advance!
Number of replies posted  9 replies      Number of times viewed  91 views      Add Reply

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TN CPA created a topic in 401(k) Plans

Can an Affiliated Service Group Create a Control Group?

I have a client that owns 1) 100% of a Schedule C construction company 2) 50%/ 50% with another partner of a company that runs the management functions of the construction company and 3) 50%/ 50% with the SAME other partner of an unrelated independent living center. The owner wants to set up a deferral-only 401k plan covering the 1) Sch C Construction company and the 2) management company (as an affiliated service group). Does the addition of the management company as an affiliated service group extend the control group requirements to it as well? In other words, by including the management group, are we now required to include the 3) independent living center because it is a control group with the company that was brought in as an affiliated service group?
Number of replies posted  1 reply      Number of times viewed  34 views      Add Reply
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SadieJane created a topic in Employee Stock Ownership Plans (ESOPs)

409(p) Compliance Question

Regarding Code Section 409(p) "prohibited allocations." An S Corp ESOP provides that HCEs who are disqualified persons for 409(p) purposes (or reasonably likely to become disqualified persons) are not eligible for the annual ESOP allocations. This helps the Plan with 409(p) compliance. Can the Plan Sponsor give an HCE affected by this provision a taxable bonus, in an amount equal to what would have been the ESOP allocation, without any effect on the 409(p) test? The Plan Sponsor could not provide for the allocation under a different qualified plan (it would be treated as an allocation under the ESOP, affecting the 409(p) test), but if it is a taxable bonus--no tax-deferral element at all--thinking it might have no impact on the 409(p) test. Thoughts?
Number of replies posted  1 reply      Number of times viewed  16 views      Add Reply
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pr2222 created a topic in Form 5500

Exempt Entity Filed in Error

We represent a church that is exempt from ERISA that filed a Form 5500SF for a funded health plan. They should not have filed and now we are trying to figure out how to notify the DOL. If we simply stop filing, the DOL will probably contact us thinking that we should continue filing. We were thinking about filing an amended return and listing Code 4R on Line 8b but the funding never really changed. Another option would be to file an amended return and mark it final but then you have to say there were no participants and no assets which really isn't the case either. Bottom line is how do we get off this roller coaster?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
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mctoe created a topic in Qualified Domestic Relations Orders (QDROs)

Pension Valuations

Divorcing individual has a defined benefit plan (government) and a pension valuation was prepared by a company. The pension valuation company used "customary" factors in performing the calculation. The PV of the pension prepared by the company was $2.1 mil. The pension plan calculates the PV of the pension at $1.3 mil. Clearly, a large discrepancy. Does anyone know if an argument could be made to use the lower value since that is how it is valued by the plan?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
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Tom created a topic in Cafeteria Plans

health insurance and cafeteria testing

Group Health Insurance - assume small employer not required to offer health insurance. If it does, is it allowable to require the employees to pay say 25% but provide the owner 100% employer-provided coverage 100% - presumably outside a cafeteria plan? Would the answer be different for a large employer over 50? Cafeteria Testing - when health insurance plan are offered by employers, they are almost always provided under a cafeteria plan so that the portion paid by employees can be withheld on a pre-tax basis. My question is - what is included in the 25% concentration test? I'm reading that an "employer contribution" must be included. Is an "employer contribution" an actual dollar amount funded to the cafeteria plan to help pay for selected benefits? Or could it also mean the premium portion paid by the employer (presumed to be outside the cafeteria plan?) Thank you Tom
Number of replies posted  0 replies      Number of times viewed  9 views      Add Reply
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Nancy D created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Form 5500 H & W participant count

Hi, We do 5500s for some of our Health and Welfare clients. I have a plan where the number of employees benefitting under the H & W programs as of the beginning of the plan year is 80. Prior year we had over 100 on the first day of the plan year and filed the 5500. Am I correct that no 5500 is necessary for current year since number of employees benefitting on first day of year is under 100? Thanks for any help.
Number of replies posted  2 replies      Number of times viewed  14 views      Add Reply
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Karoline Curran created a topic in 401(k) Plans

1099R Not Reported On a Loan Default

I have a client whose assets are in a brokerage account. The owner took a loan and never made payments. They apparently never intended to and now want it defaulted. I don't have confidence she is going to have a 1099R produced even though she said that's her intention. My question is: What are the ramifications/fixes for a defaulted loan on a brokerage account when a 1099R is not done? We do utilize Penchecks, but that may result in 2 1099Rs. Thank you in advance-
Number of replies posted  6 replies      Number of times viewed  43 views      Add Reply
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Belgarath created a topic in Retirement Plans in General

The "Qualified Business Income" deduction

Just wanted to make sure I've got this right. IF someone qualifies for this, it is a deduction taken on the individual owner's 1040. In other words, for unincorporated owner you would calculate Schedule C income and corresponding contribution as usual, and THEN, when they file their 1040, they would take an additional deduction from the otherwise taxable income (if they qualify).
Number of replies posted  1 reply      Number of times viewed  19 views      Add Reply
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30Rock created a topic in Correction of Plan Defects

Overpayment under a DC plan and 1099R requirements

I have a question on what if any amended 1099R is required in the event the plan issued a premature in-service distribution of the vested account and the participant rolled it over. The Trust will be expected to issue a 1099R with the coding for a direct rollover, however this was not an eligible rollover and the participant is being notified per EPCRS 2-8-52 Section 6.06 that the overpayment is not eligible for favorable tax treatment. Does the recordkeeper issue 2 1099R's with the first being the direct rollover and then the second one being a correction showing the full amount of the distribution as taxable? It was a 2018 distribution and the 1099R will be issued in January 2019 however the distsribution has been made and the 20% tax withholding was not taken. So I would think the recordkeeper should issue a corrected 1099R. The other option is for the recordkeeper to contact the IRA custodian, but that approach does not seem as clean. Has anyone worked on this before or received IRS direction? Thanks!
Number of replies posted  0 replies      Number of times viewed  15 views      Add Reply, Inc.
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