Message Boards Digest

November 21, 2018

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

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Santo Gold created a topic in Church Plans

Church Plan Wants 3-Year Rolling Vesting Coupled with Delayed Contribution Until Vesting Date

We're looking at a larger church plan (300+ employees) that elects not to be subject to ERISA. There are several HCEs. They have followed mainly vanilla plan provisions but they're thinking of making some changes in 2019. Do these changes sound permissible? For individuals hired 1/1/19 or later, they want to have a 3-year cliff vesting schedule apply annually to that year's contribution. So that if you are eligible to receive an ER contribution for 2019 plan year and have 1 YOS in 2019, you do not vest in that contribution until 2021. If eligible for contribution in 2020, you do not vest until 2022, and so on. Because this is a non-ERISA plan, that seems legal. But it might be messy for the recordkeeper to track money in this manner, so the employer was not going to deposit the money into the plan until the employees actually vest in it. The employer would keep those contributions in a non-plan account. So, from the above example, for those affected individuals, their 2019 employer contribution would be deposited into their accounts in 2021, 2020 ER contributions deposited in 2022, etc. If someone from 2019 leaves in 2020, their contribution was never vested so that year's money would stay with the employer or go towards another year's contribution. Writing the language in the plan document would be a challeng. Is this legal? Are there any 410(b)-type tests that have to be done because there are HCEs? Its not subject to ERISA so maybe not?
Number of replies posted  3 replies      Number of times viewed  29 views      Add Reply

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Tom Poje created a topic in Retirement Plans in General

IRS FIRE Website Shutdown Dates

The IRS FIRE site will be down for scheduled maintenance starting December 5, 2018 at 6 PM Eastern Standard Time through January 7, 2019, but won't be available until January 10, 2019. so I guess if you have an 8955-SSA due by 12/31 you need to check special exemption and say "because you shut the website down!"??? (This seems to be an annual shutdown.)
Number of replies posted  0 replies      Number of times viewed  16 views      Add Reply
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austin3515 created a topic in 401(k) Plans

SMM for New Hardship Rules?

What are people doing to notify participants about the new hardship distribution rules, since the document providers have yet to issue their stuff?
Number of replies posted  14 replies      Number of times viewed  72 views      Add Reply
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Karen McIver created a topic in Cross-Tested Plans

Integrated Allocation in Cross-Tested Plan: Average Benefits Test Still Applies?

If the plan document states that everyone is in their own group and the contribution is allocated pro rata or on an integrated basis, do you still have to pass the average benefits test?
Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply
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AKconsult created a topic in 401(k) Plans

Discretionary Match on Top of Safe Harbor Match

If a plan uses a SH match of 100% of the first 4% to pass ADP, then also allocates a discretionary match of 100% of deferrals between 5‑7%, it looks like 401(m)-2(a)(5)(iv) says that we have to run the ACP test on the 5‑7% match (in other words, anything over 4%). Is it dependent on which SH formula we use? For example, what if the SH match was 100% of the first 6%, then a discretionary match on 7‑8%? In that case would we have to run the ACP only on the 7‑8% match, or on any match over 4%?
Number of replies posted  5 replies      Number of times viewed  48 views      Add Reply
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C. B. Zeller created a topic in Defined Benefit Plans, Including Cash Balance

Mortality Assumption for Actuarial Equivalence

What is your usual post-retirement mortality assumption for actuarial equivalence? With the PPA restatements upon us, our company, like I suspect many of you, are re-evaluating our default selections for plan provisions. In the past we'd been using the 94 GAR table projected to 2002 with a 50/50 male/female blend. I'm wondering if it is reasonable to update this assumption, given that the base data is now quite old. On the other hand, for our clients, who are mostly small cash balance plans that pay out almost entirely lump sums, the definition of actuarial equivalence is immaterial, so why change something that isn't broken?
Number of replies posted  3 replies      Number of times viewed  37 views      Add Reply
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cathyw created a topic in Defined Benefit Plans, Including Cash Balance

Cash Balance Plan Termination and Adoption of New One

A law firm client of mine, which has maintained a cash balance plan for over 10 years, raised the possibility of terminating the plan and then establishing a new one. They were told by another law firm that "if the plan has been in effect for 10 years this strategy is allowed by the IRS." There are reasons my client would consider this... including getting out from under a complicated interest crediting methodology that the investment advisor can't seem to track. There are no surplus assets that would revert to the employer. I told them that while you can terminate a plan and establish another, they would need to design the new plan with enough distinctions (e.g., different benefit structure, different eligibility, etc.) that the IRS would not consider this a subterfuge for making premature distributions. I tend to be "old school" but am I being overly cautious? They would file a Form 5310 for the termination.
Number of replies posted  6 replies      Number of times viewed  75 views      Add Reply, Inc.
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