Message Boards Digest

December 4, 2018

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

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Gilmore created a topic in Retirement Plans in General

Excluded Nonresident Alien Becomes a Resident Alien; How to Handle Service and Compensation?

Company A, with 401(k), excludes nonresident aliens. Employee B, citizen of non-US country with no U.S.-source income, is employee of Company A starting January 1, 2018. 401(k) has 3 month waiting period. Employee B is moved to U.S. and will begin receiving U.S.-source income from Company A on December 1, 2018. I believe service is counted since January 1, 2018, and that Employee B would be considered as having satisfied the 3 month eligibility wait. But how about compensation from January 1 to December 1? I've seen other messages posted here that say all non-US source comp is excluded (say for ADP test, determining next year's HCEs). Other message posts say the compensation non-U.S. source income must be converted to U.S. dollars and used for plan purposes.
Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply
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BG5150 created a topic in Retirement Plans in General

Coverage Test for Controlled Group -- One Company No Longer in Business

Company A wants to sponsor a plan in 2018. Owned 50/50 by brothers. Company was in existence since 2016, but only really started conducting business in October 2018. Brothers, their wives and a child are all getting paid for services. Company A adopts a 401(k) plan 10/1/18 effective 1/1/18. 21‑1 YOS, semi-annual entry. EEs employed 10/1 have service waived and enter immediately. The brothers also owned another business, Company B, with 6 other (NHCE) employees. So, controlled group. Company B folded 9/30/18. Company B did not have a retirement plan Two employees from Company B started working for Co. A in November.

I'm guessing I have to count their service with Co. B. When do they come into the plan? January 1?

Do we have a coverage issue?

Number of replies posted  1 reply      Number of times viewed  23 views      Add Reply
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Gruegen created a topic in 401(k) Plans

Suspension Period under Proposed Hardship Regulations

A plan uses the "facts & circumstances" method of determining immediate and heavy financial need under Treasury Regulation 1.401(k)-1(d)(3)(iii)(A); is the plan permitted to impose a 401(k) contributions suspension period under the proposed hardship regulations? I realize that the preamble to the proposed hardship regulations state "the proposed regulations do not permit a plan to provide for a suspension of elective contributions or employee contributions as a condition of obtaining a hardship distribution." But I can't tell if that applies solely to plans using the deemed safe harbor reason, or to both deemed safe harbor and "facts & circumstances" method.
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply
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401king created a topic in 401(k) Plans

Crediting Service for Predecessor Employer: Limit to Specific Time Period?

Is it permissible to include service within a specified period of time from a predecessor employer? For instance, only service completed since a certain date, or through a specific date? In what is a unique scenario for our firm, we have a Plan where the Sponsor is a group of various health practices that have banded together to form one large corporation, where each "original" practice now owns a piece of this new company. When we originally established the Plan we credited all service from each predecessor employer, because those practices no longer employed the Larger group's employees, and these practices wanted the employees to become eligible based on their service with their practice. A new practice is joining the Group. For administrative reasons, we wish to exclude service with that employer prior to a certain date (1/1/2017, for example). This is to save us/the Sponsor from having to review whether or not any of the 500+ employees worked for this new practice at any time since its inception (30+ years). We wouldn't want to recognize all years, having the unintended side effect of resulting in an employee of another practice becoming eligible (and costing that practice owner the Profit Sharing contribution). At the same time, we don't want to ignore all service with the new group, preventing them from becoming eligible for the new plan. So, can we recognize/credit service from a predecessor employer during a specified period of time?
Number of replies posted  2 replies      Number of times viewed  34 views      Add Reply
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DMB72 created a topic in Qualified Domestic Relations Orders (QDROs)

My Ex-Spouse Won't Sign QDRO

My ex and I went to mediation in April 2018. Settled on amount to be paid to me through QDRO (considering half retirement account/equity of assets and debts). My atty filed the paperwork. Divorce was final June 14, 2018. Through the mediation, I agreed to move with my 2 minor children. So, I had to find a house, down payment, closing costs, moving costs, etc. I also assumed the debt bc I planned to pay it off with a cash out of the QDRO. Came back for ex to sign on x amount back inn August. He refused to sign. He claims I didn't hold up my end of the bargain when turning the house over. Claims damage (there was none), claims I took things I shouldn't have (he made a list and I left EVERYTHING he asked for and then some). He said he doesn't have anything to lose. Right, I had all the expense of moving out and he's earning money on the money he owes me and I took the debt! His atty is a real treat and based on dates and texts I have from him, they were planning this all along- I just didn't see it coming until after the fact. So, they let me file the QDRO knowing full well that he was going to make me come after it. My atty told me in my county this wouldn't cost me more than 3500 as long as we settled in mediation. I paid him that and got an 8k bill after that. I have them hounding me for money but I'm a single mom and strapped. I have the bill down to 5800 but I need the QDRO money to pay him. He doesn't return my calls or emails for 6 weeks and the first thing he asks for is money! He asked me to settle with him after we ALREADY agreed. Finally, months later and I agreed bc I need to get this settled or I'm going to go into BK fast. I have borrowed from family just to keep my head above water. My atty claims he's waiting on a response from the other atty but it's gone on too long. I looked up what to do. It says file a motion to enforce the JOD. I was told when I do that, his atty is just going to file something claiming the mediation was done fraudulently. What can I do? My ex was controlling, abusive and manipulative and I still can't get away from it! Please help!
Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply
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Santo Gold created a topic in 401(k) Plans

401(k) Plan Design Question: Limited Eligibility for HCEs

We're drafting a new 401k plan for 2019, non-safe harbor. 200+ expected eligible participants. Initially the plan was to be written excluding HCEs (HCEs would have their own nonqualified Deferred Comp program). The question was asked, can we let the HCEs into this plan so that they can rollover any 401(k) accounts from previous employer (presumably unrelated) 401k plans, but not have the HCEs eligible to make 401k contributions or receive any employer match (only 2 money types, other than rollover, allowed in the plan)? Would that work? This would affect HCEs only, so discrimination issues would not seem to matter.
Number of replies posted  0 replies      Number of times viewed  24 views      Add Reply
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BH1528 created a topic in Defined Benefit Plans, Including Cash Balance

RMD for Not-Quite-Terminated Employee

An employee has an accrued benefit. He's over 70‑1/2. He works seasonally. The company does not usually know if he will be coming back for the next year until March or April. He hasn't resigned from the company or retired but doesn't work the last few months of the year. Should he begin receiving an RMD?
Number of replies posted  1 reply      Number of times viewed  30 views      Add Reply
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oldman63 created a topic in 403(b) Plans, Accounts or Annuities

Governmental Employer Failed to Make Matching 403(b) Contributions

A governmental 403(b) plan, effective 2/1/2016, with plan year ending 8/31, provides for a fixed employer matching contribution of 100% match on elective deferrals up to 3% of compensation. However, the employer failed to make the required matching contributions. Thus the plan has an operational error and under EPCRS, as updated by Rev. Proc. 2008‑50, mandates that the employer implement correction method that would restore the plan and its participants to the position they would have been in had the failure not occurred. Such measures would include: [1] Make matching contributions on behalf of the affected participants retroactive to the time such contributions should have been made. [2] Provide earnings from the time the matching contributions would have first been made. [3] Redo 415 testing for the years in which operation failure occurred. Are there other self-correction measures the employer should take?
Number of replies posted  0 replies      Number of times viewed  11 views      Add Reply
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khn created a topic in 401(k) Plans

Employer Makes Contribution to Stable Value Fund, Not to QDIA

An annual special contribution made by an employer for union employees is invested in a stable value fund and can be transferred into the plan's default fund (target date funds). Wouldn't it be a better practice to invest initially into the target date fund, which is their QDIA? Or would it be better to invest it according to the participants' chosen investment elections?
Number of replies posted  4 replies      Number of times viewed  34 views      Add Reply
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Joe Dadich created a topic in Employee Stock Ownership Plans (ESOPs)

Terminate an ESOP While Under Audit?

I have a potential client who owns a company that has sponsored an ESOP some years ago. This has become costly to the client and too many regulatory hurdles in their opinion. They'd like to terminate at end of this year (12/31/18). The client is under a TEGE audit. Can the client terminate the plan while under audit? The audit years in question do not relate to 2018.
Number of replies posted  1 reply      Number of times viewed  14 views      Add Reply, Inc.
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