Message Boards Digest

December 7, 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

Where to Provide for a Backup Trustee?

Does anyone have any experience naming a "backup" trustee for a 1-person profit sharing plan? The plan document only states that the business would name a subsequent trustee in the event of death, etc. The business owner/sponsor wants to have it stated somewhere exactly who would control the plan.
Number of replies posted  8 replies      Number of times viewed  71 views      Add Reply

SALGBA Regional Conference Henderson, NV

Sponsored by SALGBA [State and Local Government Benefits Association]
SALGBA is holding a Regional Conference January 14-16 in Henderson, NV. The conference is being hosted by the State of Nevada. More information please visit
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JoyHodgson created a topic in Governmental Plans

Governmental Employer Setting Up 457(b) with 401(a) for Match -- Plan Document Question

I have a governmental entity setting up a 457 plan and wants to provide a match as well. We are planning to have a paired 401(a) plan so employees get to defer up to the 457 contribution limit each year. For the document. Does the 401(a) document just have the employer non-elective language with each person being in their own rate group? In that case, the client will fund the match contributions only for those who made 457 deferrals, and because governmental entities are not subject to nondiscrimination, your allocation amount doesn't have to satisfy any testing. I may be overly complicating how to draft the 401(a) vs. 401(m) document items. It doesn't seem like my 401(a) plan needs any matching contribution language because that plan will not have an deferrals.
Number of replies posted  6 replies      Number of times viewed  39 views      Add Reply
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toolegit created a topic in 401(k) Plans

Deadline to Declare Matching Contribution Percentage?

Is there a requirement that non-SH employer discretionary matching contribution percentage be declared by any certain time? My understanding is that this is left to the language of the plan. Does anyone have any authority on this?
Number of replies posted  0 replies      Number of times viewed  29 views      Add Reply
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ERISA-Bubs created a topic in Nonqualified Deferred Compensation

Discount on Amount of Premature Payment Under Long-Term Incentive Plan

We have a long term incentive plan where participants vest after 3 years. On vesting, they receive shares of Common Stock which they can't sell. If there is a Liquidity Event everyone gets paid for their shares. If they terminate before the Liquidity Event, they get paid 65% of the value of the shares (this reflects that there is no liquidity or marketability for the shares at that time). I think the discount in the event they terminate before the liquidity event is OK, but is there any guidance as to what an appropriate discount would be? Is 65% normal? The Company also wants the option at termination to either [1] pay for the shares in a lump sum, or [2] pay for the shares installments up to 5 years at their discretion. I think this violates 409A's time/form of payment rules -- do you agree?
Number of replies posted  2 replies      Number of times viewed  36 views      Add Reply
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ErnieG created a topic in Defined Benefit Plans, Including Cash Balance

Minimum Funding for Cash Balance Plan

A cash balance plan was established in 2015 with the plan year beginning 1/1/2015. In reviewing the Annual Funding Notice the company has not made a contribution to the Plan in the first two years of its implementation, 2015. Their Annual Funding Notice is confirming that no contributions have been made in 2015 and 2016. Their Plan Adoption Agreement clearly outlines the benefit that should have been funded for:

[ X ] Group One: An amount equal to:
[ X ] $ 190,000 for each Determination Period.

[ X ] Group Two: An amount equal to:
[ X ] $93,000 for each Determination Period.

[ X ] Group Three: All Other Participants. An amount equal to:
[ X ] 2.50 percent of Compensation during the Determination Period.

A contribution has been made for the 2017 plan year and the funded status is over 100% in 2017. My understanding is, in general the 'minimum funding standards' requirement under the Code require sufficient assets in the Plan to meet the current liabilities. For example in 2015 and 2016 there is a Plan liability to provide the projected retirement benefit however no asset, contribution, has been deposited.

My only thought is the company is not funding the Plan based on the vesting schedule which is a 3-year cliff. Therefore for years one and two (2015 and 2016) there is no benefit calculated because there are no benefits paid in the event a participant leaves service, no vesting. In year three 2017 they become 100% vested and are due the accrued benefit from the time they became eligible.

I believe this approach is not correct. The 'minimum funding standards' ensure that sufficient money will be available to pay promised retirement benefits to employee when they retire, no mention of when the vest. I have not seen this interpretation before and cannot locate a cite to justify its conclusion. Can this be possible? Do you agree with funding based on the vesting schedule or funding based on the retirement benefit once eligible? Your thoughts and comments, as always are appreciated.

Number of replies posted  6 replies      Number of times viewed  35 views      Add Reply
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Purplemandinga created a topic in Retirement Plans in General

Trusts in Controlled Group Situations

I find myself confused with controlled group determinations that involve trusts. I read everywhere that trusts which have ownership interests in another business attribute the ownership to the beneficiaries. But does the ownership ever attribute back to the grantor? If the trust is revocable and thus ultimate control over the ownership still rests with the grantor, would the ownership not attribute back to the grantor?
Number of replies posted  0 replies      Number of times viewed  7 views      Add Reply
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digger created a topic in Retirement Plans in General

Can Trustee Be Named by Job Title?

Sponsor wants to name the CEO and highest HR position as plan trustees, rather than naming names. They say they have incoming officers sign to accept trusteeship and notify departing officers of their removal as trustee. Is this OK? I wouldn't think these officers would change very often, and they're going through the right steps anyway, so I'm not sure of their motivation to do it this way.
Number of replies posted  1 reply      Number of times viewed  19 views      Add Reply, Inc.
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