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December 28, 2018

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

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wifrbr created a topic in 401(k) Plans

402(g) Refund -- Effect of Losses on Figure Reported on 1099R

An employee goes over the 402(g) limit for the year and the correction is made in the current year. What would the 1099R look like? For example, John contributes $19,500 for 2018. We correct this in December 2018 but because of losses the refund is only $900 ($1,000 in excess, less $100 in losses). When he gets his 1099R in January 2019, should it say $900?
Number of replies posted  2 replies      Number of times viewed  52 views      Add Reply
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rocknrolls2 created a topic in Retirement Plans in General

$100 Per Day Penalty for Not Furnishing Info: Is It COLA-Adjusted?

ERISA Section 502(c)(1)(B) allows a court to impose a civil penalty upon a plan administrator if it fails to furnish documents to a participant or beneficiary within 30 days of receiving a written request for such documents, absent reasons beyond its control. The dollar amount was bumped up to $110 by 1990 legislation. 2015 legislation imposed a requirement for indexing the dollar amounts for nearly all federal statutory penalty amounts. But I noticed that on the four occasions when the DOL has published penalty adjustments, section 502(c)(1)(B) is not on the list. Why?
Number of replies posted  0 replies      Number of times viewed  28 views      Add Reply
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30Rock created a topic in 401(k) Plans

Missed Deferrals in Final Payroll of 2018

Sponsor deducted final deferrals from the wrong payroll file, and thus many participants who had increased their deferral elections were missed. The IRS EPCRS guidance states that, if corrected within 3 months, no QNEC is due for the deferrals, that a QNEC for the missed match (if any) must be made, and that a notice must be given. The sponsor wants to know how to correct for the missed deferral deduction opportunity. Is there a W-2 or accounting method they could use to fix this, perhaps by offseting some of their pay from the first payroll in 2019 (so they can make 2018 deferrals)?
Number of replies posted  1 reply      Number of times viewed  37 views      Add Reply
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Gilmore created a topic in 401(k) Plans

New Company, New Plan -- First Plan Year Only One Month Long

A one-person company is begun on 12/1/2018. It wants to start a 401k with an initial short plan year -- 12/1/2018 to 12/31/2018. If the Limitation Year is defined as the calendar year, is it permitted to NOT apply the 415 and comp limits pro rata?
Number of replies posted  2 replies      Number of times viewed  33 views      Add Reply
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Dougsbpc created a topic in Defined Benefit Plans, Including Cash Balance

Cash Balance Plan: Apply the General Test Using Average Compensation?

It appears only current year compensation can be used in determining the contribution credit each year. If that's correct, are we forbidden from general testing based on average compensation with a cash balance plan?
Number of replies posted  2 replies      Number of times viewed  33 views      Add Reply
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RWPHoenix created a topic in Defined Benefit Plans, Including Cash Balance

Contributory Multiemployer DB Plan Has Hundreds of Separate Accounts

I have taken over a non-governmental contributory multiemployer DB plan in which employee contributions ceased many years ago but with respect to which approximately 200 separate accounts still exist. The client has historically obtained a separate audit for these accounts. Audit and investment fees associated with the separate accounts are paid out of the accounts and the trustees are concerned that these costs are getting too high. The trustees would like to find a way to get rid of the separate accounts. [1] Is a separate audit of the separate accounts legally required? [2] Am I correct that a contributory DB Plan is still a DB plan; accordingly, an in-service pre-normal retirement age distribution of a participant's separate account cannot be made available to such a participant because a DB Plan cannot distribute a participant's account before (i) the plan's termination, or (ii) the participant's termination of employment or attainment of normal retirement age? [3] Assuming that the segregated accounts can't be paid to participants before their termination of employment or attainment of normal retirement age, can the DB Plan spin off the separate accounts into a new DC plan and then terminate the DC Plan and payout the accounts?
Number of replies posted  3 replies      Number of times viewed  18 views      Add Reply
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cpc0506 created a topic in Employee Stock Ownership Plans (ESOPs)

Company Sponsors ESOP and a 401(k) Plan; OK to Split 401(k) Into Two Plans?

Client currently sponsors an ESOP and a tested 401k Plan. The ESOP owns 100% of the company stock. Both plans are audited. Client is interested in breaking the current 401k plan into two separate plans to avoid the cost of audit. The two plans would consist of one safe harbor plan covering salaried employees and one tested plan covering hourly employees. All HCEs would be in the safe harbor plan along with 32.97% of the NHCEs. The remaining 67.03% of the NHCEs would be in the tested plan. Can this be done when the third plan sponsored by the client is an ESOP?
Number of replies posted  1 reply      Number of times viewed  12 views      Add Reply
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RatherBeGolfing created a topic in Mergers and Acquisitions

Companies Become a Controlled Group in January 2019; 410(b)(6) Transition Rule Means No Changes Needed Until 2020?

A client is the majority owner of Company A and a minority owner of Company B. He will acquire majority ownership of Company B in January 2019. The ownership will be enough to establish an A+B controlled group. Company A maintains a small plan with a safe harbor match, with age 21/one Year of Service eligibility requirements. Company B maintains a large (audited) plan with a non-safe harbor match and age 21/three Months of Service eligibility requirements. We're working on a plan design to fit the needs of both A and B. Neither company has adopted the plan of the other company. B's plan would probably pass coverage without a problem with A's employees not benefiting, but A would fail miserably. We can rely on the transition rule until we have a solution and then make the solution effective 1/1/2020, right?
Number of replies posted  2 replies      Number of times viewed  19 views      Add Reply
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