Message Boards Digest

January 14, 2019

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

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Fiduciary Guidance Counsel created a topic in Retirement Plans in General

Fees for Locating Missing Participants

It remains unclear how much effort a single-employer individual-account retirement plan's administrator must put into finding another address for a participant if the administrator receives information suggesting that the participant no longer is at the address the participant furnished (and perhaps neglected to update). Administrators have expressed concerns that some EBSA examiners suggest unreasonable efforts. Some of the tension results because not all of an employer/administrator's cost is visible as an expense. Of those service providers that offer ERISA Section 3(16) services, do any of them offer the service of finding better addresses on 'missing' participants? Does that service have a distinct fee, or is it embedded in an overall fee? If there is a distinct fee, is it charged against the account of the to-be-located participant?
Number of replies posted  6 replies      Number of times viewed  76 views      Add Reply
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thepensionmaven created a topic in Retirement Plans in General

Fidelity Bonding of Multiple Trustees

We all know that trustees should be bonded for at least 10% of plan assets. Is that each, or total? Let's say there are three trustees and the plan has $100,000 of investments. Does each participant need a bond of $100,000 or does each get a bond for $33,333?
Number of replies posted  6 replies      Number of times viewed  84 views      Add Reply
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IhrtERISA created a topic in Retirement Plans in General

Appeal Rights for Participant Who Was Denied Information on QDRO Alternate Payee's Pay Status

Employee/participant has a QDRO designating that his ex-wife is to receive ALL of his benefits under the 401(k) Plan. Employee wants plan administrator to attest in writing that his ex-wife has started to receive the benefits. The plan administrator is refusing. In denying the employee's request, is the plan administrator obligated to provide the standard ERISA claims procedure rights (appeal process, etc)? In essence, is an employee who no longer has any benefits under the Plan as a result of a QDRO still deemed a Plan Participant? And if so, must he/she receive notice of ERISA rights to appeal?
Number of replies posted  6 replies      Number of times viewed  67 views      Add Reply
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KaJay created a topic in International, Expat Benefits

403(b) Distribution to US Citizen Living Abroad: Is W-9 necessary?

A participant in a 403(b)(9) retirement plan has requested a distribution. The participant is a US citizen. The participant lives in Peru. The funds would be wired to a bank account in the US. The retirement plan has his SSN on file sourced from both his enrollment app from years ago and his recent withdrawal request form. Questions: [1] Because his SSN is on file and he indicated on the withdrawal form he is a US Citizen, is there any need for the plan to require receipt of a W-9? [2] If the participant was requesting the funds be delivered outside the US, would there be a need for the W-9?
Number of replies posted  0 replies      Number of times viewed  29 views      Add Reply
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kmhaab created a topic in 409A Issues

Can a SERP be Rolled Over into Phantom Stock?

A company is in the final stages of restating and merging a traditional NQDC plan and a SERP into a Phantom Stock Plan and is intending to roll the benefits accrued under the NQDC and SERP into the Phantom Stock Plan. The SERP promises to pay a certain benefit amount to participants upon certain future events (i.e., normal retirement, disability). Company wants to effectively "roll over" benefits accrued to date under the SERP into the Phantom Stock Plan, keeping the same distribution terms for 409A compliance. Going forward, no new benefits would be accrued under the terms of the SERP. Participants would be eligible to receive phantom stock going forward. The "rollover" balance from the SERP could grow based on the phantom stock value (but not be reduced). There is no acceleration of the timing of payments of benefits accrued to date. [1] Is this really a termination of the SERP, and if so does that preclude the adoption of the Phantom Stock Plan (even though there is no acceleration of payment under the SERP)? [2] If not, are the new benefits yet to be accrued under the Phantom Stock Plan bound by the prior SERP distribution provisions? I initially thought not, but am now wondering if the Phantom Stock granted in the future would be considered a replacement for the full normal retirement benefits previously promised under the SERP?
Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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Belgarath created a topic in Cafeteria Plans

Nondiscrimination Testing for Cafeteria Plans

I've run across a block of cafeteria plans, where eligibility for the cafeteria plan is identical to the eligibility for the health plans. There has been no eligibility testing on the cafeteria plans, because the TPA says that since eligibility is the same for all participants, they automatically pass. I would not have said this was true, depending upon the eligibility requirements for the health insurance. For example, the first plan I looked at (which raised this question) provides that anyone working less than 30 hours per week is not eligible for the health insurance. Consequently, they're not eligible for the cafeteria plan. Well, all 4 HCE/Key Employees are naturally eligible for the health insurance, but many employees are working less than 30 hours per week and therefore ineligible. Isn't this a potential problem? Or am I missing something obvious? Now, I understand that they might very possibly pass if testing is done, but it doesn't seem like it is automatic.
Number of replies posted  4 replies      Number of times viewed  27 views      Add Reply
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Madison71 created a topic in 401(k) Plans

Correction for Mistakenly High TPA Fees Paid from Trust Assets?

I am wondering what the correction is for a 401(k) plan that is inadvertently set-up with a 20 basis point annual asset charge for TPA fees paid out of the Plan when it should have been only 10 basis points. The error occurred over one year ago and was recently discovered by the TPA firm. Some of the participants who were overcharged were paid out of the plan already. My initial thought is to self-correct by reimbursing the participant accounts on a nondiscriminatory basis plus missed earnings.
Number of replies posted  1 reply      Number of times viewed  28 views      Add Reply
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TPA Bob created a topic in Correction of Plan Defects

Form 8950: Instructions Show Revision But Not Form

Looking at filing Form 8950 for a client. The instructions are revised January 2019 but on the IRS website the Form 8950 itself is has a revised date of November 2017. Any ideas?
Number of replies posted  0 replies      Number of times viewed  9 views      Add Reply, Inc.
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