Message Boards Digest

January 23, 2019

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

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Fiduciary Guidance Counsel created a topic in Distributions and Loans, Other than QDROs

Do Your Clients' DC Plans Allow Benefits in the Form of Periodic Payments?

Some individual-account (defined-contribution) retirement plans allow a participant a choice of taking a retirement benefit in periodic payments. Others provide a benefit is paid only as a single sum. Some reason that limiting payout options doesn't harm participants because whatever one might choose in an employment-based plan's payout options can be accomplished with an Individual Retirement Account or Annuity [IRA].) A recent Pensions & Investments article describes an Alight Solutions survey, which finds 57% allow periodic payments and 43% don't. I haven't read Alight's report, but I guess the sample is larger plans. I wonder whether smaller plans have a different mix on allowing or precluding periodic payments. So, an informal survey: Do your clients' plans allow periodic payments? About whether to allow or preclude payments, do most clients follow your suggestion?
Number of replies posted  16 replies      Number of times viewed  97 views      Add Reply

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ERISA-Bubs created a topic in Multiemployer Plans

Can a Fund Change Withdrawal Liability Calculation Rules? Under What Circumstances?

My client is contemplating leaving a multiemployer Fund. We have two withdrawal liability estimates, one from a few years ago and one very recent. The recent one is almost triple the one from a few years ago. We have been told that the Fund changed their withdrawal liability calculation rules, removing a cap on how they calculate unfunded vested benefits. This rule change caused the huge increase. This seems suspicious to me that my client could have left the Fund a few years ago for a fraction of the cost based on unilateral action by the Fund. Is the Fund allowed to make this change? Should the Fund have provided advance notice before making this change? Are there any other defenses my client has against this huge increase in withdrawal liability based simply on the Fund changing how the liability is calculated?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
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Pri created a topic in Plan Terminations

Termination of 401(k) in a Controlled Group

What termination procedure is needed when a 401(k) plan is part of a controlled group? Can it be terminated?
Number of replies posted  3 replies      Number of times viewed  34 views      Add Reply
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figure 8 created a topic in Defined Benefit Plans, Including Cash Balance

DB RMDs for First Vested Year

Say a 5% owner is well past 70.5 and starts a plan effective 1-1-19. Vesting is excluded prior to 1-1-19 and NRA is 65+5. 3-year cliff vesting is used, so the owner will first have vested benefits in 2021. Is the initial RMD date 4-1-2022 or 12-31-2021? There are several threads on this topic, but they give different answers, and some are more focused on the benefit amount instead of the starting date. One area of confusion appears to be that people get DC rules mixed up with DB rules. For example, in a DB plan, if an RMD starts at 4-1 with an annual payment, the second RMD is NOT due at 12-31 of that same year. The second RMD is payable at 4-1 each year. I think a second area of confusion is that I'm not sure the IRS gives a clear answer. I can see an argument made for 4-1-22 or 12-31-21. How do others approach this?
Number of replies posted  7 replies      Number of times viewed  56 views      Add Reply
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Pauline created a topic in Cafeteria Plans

Need Help Reconciling Purchased PTO on Balance Sheet

The company I just started with has PTO purchase via 125 plan. The deductions were set up to hit GL as CR to PR Liability. When or how is the Liability cleared? Plan states all time has to be taken or lost. What should happen when the employee uses the purchased Time off? Seems to me we will have to do a manual entry to DR the Liability account and CR Wages, to correct the balance sheet. Currently, when the employee takes any PTO, this is paid out to them as vacation time, or wages in effect and taxed as such. I need to confirm I am understanding the DR and CR of this transaction. Where is the benefit, other than extra week off, with pay, they in effect purchased from the employer? They have never reconciled the balance sheet. I'm attempting to do that for EOY 2018, but this one item has me confused. Thank you to anyone who can reply and explain this in clear T accounts.
Number of replies posted  1 reply      Number of times viewed  15 views      Add Reply
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Julie created a topic in Retirement Plans in General

Exclude 'Adjunct Professionals' as Class for Code 410(a) Purposes?

Is "adjunct professionals" a reasonable exclusion from Code 410(a)?
Number of replies posted  1 reply      Number of times viewed  15 views      Add Reply
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Pammie57 created a topic in Distributions and Loans, Other than QDROs

Hardship Withdrawal Request Needed for Roth Deferrals?

I had a client call me with a participant wanting a hardship withdrawal. All of his money is in Roth deferrals. Does he need to request a hardship, or can he just take his Roth out? He hasn't been in the plan 5 years, however -- only 3. He's only 32 and the in-service distribution is available only at age 59 1/2. He does have a true hardship. I'm not sure of hardship rules as they apply to Roth.
Number of replies posted  0 replies      Number of times viewed  15 views      Add Reply, Inc.
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