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Message Boards Digest

January 24, 2019

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

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Liam created a topic in 401(k) Plans

401(k) Excess Matching Contribution of $18

Our client had an excess matching contribution of $18 to an employee and couldn't contact with him to resolve this problem. The plan admin proposes the following fix. "The guiding principle is to make the plan whole. You have three options here:
  • Recover the assets from the participant to make the plan whole (let me know if you go this direction and I will provide some assistance with the mechanics)
  • Make the plan whole from corporate assets and recover the assets from the participants to make the corporation whole
  • Declare this to be a de minimis amount, taking no action to make the plan whole, and take your chances on audit with the IRS/DOL that they agree with you that this amount is de minimis"
We really want to treat this as de minimis since it would be troublesome and not cost effective to resolve such small amount. I just want to find some research or guideline from IRS/DOL to back this de minimis. I did some research and only found Rev. Proc. 2016-51 section 6.02(5)(b): "(b) Delivery of small benefits. If the total corrective distribution due a participant or beneficiary is $75 or less, the Plan Sponsor is not required to make the corrective distribution if the reasonable direct costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution. This section 6.02(5)(b) does not apply to corrective contributions. Corrective contributions are required to be made with respect to a participant with an account under the plan." But this only applied to corrective distributions. In this case, the employee owes the plan back $18.
Number of replies posted  4 replies      Number of times viewed  64 views      Add Reply
 
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cpc0506 created a topic in 401(k) Plans

Leaving MEP to Start Own Plan: Effective Date?

We have a new client who was part of a MEP as of 6/1/16 and has decided to terminate participation in the MEP and wants to start its own plan this year. We have conflicting thoughts in our office as to what would be the effective date of the new plan. I say this is a new plan and its effective date should be 2019. My reasoning for a 2019 date: this is the first time the employer has sponsored its own plan. Others are saying the effective date of the plan should be the date the employer entered the MEP as a participating employer.
Number of replies posted  3 replies      Number of times viewed  54 views      Add Reply
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JustnERPA created a topic in Defined Benefit Plans, Including Cash Balance

Effect of Frozen DB Plan on 401(k) Plan's Top-Heavy Status

A plan sponsor's DB plan has been hard frozen for a few years. It has no early retirement and no subsidized benefits. Last month they changed their 401(k) plan to only provide allocations of deferrals and safe harbor match for 2019. Is the 401(k) plan top-heavy exempt, or does the mere existence of the frozen DB plan eliminate the top-heavy exemption?
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply
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legort69 created a topic in 401(k) Plans

Fully Vested Match Deemed to be a QMAC?

If a plan has a per-payroll fully vested match subject to deferral withdrawal restrictions, is the match deemed to be a QMAC?
Number of replies posted  6 replies      Number of times viewed  64 views      Add Reply
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khn created a topic in 403(b) Plans, Accounts or Annuities

403(b) Plan Will Move to Single Vendor

A 403(b) plan currently has 3 vendors and would like to move to a single vendor arrangement. However, they are hesitant to make any drastic changes from a participant perspective. Are there any clear issues with them doing a phased approach and moving to a single vendor going forward for new employees only? And is that something that could be amended in their plan document?
Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply
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spencerhastings created a topic in Other Kinds of Welfare Benefit Plans

Paging Anyone with Knowledge of MEWAs under Tennessee Laws

Client is in the middle of selling a division and will be keeping those employees in its medical plan for the rest of the year to avoid disruption, thus creating a self-insured MEWA with two employers for this short period. I'm trying to determine the potential risks and requirements of keeping these employees in the plan for the rest of the year under Tennessee law.
Number of replies posted  5 replies      Number of times viewed  41 views      Add Reply
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oldman63 created a topic in 403(b) Plans, Accounts or Annuities

Plan Document Not Updated for Final 403(b) Regs

Tax-exempt employer established 403(b) plan effective 7/1/1998, and amended and restated effective 7/1/1999 on an individually designed plan document. Document was not updated to comply with final 403(b) regulations, EGTRRA, PPA, HEART, or WRERA. What corrective action should the employer take to address these document failures?
Number of replies posted  1 reply      Number of times viewed  16 views      Add Reply
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Ted Munice created a topic in Defined Benefit Plans, Including Cash Balance

Required Changes in Assumptions for 2018 Beginning of Year Valuations?

Did the IRS issue some sort of guidance or notice in 2017 effective for 2018 that restricted what assumptions could be used in a beginning of year valuation? Specifically did they state that for a participant you must assume 2018 expected compensation and expected hours must be the actual 2017 compensation and hours?
Number of replies posted  1 reply      Number of times viewed  15 views      Add Reply
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Scuba 401 created a topic in 401(k) Plans

Affiliated Service Group Here? Doctor Is Minority Owner in Dialysis Center to Which Patients are Referred

I have a doctor client who is a minority owner in a dialysis center. They send patients to the center for treatment. It seems to meet the definition of an A-org/FSO affiliated service group but this is problematic for me. The center does dialysis for many other doctor groups. It is also owned by a majority owner. What if there were other doctor groups that owned a piece? How could the center be part of two affiliated service groups? Am I missing something?
Number of replies posted  1 reply      Number of times viewed  17 views      Add Reply
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IhrtERISA created a topic in Form 5500

Multiple Welfare Plans but No Wrap Document: Amending 5500 vs. DFVCP

Plan sponsor is in the process of winding down and terminating all of its benefit plans. All plans have 100+ participants. It came to our attention that over the past number of years, plan sponsor had been filing only ONE Form 5500 for ALL of its ancillary benefits (AD&D, LTD, Life Insurance, PPO, etc.) in addition to its partially-insured health plan (medical & RX drug). Meanwhile, a (mega) wrap plan document was never in place bundling these benefits. It is our position that a retroactive wrap document cannot be used to retroactively bundle benefits which were previously and incorrectly reported under a single Form 5500 (although it does permit a single filing under DFVCP and help with a single $4,000 penalty). That said, is it possible that this is an Form 5500 amendment issue (since a Form 5500 was in fact filed each year, just incorrectly and for the wrong plan name) and thus inappropriate to be filed under DFVCP? I am more inclined to recommend correction under DFVCP since I see this as a non-filer issue (Form 5500 that was filed was under a non-existent plan name) and client would rather pay the $4,000 filing fee and rest assured that the matter has been put to bed. Thoughts and Feedback would be most appreciated.
Number of replies posted  0 replies      Number of times viewed  20 views      Add Reply
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imchipbrown created a topic in Retirement Plans in General

410b PS with 401(k) Safe Harbor Match -- Coverage Issue

Client went through high turnover this year.

2 HCEs

1 NHCE > 1000 hrs

3 NHCEs terminated -- 1 > 1000 hrs, 1 900 hrs, 1 < 500 hrs. All left months apart, voluntarily. Two were partially vested.

2 HCEs defer, 3 NHCEs defer.

HCE owners want to max his allocation. Profit-Sharing has last day/1000 hr condition. I think I have to add back 2 terminated NHCEs to pass 410b. Wrinkle: plan has "New Comparability" checked as allocation. Historically, allocation has been integrated. I think I can allocate as if "integration" was check on the AA. Just want to make sure my "bad news" is solid.

Number of replies posted  4 replies      Number of times viewed  29 views      Add Reply
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