Message Boards Digest

January 31, 2019

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

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AndyH created a topic in Defined Benefit Plans, Including Cash Balance

Plan Amendment and 133% Accrual Rule

Have an antique integrated DB plan of .75% of average comp + .50% of average comp > $10,000, max 35 years. Sponsor wants to increase benefits by not more than 10% while keeping it simple and maintaining safe harbor status. Thinking about amending the plan to add to the existing formula effective 1/1/2019 2% of average comp x Years of service prior to 1/1/2019 limited to 5 years. This provision seems to violate the 133% rule. Or is it OK because it's due to an amendment and would be OK for every year of service starting 1/1/2019? If not OK, any other ideas (within the objective of a safe harbor formula)?
Number of replies posted  4 replies      Number of times viewed  39 views      Add Reply

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AndrewZ created a topic in 401(k) Plans

Scam 'DOL' Call Regarding 408(b)(2) Compliance?

One of our clients received a call from the "DOL" saying their plan is "not recognized" by the DOL because they're not in compliance with 408(b)(2), and they'll call back in a week to confirm the client has taken appropriate actions. The client says it sounded like a robot. It seems obvious this is some sort of scam (like the IRS, the DOL would only initiate contact by mail, and they have no way of knowing if a plan complies with 408(b)(2) unless they audit it). If they call again, we're asking our client to request a return phone # and agent ID # to call them back with. Has anyone else experienced this, or have any insight? Another client recently received a letter from an advisory firm trying to scare them into hiring them for a "free" 408(b)(2) compliance review.
Number of replies posted  2 replies      Number of times viewed  70 views      Add Reply
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76401k created a topic in 401(k) Plans

401(k) Merged Into ADP MEP, Back to 401(k)

Client started with 401k in 1986 (001), then merged into ADP MEP (filed 5500 on ADP EIN), now wants to spinoff to 401k. Is spinoff document 001 because they started with 001 prior to merger or is it 002? Does predecessor service or prior year service apply in this case? Is original effective date 1986 or 2019?
Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply
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AlbanyConsultant created a topic in 401(k) Plans

Testing Each Cross-Tested Deposit... Including Receivable?

We have a small segment of our new comp plans that insist on making profit sharing deposits during the year even though they are cross-tested and even though we have told them repeatedly in writing that this is a Bad Idea and a Royal Pain. Mostly, they give a small percentage (~1.5%) to each staff employee with each payroll to approximate the gateway minimum and none to the owners, so we figure that even if questioned, it could be shown that the deposit is nondiscriminatory. Or they give the 3% safe harbor to each staff employee with each payroll but don't for the owners (though that's usually only for sole props and partnerships, which makes sense). Today, someone here had the idea to ask if the receivable deposit, if tested on its own, would be discretionary in favor of the HCEs. Sure, if you look at all the information for the entire year it passes testing, but if you look at that one after-the-end-of-the-year deposit, it's almost all for the HCEs and would fail miserably. Looking at this on the "receivable" is something I had never considered before. Is this an even bigger issue than I realized?
Number of replies posted  1 reply      Number of times viewed  39 views      Add Reply
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IhrtERISA created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Wrapping Existing Plan Document with Ancillary Benefits

Plan sponsor has an existing ERISA plan document for its self-insured medical and RX drug plan. Plan sponsor endorses multiple fully-insured ancillary benefits (LTD, STD, AD&D, etc.) and never adopted a wrap document for such benefits. It's come to our attention that plan sponsor had been filing one Form 5500 for its "welfare program" (combining self-insured plan with fully-insured benefits) without a plan document properly "bundling" all benefits. As I see it, Plan sponsor has the following options: [1] Maintain one plan: Adopt a mega wrap document that bundles both the existing self-insured medical plan with the fully-insured ancillary benefits; [2] Maintain two separate plans: Wrap the fully-insured ancillary benefits under one mega wrap document and maintain the existing self-insured medical plan as a separate document; or [3] Amend the existing plan document for the self-insured medical plan to include the fully-insured ancillary benefits. My gut tells me to go with option #2 (thereby maintaining two separate plans... the existing self-insured medical plan document and a wrap for the fully-insured benefits) because I believe there could be complications with bundling an existing ERISA plan document with ancillary benefits under one plan. Any pros/cons to these approaches?
Number of replies posted  0 replies      Number of times viewed  18 views      Add Reply, Inc.
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