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Message Boards Digest

March 5, 2019

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

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cpc0506 created a topic in Distributions and Loans, Other than QDROs

Partial Withdrawals as a Protected Benefit?

Plan allows for partial withdrawals so long as the amount is at least $85. Is this a protected benefit? If so, can the client change the minimum amount or is that protected as well?
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply
 
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5500sorBust created a topic in 401(k) Plans

Do Stable Value Funds File as a Direct Filing Entity?

Do stable value investments file as a Direct Filing Entity? Why or why not?
Number of replies posted  1 reply      Number of times viewed  37 views      Add Reply
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JustnERPA created a topic in Correction of Plan Defects

Fixing Missed Deferrals -- 25% QNEC Required? Or 50%?

A catch-up eligible NHCE elected to defer the maximum in calendar year 2018. The calendar year plan allows catch-up deferrals. The employer stopped withholding once they reached $18,500. The employer started withholding deferrals again January 1, 2019. The error only affected catch-up deferrals.

To fix a missed deferral using a 25% QNEC instead of a 50% QNEC, a notice must be provided no later than 45 days after the correct deferrals begin. The notice requirement states "Notice of the failure that satisfies the content requirements of section .05(9)(c) of this Appendix A is given to an affected participant not later than 45 days after the date on which correct deferrals begin."

Could the term "correct deferrals" mean the next time a catch-up deferral applies to this participant? That would be the date on which such 'correct deferrals' begin? If so, that would allow a 25% QNEC to fix the error. Otherwise, the 45-day notice requirement can't be met and the 50% QNEC applies. Agree?

Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply
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Chippy created a topic in Cross-Tested Plans

Gateway Testing in Controlled Group Context -- Some Employees Working for Two Companies

I have a controlled group, 3 companies, all three have a safe harbor enhanced match, and 2 of the three companies allocate a pro rata profit sharing contribution. I'm having problems passing gateway as a few employees work for 2 companies, one with the profit sharing and one that does not allocate one. Because the contribution is allocated pro rata, do I even need to run the gateway test? If I pass the average benefits percentage test, is that all I need to pass? The plan passes 410b as well.
Number of replies posted  7 replies      Number of times viewed  37 views      Add Reply
Author's photo

Scuba 401 created a topic in Mergers and Acquisitions

Handling Variable Annuity Contracts After Merger of Plans

Two 401(k) plans are merging as part of an asset sale. Plan A contains a few variable annuities and is being merged into Plan B. Plan B does not want the variable annuities. What are Plan B's options? I am thinking that, worst case, if they had to, they could take the annuities but not allow other participants to purchase any more. but the acquiring plan sponsor would prefer to either force participants to roll them or liquidate.
Number of replies posted  0 replies      Number of times viewed  20 views      Add Reply
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AKconsult created a topic in 401(k) Plans

Every Plan Must Include a First-Day-of-Plan-Year Entry Date?

I have always understood that the Code and regulations with respect to eligibility/entry dates are designed so that, if a person must work 1 year and be at least age 21, then the entry dates must be set in such a way that ultimately the person is not required to work more than 18 months before entering the plan. So a plan with a 1-year requirement and quarterly entry dates is fine, because there's no way someone would need to work more than 18 months before entering the plan. HOWEVER, in looking more closely at the regs, they require that the person must enter by the earlier of:
  • the 1st day of the plan year after meeting the 1 year/age 21 requirement OR
  • 6 months after meeting the 1 year/age 21 requirement.
I am thinking this essentially requires every plan to use the first day of the plan year as an entry date, but I want to see if that is correct. We have a calendar year plan that wants to use entry dates of 2/1, 5/1, 8/1 and 11/1 to coincide with open enrollment for other benefits. I think they MUST also use a 1/1 entry date. EXAMPLE: a person hired 11/15/18 works one year by 11/15/19, he must enter on 1/1/20, he can't wait until 2/1/20. I initially thought the 2/1 entry date was fine because the person would be entering with 18 months of hire, but I think in this case, he must enter 1/1. Agreed?
Number of replies posted  1 reply      Number of times viewed  32 views      Add Reply
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BG5150 created a topic in Retirement Plans in General

Text of the Service Spanning Rules?

Can someone give me a link to where I can see the IRS service spanning rules?
Number of replies posted  1 reply      Number of times viewed  18 views      Add Reply
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