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Message Boards Digest

March 20, 2019

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

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R. Butler created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Using FSA for Cost of Gym Membership

Participant pays gym membership. He has a Letter of Medical Necessity and it has been determined that it would qualify for reimbursement. He paid the 2019 membership in December 2018. Can that count as reimbursement for 2019 if it was actually paid in 2018?
Number of replies posted  0 replies      Number of times viewed  19 views      Add Reply
 
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52626 created a topic in 401(k) Plans

Controlled Group: One Company's Plan Is Safe Harbor, Other Company's Plan Is Traditional

Company A will acquire Company B in an asset purchase (company B will now be Company C). A and C will be a controlled group. Company A has a safe harbor match. Company C wants traditional 401(k) like they had before the sale. [1] As long as they each pass coverage independent of each other they can have their own plan, correct? Company A has 10 HCEs and 50 NHCES; Company C haa 5 HCES and 35 NHCES. [2] Does Company C's traditional match have to be the same as the match for Company A? [3] Does Company C have to vest 100% immediate like Company A or can they maintain a 6 year graded schedule? Client really wants to keep Company C on their own.
Number of replies posted  0 replies      Number of times viewed  27 views      Add Reply
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Doghouse created a topic in Correction of Plan Defects

Correction of Missed Deferral Opportunity

Following the passage of the Bipartisan Budget Act, plan sponsor agreed to adopt recordkeeper's recommended best practices, which included offering an option to any participant who is on hardship withdrawal suspension to end that suspension early. However, no one ever notified the one participant who fell into this category. Is this a missed deferral opportunity that needs to be corrected?
Number of replies posted  0 replies      Number of times viewed  18 views      Add Reply
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shERPA created a topic in Defined Benefit Plans, Including Cash Balance

ASC 715 Report & Cash Balance Plans

Met with a prospect, currently have a CB plan. They also need audited financial statements so their actuarial firm provided an ASC 715 report. Question from the employer -- the benefit obligation figure on the ASC 715 exceeds the CB hypothetical account balances. I suppose it's a matter of assumptions, and what is reasonable. Is this typical of what CB plan sponsors are dealing with? This is a small plan, for IRS funding the assumption is lump sum distribution of the HAB. I see ASC 715 assumption is the benefit in the form of a life annuity, which I suspect is the reason for the difference.
Number of replies posted  3 replies      Number of times viewed  39 views      Add Reply
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khn created a topic in 401(k) Plans

Participant Requests Addition of an Asset Class

What is a prudent response to a participant who is "formally" requesting their employer add an ESG fund to the 401k lineup so they can invest in alignment with their moral principles?
Number of replies posted  2 replies      Number of times viewed  43 views      Add Reply
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RatherBeGolfing created a topic in Distributions and Loans, Other than QDROs

Beneficiary Determination: Who's Your Daddy?

Participant "P" dies with no beneficiary designation. There is no spouse. Participant had two children, son "S" and daughter "D". S and D have both been located, but they have added a twist. S and D both acknowledge that P is the father of both children, but D's birth certificate does not name the father. My understanding is that D would not be a beneficiary unless she establishes paternity through the courts. D does not want to go through the trouble for her share of an account that is worth about $10K. If S makes a claim and the plan pays him the full amount of Ps account, the plan should be in the clear right? Even if D decides down the road that she does want to establish paternity, the plan would have paid the benefit to the only beneficiary at the time of the claim. Whats throwing me off a bit is that both S and D acknowledge that P was the father of D, even though its not official. Has anyone dealt with this type of situation before?
Number of replies posted  7 replies      Number of times viewed  41 views      Add Reply
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EBECatty created a topic in 409A Issues

409A Issue: One Time/Form of Payment Required; Does This Design Comply?

Plan subject to 409A says executive will get five annual installments upon separation from service. If the executive separates and begins payments, but dies before receiving all five, the plan explicitly says the designated beneficiary will continue receiving the remaining annual installments in the same manner the participant would have received them. There is no election at any point. The plan further says that if no beneficiary designation is on file the remaining payments will be paid in one lump sum to the executive's estate. It seems to me that this would violate the one form of payment requirement by toggling the form of payment based on whether or not a beneficiary has been designated. Would further allow for manipulation, e.g., executive is terminally ill and wants survivors to have lump sum, so revokes the existing beneficiary designation and effectively elects lump sum acceleration instead of remaining installments. Appreciate any thoughts.
Number of replies posted  2 replies      Number of times viewed  18 views      Add Reply
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