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April 22, 2019

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

jpod created a topic in Other Kinds of Welfare Benefit Plans

Employer Skips Top-Paid Group Election for Its Qualified Retirement Plans; Affects Section 129 DCAP?

In determining HCE status, a particular employer client does NOT make the top-paid group election for its five section 401(a) retirement plans. It's desirable for coverage testing purposes that it not make the election. Does the "consistency" requirement of the top-paid group election rules mean that this employer cannot make the election for any of its non-401(a) plans where HCE status is relevant? In this case it's for a Section 129 plan.
Number of replies posted  2 replies      Number of times viewed  56 views      Add Reply

CFP created a topic in 401(k) Plans

Definition of 'Retirement' for Purposes of Punitive Withdrawal Penalty Under Group Annuity Contract

Client's plan sets normal retirement age at 59.5. We have 6 active employees, all over 59.5, who are invested in the guaranteed rate investment option in the plan. Per the group annuity contract, if a plan participant takes a non-benefit sensitive withdrawal from the guaranteed rate option, the withdrawal is subject to a market value adjustment. The market value adjustment formula is punitive. The annuity contract specifies that "Participant retirement, as defined in the plan document" is considered a benefit sensitive withdrawal. The plan document also allows in-service withdrawals at 59.5. I'm interpreting this fact pattern to say that if I recommend to these 6 participants that they roll over their moneys in the guaranteed rate option to an IRA, that they should all be able to do so without imposition of the market value adjustment. And they don't have to retire to do so, they can continue working and contributing to the plan. Is my interpretation defensible?
Number of replies posted  1 reply      Number of times viewed  49 views      Add Reply

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

Effect of Family Aggregation on Rules for Required Minimum Distributions

[1] Does family attribution apply for purposes of required minimum distributions? A 70-1/2 year old man is an employee of his wife's company. Is he considered to be a "more than 5% owner" for RMD purposes? A different question: [2] If someone starts taking RMDs, and later discovers she doesn't have to (never should have started), does she have to keep taking RMDs each year?
Number of replies posted  3 replies      Number of times viewed  88 views      Add Reply

poisnivey created a topic in 401(k) Plans

Too Few Deferrals Taken from Participants' Paychecks: How to Correct?

We had a new earnings code used for group of associates on our last payroll that was not set up correctly as 401k eligible. It was caught after 1 payroll. So there were some whose contribution was not calculated on the entire amount of their earnings. We propose to tell everyone affected that they can increase their deferrals to make up for any part on their end, and that our match true-up at year-end will apply to such additional deferrals. Comments?
Number of replies posted  1 reply      Number of times viewed  82 views      Add Reply

Marsh created a topic in 401(k) Plans

Vesting in My Profit Sharing Account

I worked for a company for 12 years and was a participant in the profit sharing plan (100% employer funded). The vesting period was 1 year for 100%. I left the employer a few months ago. I recently received notice that I received a profit sharing plan payment for my work in 2018. The plan provider has changed since I left, and my new provider shows that I am 0% vested. I believe I'm entitled to receive the distribution because I was 100% vested at the time of my departure. I would like to roll this money over into my new retirement account. Can anyone provide some helpful information on this?
Number of replies posted  7 replies      Number of times viewed  90 views      Add Reply

Santo Gold created a topic in IRAs and Roth IRAs

Do Roth IRA Contributions Affect the Maximum Allowed 401(k) Deferrals?

For 2019, if an individual over age 50 contributes $6,000 to his Roth IRA, can he still contribute $25,000 to the 401(k) plan as either a pre-tax 401(k) contribution or as a Roth elective deferral to the plan?
Number of replies posted  2 replies      Number of times viewed  64 views      Add Reply

austin3515 created a topic in Form 5500

Who Must Be Given a Summary Annual Report?

The DOL regs and the ERISA Outline Book both say essentially "All participants must receive the SAR." We've always interpreted this to mean all active/eligible employees plus any terminated employees with balances as of the last day of the plan year. But I can't seem to find anything that says that explicity. What do people think? Do you know of anything more specific?
Number of replies posted  3 replies      Number of times viewed  64 views      Add Reply

Debbie A. created a topic in 401(k) Plans

Changing from Eligible Class to Excluded Class

The plan excludes "seasonal" employees. If an employee goes from working 1000 hours a year and being eligible to then working less than 1000 hours and becoming labeled "seasonal", do they then become ineligible to contribute? If so, upon what day are they considered ineligible? For example, the lifeguard worked 1001 hours in 2017 and entered the plan on 1/1/18 (semi-annual entry dates), but then the next summer he only worked 600 hours. Can he become ineligible on 7/1/18, or does he need to complete the year in order to see total hours and then he becomes excluded on 1/1/19?
Number of replies posted  4 replies      Number of times viewed  83 views      Add Reply

AJC created a topic in 401(k) Plans

Determining What Are Salary Deferrals: Employee Has Annual Choice of Higher Pay or Deferral of That Amount

It seems to me this plan sponsor is avoiding FICA tax.... The plan sponsor has a job-defined pay scale and adds a percentage to each employee's wages based on years of service. This added percentage ranges from 2% to 16% of their job-defined wages. There are no key employees and no HCEs. The plan sponsor is a church. Each year, the plan sponsor allows each eligible employee (separately) to determine whether their percentage of pay based on years of service is paid as wages or whether it is deposited into the plan as an employer contribution FBO the employee. Should these "employer" contributions be considered employee salary deferrals?
Number of replies posted  4 replies      Number of times viewed  113 views      Add Reply

RatherBeGolfing created a topic in Correction of Plan Defects

IRS Expands Self Correction to Certain Loan Failures

Expanded Self Correction Program -- EPCRS Rev. Proc. 2019-19. I've only glanced at it, but is this an early Christmas gift from the IRS?
Number of replies posted  5 replies      Number of times viewed  65 views      Add Reply

nlrln created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Employer Contribution to Health Insurance Based on Marital Status

Can my employer pay more for a co-worker's health insurance, who is married, than for my health insurance as a single person? My employer pays 100% of my health insurance, but they also pay 100% of my co-workers' family health insurance policy (which covers my co-worker, his spouse and his children). We have the same job, with the same job title and responsibilities. But I believe that since family policies are likely 3-5 times more expensive than a single policy my co-worker is receiving a larger dollar benefit based on the cost of his family policy vs my single policy. Is this legal, or is it a discriminatory benefits policy based on marital or family status and not a bona fide job-related classification?
Number of replies posted  19 replies      Number of times viewed  125 views      Add Reply

Bumppo23 created a topic in Plan Terminations

Fully Insured Defined Benefit Plans; Must One Submit Schedules SB and/or AFTAP(s)?

If one has a fully insured defined benefit plan, must one submit a Schedule SB and/or AFTAP(s)?
Number of replies posted  0 replies      Number of times viewed  23 views      Add Reply

401(k)athryn created a topic in 401(k) Plans

Mid-Year Amendment to Safe Harbor Plan to Change Definition of Compensation

I've seen threads discussing the issue of amending a safe harbor plan's definition of compensation mid-year. It seems people are in agreement that you cannot amend to exclude compensation mid-year because this would reduce the safe harbor contribution. I have a client who would like to exclude auto allowance pay starting 7/1/2019 (a calendar year plan). Notice 2016-16 prohibits the following change- --
A mid-year change to modify (or add) a formula used to determine matching contributions (or the definition of compensation used to determine matching contributions) if the change increases the amount of matching contribution, or to permit matching contributions. This type of change is possible if certain conditions are met.
If my client amends to exclude auto allowance mid-year, it would decrease the safe harbor match for the remainder of the year (they allocate each pay period). The above only prohibits a plan from an amendment that would increase the safe harbor contribution. So, can I amend mid-year without it having to be retro to 1/1/2019? If not, what am I missing?
Number of replies posted  0 replies      Number of times viewed  26 views      Add Reply

ATM created a topic in 401(k) Plans

Safe Harbor Plan -- Mid-Year Amendment to Reduce Requirements for Deferral Eligibility?

Can you amend the eligibility requirements for salary deferrals to be more relaxed mid-year while keeping the SHNEC requirements at 1 year?
Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply

bmore1147 created a topic in 401(k) Plans

Questions About Recent Private Letter Ruling Approving a Student Loan 401(k) Program

Is anyone familiar with the Abbott PLR that was used to implement the student loan contribution arrangement? I read the PLR, and was under the impression that this was a Non-Elective contribution, subject to all the eligibility and vesting requirements of the NE contribution. My client Empower just launched a Student Loan program, and the employer contribution will be made as a QNEC. [1] Was the PLR based on a QNEC? That term and any reference to that term was not part of the PLR. [2] if you do proceed with a QNEC, can you place a last day/1000 hours requirement on the contribution? I assume you can't do anything about vesting --
Number of replies posted  0 replies      Number of times viewed  24 views      Add Reply

401(k)athryn created a topic in Retirement Plans in General

Determination of Partial Plan Termination: Always Wait Until Year-End?

I have a client that experienced a partial plan termination in 2018 because more than 20% of eligible employees were terminated involuntarily. This year, I have continued to receive withdrawal requests and have determined that, if I were to make a partial termination determination based upon January -- April 2019, it would be a partial termination and these 2019 terminated employees should be fully vested. It's possible that there will be enough new plan entrants throughout 2019 to have a result that it is NOT a partial termination based upon the full year. I'm hesitant to wait until the end of year as I normally would, because I don't want to have to reinstate forfeitures when that could have been avoided. Does anyone make partial termination determinations throughout the year (if you have a reason to suspect a partial termination) or do you always look at the plan year? In my case, it's not a single event where people are laid off or a division shutdown. I would not say that these are related to the 2018 layoffs, either.
Number of replies posted  7 replies      Number of times viewed  47 views      Add Reply
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