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May 16, 2019

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

Vlad401k created a topic in 401(k) Plans

Eligibility Computation Period for Rehired Employees

Let's say the plan requires 1 year of service with 1,000 to become eligible. The entry dates are 1/1 and 7/1 (semi-annual). Also, let's say if the participant did not complete the 1,000 hours by anniversary date, the plan changes the eligibility computation period to calendar year. An employee is hired in 2018 (let's say on 1/10/2018). He is terminated in 2018 before completing 1,000 hours. He is then re-hired in 2019 (let's say on 2/10/2019 -- so he hasn't completed 1,000 hours by anniversary date) and works 1,000 hours in 2019 calendar year. Would he become eligible on 12/31/2019 (and enter the plan on 1/1/2020) or 2/9/2019 (and enter the plan on 7/1/2020)? Basically, would the plan switch to calendar year eligibility period because the employee did not complete eligibility by anniversary date? Or, would he be treated as a new employee as he did not complete the eligibility requirements by his initial anniversary date?
Number of replies posted  2 replies      Number of times viewed  53 views      Add Reply
 
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401king created a topic in 401(k) Plans

Allocation Schedule vs. Payroll Report of Salary Deferrals -- What's the Diff?

A client's 401(k) plan is undergoing an IRS audit and the auditor requests both an Allocation Schedule and a report of 401k contributions for each pay period. Anyone know the difference, or what exactly they're looking for in an allocation schedule?
Number of replies posted  4 replies      Number of times viewed  68 views      Add Reply

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

Last Day Employment Condition to Earn CB Contribution Credits: OK to Apply to HCEs Only?

I am taking over a cash balance plan that requires NHCEs to work 1000 hours to receive the contribution credit, but HCEs must work 1000 hours AND be employed on the last day of the plan year? Is this allowed for HCEs?
Number of replies posted  5 replies      Number of times viewed  70 views      Add Reply

Bumppo23 created a topic in Defined Benefit Plans, Including Cash Balance

Application of Interest Rate Assumption for Benefit Adjustments in Applying Sec. 415

https://www.irs.gov/pub/irs-drop/n-07-07.pdf

Section 303(a) of PPA '06 amended Section 415(b)(2)(E)(ii) to provide that the interest rate assumption for purposes of adjusting a benefit payable in a form that is subject to the minimum present value requirements of Section 417(e)(3) must not be less than the greatest of (i) 5.5%, (ii) the rate that provides a benefit of not more than 105% of the benefit that would be provided if the applicable interest rate (as defined in Section 417(e)(3)) were the interest rate assumption, or (iii) the rate specified under the plan.

This situation may refer to PFEA. Does anyone recall if an eligible employer stands as free of prong (iii)?

Eligible Employer defined per Section 408.

http://uscode.house.gov/view.xhtml?req=(title:26%20section:408%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section408)&f=treesort&edition=prelim&num=0&jumpTo=true#substructure-location_p_2

The term "eligible employer" means, with respect to any year, an employer which had no more than 100 employees who received at least $5,000 of compensation from the employer for the preceding year.

Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply

cpc0506 created a topic in 401(k) Plans

Terminating a Safe Harbor Plan Due to Retirement

Client is closing down his medical practice on July 31, 2019. He sponsors a safe harbor 401(k) plan. [1] Does he have reliance on safe harbor status even though plan is not a full year? [2] Is a notice to participants required? [3] Is there any special language needed in the amendment to terminate? The small firm that I was employed by has been bought by another firm whose termination procedures were very different from the way we handled plan terminations. I am looking for guidance on how others handle plan terminations.
Number of replies posted  3 replies      Number of times viewed  42 views      Add Reply

ERISARocks created a topic in 401(k) Plans

Delinquent Loans Under Rev. Proc. 2019-19: Can Correct Before Default?

Under Rev Proc 2019-19, can we can correct a delinquent loan that has not yet been defaulted? The Rev Proc says that a 'defaulted loan' is any loan that is not repaid in accordance with plan terms. Can SCP be used to correct a loan in which several loan payments were missed because the employer's payroll messed up and failed to withhold the loan deductions? The cure period has not expired so there is no default yet. The question arises because the Rev. Proc. states that it applies to 'defaulted loans' and does not mention delinquent loans. My thought is that the term 'defaulted loan' is being used differently than the conventional definition in the Rev. Proc. and we may correct a delinquent loan. Thanks in advance for any thoughts. Rev. Proc. 2019-19, Section 6.07(d) states: Defaulted loans. A failure to repay a loan in accordance with loan terms that satisfy Section 72(p)(2) may be corrected by (i) a single-sum corrective payment equal to the amount that the affected participant would have paid to the plan if there had been no failure to repay the plan, plus interest accrued on the missed payments, (ii) reamortizing the outstanding balance of the loan, including accrued interest, over the remaining payment schedule of the original term of the loan or the period remaining had the loan been amortized over the maximum period that complies with Section 72(p)(2)(B), as measured from the original date of the loan, or (iii) any combination of (i) or (ii).
Number of replies posted  3 replies      Number of times viewed  43 views      Add Reply
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