BenefitsLink.com logo   

BenefitsLink
Message Boards Digest

May 20, 2019

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

M Norton created a topic in Distributions and Loans, Other than QDROs

Late RMD; Which Age Factor to Use?

401(k) plan participant turned 70-1/2 in 2018. Attained age in 2018 was 71. RMD should have been made by 4/1/2019. Because it will be late, earnings will need to be calculated. The distribution is being made for 2018 when attained age was 71. The distribution will actually be made in 2019 when attained age will be 72. If attained age in 2019 is used to determine the factor for the first RMD for 2018, then the same factor would be used again to calculate the RMD for 2019. So the question is: which age factor to use to calculate the first RMD?
Number of replies posted  1 reply      Number of times viewed  45 views      Add Reply
 
[Advert.]

Legal Analytics help ERISA Litigators Win

Sponsored by Lex Machina
Join our complimentary webcast on May 30, unveiling the first ERISA Litigation Report with valuable trends and insights such as ERISA case timing, resolutions, damages, remedies, and findings.

Earl created a topic in 401(k) Plans

Service-Based Matching Contribution Rate Fails BRF Test

Plan has increasing rates of match based upon years of service. Top rate has insufficient number of NHCEs so it fails. Top rate is 50% up to 12% deferral. Second rate is 50% up to 10% deferral. No one in the second rate deferred more than 10% so moving them up to the top rate and applying the formula would have no effect on the contribution. Could I just give them 1% of pay anyway and be OK, or do I instead have to elevate lower years of service people with 12% or more deferral? ER would like to do the former, because they're longer service employees -- but would it be a valid correction of the match problem?
Number of replies posted  2 replies      Number of times viewed  54 views      Add Reply

52626 created a topic in 401(k) Plans

Outstanding Participant Loan at Time of Rollover

Participant terminated 12/31/2018. In March of 2019 he took a lump sum payment and rolled his benefit to his new employer's plan. At the time of distribution he had an outstanding loan balance. The recordkeeper issued two 1099-Rs -- one for the rollover and one for the offset loan amount. Under the Tax Cuts and Jobs Act, does the participant have until 4/15/2020 to fund the "outstanding" loan amount to an IRA or his new employer's plan as a rollover contribution? Any restrictions on funding the outstanding loan balance by the due date of tax return?
Number of replies posted  1 reply      Number of times viewed  46 views      Add Reply

52626 created a topic in Retirement Plans in General

Florida Documentary Stamp Tax as Applied to Participant Loans

Florida imposes a document tax on loan transactions that are made, signed, executed, issued in the state. Before you ask, why would a Plan Sponsor care, the loan is under a Qualified Plan (and ERISA)? Answer: the Florida statue specially states that "promissory notes made in connection with a pension plan loan, 401(k) loans and share loans" ARE specifically included. Failure to pay the documentary tax could result in a the plan's inability to enforce provisions of the promissory note. It'as been suggested that failure to pay the tax could mean a 401(k) is extending loans that are not adequately secured, meaning prohibited transaction excise taxes or operational failures. It seems everyone is aware of this but no one pays the taxes. Could the State of Florida challenge the loan? For folks with Florida clients, are you recommending that plan administrators have the loans recorded with the state and pay the documentary tax?
Number of replies posted  5 replies      Number of times viewed  77 views      Add Reply

CEB50 created a topic in 401(k) Plans

How to Make an ADP Refund When Account Balance Has Been Paid Out Already?

A plan has failed the ADP test. Several HCEs terminated and rolled their money out before the refunds were calculated, so their balance is $0. What's the fix?
Number of replies posted  1 reply      Number of times viewed  41 views      Add Reply

doombuggy created a topic in 401(k) Plans

RMDs for Non-Spousal Beneficiaries

Company owner died on 1/1/18. His 6 children were the beneficiaries of his account. They requested distributions from the owner's account last year. Each took his or her share of the owner's 2018 required minimum distribution in this way: the beneficiaries kept the assets in the plan, but the platform allowed them to move the assets to each of their accounts as a rollover. How do we calculate the RMDs each year?
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply

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

Nebraska Divorce Decree -- Healthcare Coverage Exception and ERISA Preemption

We have a client with a self-funded health plan. Ex-spouse of employee in Nebraska claims he should still be covered for 6 months (until divorce decree is final for purposes of health plan per Nebraska statute). [1] Because the plan is self-funded would ERISA preemption apply? [2] Would the answer be different if the plan was insured? Nebraska Statute Below:
42-372.01. Decree; when final. (1) Except for purposes of appeal as prescribed in section 42-372, for purposes of remarriage as prescribed in subsection (2) of this section, and for purposes of continuation of health insurance coverage as prescribed in subsection (3) of this section, a decree dissolving a marriage becomes final and operative thirty days after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered. (2) For purposes of remarriage other than remarriage between the parties, a decree dissolving a marriage becomes final and operative six months after the decree is entered or on the date of death of one of the parties to the dissolution, whichever occurs first. If the decree becomes final and operative upon the date of death of one of the parties to the dissolution, the decree shall be treated as if it became final and operative the date it was entered. (3) For purposes of continuation of health insurance coverage, a decree dissolving a marriage becomes final and operative six months after the decree is entered. (4) A decree dissolving a marriage rendered prior to September 9, 1995, which is not final and operative becomes operative pursuant to the provisions of section 42-372 as such section existed immediately preceding September 9, 1995.
Source: Laws 1995, LB 544, Section 2; Laws 1997, LB 434, Section 1; Laws 2000, LB 921, Section 34.
Number of replies posted  0 replies      Number of times viewed  17 views      Add Reply

PFranckowiak created a topic in Qualified Domestic Relations Orders (QDROs)

Alternate Payee Dies Before QDRO Payment Begin

Alternate Payee died before receiving payment from a 401(k). The QDRO states that if alternate payee dies, it is to be paid to the alternate payee's estate. The mother of the Alternate Payee seems to have control of the estate per a court. Alternate payee has a 4-year-old child. Regarding payment to the Alternate Payee's "estate" -- does that mean there are no rollover options and that we are required to withhold taxes?
Number of replies posted  3 replies      Number of times viewed  29 views      Add Reply
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

Copyright 2019 BenefitsLink.com, Inc. All materials contained in this mailing are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than BenefitsLink.com and EmployeeBenefitsJobs.com are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy