Message Boards Digest

May 30, 2019

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

Zoey created a topic in 401(k) Plans

Safe Harbor Contribution on Wage Settlement Penalty

I need some guidance as to what someone would do in this situation, or if anyone knows of a cite that they can refer me to. I have a client who was sued (settled 2018) by an employee for vacation pay from 2016. For simplicity, let's say they were awarded $3,500. The client was also ordered to pay a penalty on that amount of say $1,500. The plan is a safe harbor non-elective plan. The client then submitted the 3% SHNE contribution on the $3,500 plus lost earnings on the $3,500. The participant is now asking for the 3% ($45 plus lost earnings) on the $1,500 penalty. Here is what the SPD reads (for the readers digest version)... Does plan compensation include monies paid to me during an absence or after my employment ends? Usually, only the amounts paid to you while you are an employee are considered plan compensation (described above). However, the plan may consider certain types of pay as plan compensation, though paid during an absence or after you leave employment. If you are totally and permanently disabled, compensation under your plan will not include disability related salary continuation payments. Payments you receive after terminating employment might be considered plan compensation, if they meet the definition of "post-severance compensation. "To be considered post-severance compensation, the payment must be one that you would have received had employment continued, such as your salary or wages. Post-severance compensation does not include severance pay, or other amounts you receive only because your employment ended. To be included in plan compensation, post-severance compensation must be paid to you by the later of the end of the limitation year in which your employment ends, or within 2-1/2 months after the date your employment ends. Payments for unused accrued sick, vacation, or other leave that you would have been able to use if your employment had continued are not included in your plan's post-severance compensation. Thoughts? The debates here, are several...1) She should not have gotten the SHNE on the vacation pay to begin with. 2) Vacation pay could be considered post-severance compensation (as she would have received it, had she not terminated), but the last paragraph kind of negates that. 3) None of it was paid within 2-1/2 months after employment ended. Thanks in advance!
Number of replies posted  0 replies      Number of times viewed  27 views      Add Reply
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Narith created a topic in Defined Benefit Plans, Including Cash Balance

Guaranteed return

Hello, I am sorry if this is a basic question. I'd like to ask what do we mean when we say that the employer has to guarantee a return of 3.75% on employee contributions? For example, assume that someone, aged 65, has just started in a company and this year's employee contribution is 10,000. Then what's the amount of the lump sum that he will receive when he retires (assume at 67)? Thank you in advance for your help.
Number of replies posted  7 replies      Number of times viewed  72 views      Add Reply

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

5500 - Schedule A - Part III 9b - claims paid &/or charged

Insurance providers report claims paid on their Schedule A letters, but not a separate item for Claims charged. I'm wondering if this amount should be entered on Sched., AIIIb under both (1) Claims paid and (4) Claims charged. Reason I wonder is that the SAR pulls the 'claims paid' number from the Claims charged entry.
Number of replies posted  0 replies      Number of times viewed  17 views      Add Reply

mattmc82 created a topic in Employee Stock Ownership Plans (ESOPs)

Share release when amortization schedule "changes"

For sake of simplicity I will just use an example 1000 shares in suspense in 2017 Original amortization schedule is 20 payments of 160 (total payments of 3,200) 160/3,200 x 1000 = 50 shares released with $3,040 in remaining loan payments Year 2018 the amortization schedule was updated by the valuation company and is 20 payments of 155 (total payments of 3,100) should the 2017 share release be recalculated to reflect this updated amortization schedule?
Number of replies posted  3 replies      Number of times viewed  36 views      Add Reply

Scuba 401 created a topic in Retirement Plans in General

compensation issue

Plan defines Comp period as the 12 month fiscal period ending within the plan year. Example: 3/31 Fiscal Year End. The 12 month comp period would be 4/1/2017 03/31/2018. This plan has 4 entities (control group) participating. 2 w/ 3/31 fiscal years and 2 w/ 12/31 fiscal years. The employer switched fiscal years after the completion of the 3/31 fiscal year to a calendar year. I technically have two fiscal year ends (21 months of comp) within the 12 month plan year. 4/1/17 03/31/18 and now 4/1/2018 12/31/18. The plan year has not been changed and continues to be a 12 month calendar year. We want to be able to include all 18 months of compensation for funding purposes during 2018 and then going forward 2019's compensation will follow the 12 month plan year. How do we include compensation from 4/1-17 12/31/18 for funding purposes for those 3/31 fiscal EE's that had their fiscal year switched to 12/31? Can this be accomplished in the 2018 plan year?
Number of replies posted  1 reply      Number of times viewed  35 views      Add Reply

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

QDRO Assumptions

This is a general question regarding the assumptions used to value a QDRO for a defined benefit monthly accrual. Is it appropriate to use the current year Applicable Table with the current 417(e) rates for both a public and a private pension plan payment. Or, is there some other industry standard that is used. Does it make a difference if the plan does not allow a single lump sum payment to the alternate payee?
Number of replies posted  0 replies      Number of times viewed  21 views      Add Reply

BTG created a topic in 403(b) Plans, Accounts or Annuities

Universal Availability

I have a very simple question with what seems to be a very elusive answer: When did the universal availability requirement first apply? I'm looking at an early 1990s document from a major provider that has an age 21 and one year of service requirement in order to be eligible for deferrals. I'm struggling with how that would have been permissible. Code Section 403(b)(12)(A)(ii) was certainly in effect back then.
Number of replies posted  2 replies      Number of times viewed  24 views      Add Reply, Inc.
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