Message Boards Digest

July 2, 2019

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

frank1971 created a topic in 401(k) Plans

Late Contributions to 401(k) -- Use DOL Calculator for All Contribution Types?

Employer was 20 days late with employee deferrals, matching, and non-elective QACA contributions. Prior to this error they have always submitted the three money types together to participant accounts every pay period. For the missed contributions, do they need to use the VFCP lost earnings calculator for all three money types or just for the employee deferrals?
Number of replies posted  0 replies      Number of times viewed  22 views      Add Reply

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

QDRO Approved, Funds Already Disbursed -- Do-Over Possible?

State of Oregon. Parties are now dealing with the reality that they did not withdraw enough from 401K plan to pay off all bills and also pay IRS. Husband now wants to renegotiate the pension settlement and wife just wants the bills paid off. Can they renegotiate the 401k settlement and file an amended or new QDRO? Is it allowed to go back? They had done a 50/50 split before but failed to account for the tax consequences of not rolling over into another retirement plan. Plus the bills turned out to be more that they thought after paying lawyers :(
Number of replies posted  9 replies      Number of times viewed  53 views      Add Reply

Dennis G. created a topic in Employee Stock Ownership Plans (ESOPs)

Plan Buys Back Shares Distributed from ESOP But Section 415 Now a Problem

I administer an ESOP plan that only holds Employer Shares. When a participant terminates, the participant sells his shares to the plan in exchange for cash. The "cash" paid is a cash contribution to the plan and in turn paid out to the terminated participant. The shares "sold" to the plan are allocated to the remaining participants eligible to receive a contribution to the plan for the year. However, because of diversification the value of the shares sold this year exceeds the 415 limit for contribution allocation. What can be done? Does the value of the shares in excess of the 415 limit belong to the Employer outside the plan?
Number of replies posted  2 replies      Number of times viewed  23 views      Add Reply

csanch11 created a topic in 401(k) Plans

Confused About Enrollment Process in T Rowe Price 401(k) Plan

I'm in the process of enrolling in a 401k with trowprice. I'm a bit confused in this enrollment stage (see attached screenshot). There's the Roth 401k and the Pretax selection. My assumption is that the Pretax is the traditional 401k account. Right? If so, why do they give me the choice of opening both traditional and Roth 401K accounts?
Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply

TPApril created a topic in Form 5500

Welfare Plan 5500 -- Schedule A Reporting -- Mid-Year Broker Buyout Gives Rise to Two Commissions

Group Insurance broker was bought by another firm mid-year. So two different brokerages received commissions, even though the Employer did not formally change brokers. On insurance carriers' Schedule A information letters, they either indicate one or the other for the whole year (i.e., if their system is not updated, they list the prior firm name; if updated, the new firm's name) with the grand total for the whole year. To what extent is it necessary to break out what amounts were paid to which firm, even though it's the same broker group?
Number of replies posted  0 replies      Number of times viewed  10 views      Add Reply

cheersmate created a topic in 401(k) Plans

Deferrals Erroneously Withheld from Bonuses, Not Remitted to Plan

How do we correct the following error? 401k Plan permits special elections for "irregular pay" and absent making an affirmative election, nothing should be withheld. In December 2017 a small amount of deferrals were withheld from "Christmas" bonuses for some but not all employees. These deferrals were never remitted over to the Plan because the employer never realized they were in fact withheld. We've just discovered this during year-end reconciliations and 5500 preparation (off calendar fiscal/plan year). How best is this corrected? If remitted over to the plan, they violate plan operation because they were not elected, so should not have been withheld from payroll. Because withheld on a pre-tax basis, no income taxes were withheld on these amounts nor were the amounts reported as taxable income. But Social Security taxes were withheld and amounts reported. Given all of this, is it best to remit them over to the plan along with corrective earnings and then do an amendment for those specifically affected for the specific paydate? Adjust via payroll somehow?
Number of replies posted  4 replies      Number of times viewed  31 views      Add Reply

austin3515 created a topic in Form 5500

Reporting an Increase in Amount of Fidelity Bond

I recently wrote this memo regarding reporting a fidelity bond increase that took place in 2019 as of 12/31/2018. I'm less concerned with whether it is what you would do, and more concerned with whether or not it fits within the gray zone of opinion. Before I started writing the memo I was unsure, but as I completed it, I became convinced that not only was it OK, it was likely a preferred approach as a matter of providing valuable information to the reader. Anyway let me know what you think. The 5500 asks: "during the plan year," did the Plan have a fidelity bond? We answered Yes to that question because during the plan year there is a bond. The instructions are not specific regarding what bond amount must be reported (i.e., as of which date). For example, they could have said "enter the bond amount as of the beginning of the year" or "... as of the end of the year", etc. but they make no reference. In fact they provide no guidance on how to report a bond that uses the ERISA Inflation protection (if anything required an explanation as to applicable dates, it would be this). Based on this lack of guidance, we're in a position where reasonable alternatives must be considered. One other approach would be to allow the Employer to report the bond in effect as of the date of the filing of the 5500. If a reader of a 5500 has more recent information regarding the value of the fidelity bond he or she will better be able to determine the level of protection the Plan has acquired.
Number of replies posted  7 replies      Number of times viewed  51 views      Add Reply

Stash026 created a topic in 401(k) Plans

Part-Owner is Eligible for Profit Sharing Contributions Under Multiple Plans of Non-Related Entities?

Here's my situation:
  • Company 1 -- Husband & Wife owns 100%
  • Company 2 -- Husband owns 50%, another Individual owns 50%
So we don't have a controlled group. The Husband maxed out his 401(k) in Company 2 and they pass all testing, but can he get Profit Sharing from both plans, and what would the maximum be for each?
Number of replies posted  2 replies      Number of times viewed  31 views      Add Reply

BG5150 created a topic in 401(k) Plans

Added Safe Harbor Match in Mid-Year -- Oops!

Have an existing 401(k) Plan that someone (not me!) added a SH match to, effective as of April [1] Obviously this is not allowed. What's the remedy? Send a "Sorry that you got that SH notice, but you really didn't need to..."? Amend the documnet to not have the SH features? Good thing is, there already was a stated match in the plan which was the same as the SHM. Testing should not be a problem.
Number of replies posted  3 replies      Number of times viewed  19 views      Add Reply, Inc.
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