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Message Boards Digest

August 7, 2019

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

BG5150 created a topic in 401(k) Plans

Amending Safe Harbor Effective Date

Plan was written with an effective date of 5/1/18. However, in the SH effective date section, someone put 4/1/18. Because the plan wasn't effective until AFTER the original SH effective date, can we amend the plan to properly reflect that without messing anything up?

Number of replies posted  3 replies      Number of times viewed  46 views      Add Reply
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Kris created a topic in Cafeteria Plans

Employee Out on Short-Term Disability Pays Health Premiums Pre-Tax

I have an employee out on STD. He is being paid through our 3rd party provider, not through our payroll company. He is paying his pre-tax medical deduction via check to the company. Are FICA taxes owed to the employee because there are no wages to take this deduction from and this is a pre-tax deduction?

Number of replies posted  1 reply      Number of times viewed  24 views      Add Reply

Pixie created a topic in 401(k) Plans

Catch-Up Contributions for Short Plan Year

I am running an ADP test for a short plan year 1/1 to 5/31. Can I use $6,000 for catch-up to offset my ADP refunds?

Number of replies posted  1 reply      Number of times viewed  49 views      Add Reply

Gruegen created a topic in 401(k) Plans

In-Plan Roth Rollover -- After-Tax Basis Recovery

A participant has an Employee (Voluntary) After-Tax Account in a qualified 401(k) retirement plan of $100,000, which represents $10,000 of Post-1986 after-tax contributions (basis) and $90,000 of investment earnings. This $100,000 After-Tax Account was attributable to After-Tax Contributions he made to the Plan in the 1990s and he has not made any After-Tax Contributions since then. Generally, if he takes a distribution of a portion of this $100,000 After-Tax Account, it is my understanding that 90% of such distribution will be taxable under the basis recovery rules of IRC 72(e)(8). He makes $500 of new After-Tax Contributions on January 15, 2019 which he intends on converting to a Roth Account inside the plan pursuant to the In Plan Roth Rollover provisions of IRC 402A(c)(4). Assuming he makes the election on January 16, 2019 to convert $500 of his After-Tax Account to a Roth Account under the Plan, what is the taxable amount (if any) of the conversion? In other words, can he elect to convert just the $500 of After-Tax Contributions deposited into the plan the day before, or must the In Plan Roth Rollover take into account his entire (previous) After-Tax Account, in which case about 90% of the $500 converted would be taxable? My understanding is that the after-tax "contract" under 72(d)(2) applies to all amounts under the Plan (the sum of the old After-Tax Contributions from the 1990's and new After-Tax Contributions made in 2019) and thus he would not be able to designate just the new $500 After-Tax Contribution as the portion subject to the In Plan Roth Rollover (and thus approximately 90% of the $500 converted would be taxable). I hope I am wrong, though.

Number of replies posted  1 reply      Number of times viewed  28 views      Add Reply

MarZDoates created a topic in 401(k) Plans

Cost of Annual Plan Audit: Plan Sponsor Can Be Reimbursed from Plan's Trust?

If a plan sponsor has already paid the CPA for their 401K Plan audit, can the plan reimburse the plan sponsor for those costs from the forfeiture account? Or must the fees be paid from the plan's forfeiture account directly to the CPA firm that audited the plan?

Number of replies posted  2 replies      Number of times viewed  54 views      Add Reply

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

When Are DB Plan Restatements Required?

Since I see DB plans so infrequently, I want see if I've got this straight... DB plans using pre-approved docs need to be restated by the deadline next year. DB plans using IDP documents, that already have a prior D-letter from the IRS, are not required to restate (and generally can't apply for a D-letter) but do need to keep up their amendments required by the IRS annual list within the appropriate timeframes. I realize that D-letters are now available in certain situations where they weren't previously, but I'm just confirming what MUST be restated.

Number of replies posted  0 replies      Number of times viewed  17 views      Add Reply

BG5150 created a topic in Retirement Plans in General

414(s) Testing Questions

I know if a plan fails the 414(s) test, we have to use compensation that satisfies the test. Say the plan excludes bonuses and the 414(s) test is failing. Instead of just including the bonus and moving on, could I perhaps exclude HALF of the bonus if that would then pass the 414(s) test? For example, only NHCEs get a bonus. This year, they all got a 6% bonus. Test fails; difference is 6%. Could I exclude only half the bonus, so now my difference is the widely-accepted 3%?

Number of replies posted  6 replies      Number of times viewed  45 views      Add Reply
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