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Message Boards Digest

August 15, 2019

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

M Norton created a topic in SEP, SARSEP and SIMPLE Plans

Moving From SH 401(k) to SIMPLE

Physician with calendar year SH 401(k) wants to switch to SIMPLE IRA for 2020. Total 5 employees plus the doctor, but only two employees plus doc contributing. Is he required to formally terminate the 401(k) as of 12/31/2019, or can he just not allow contributions to 401(k) beginning 1/1/2020? (There may be additional contributions in 2020 for the 2019 plan year.) Where is this addressed on the IRS web site?

Number of replies posted  1 reply      Number of times viewed  26 views      Add Reply

RatherBeGolfing created a topic in Operating a TPA or Consulting Firm

ftwilliam Distribution Tracking Software

Has anyone used ftwilliam's Distribution Tracking Software (DTS)? It has some features that look very appealing but I'm wondering how much time you spent setting it up and whether you've been successful getting clients to use it to initiate and sign off on distribution and loan requests.

Number of replies posted  4 replies      Number of times viewed  45 views      Add Reply

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

Another Combo Test Situation: One Excluded Employee

We're working with another TPA on a combination straditional DB with 401(k) SHNE -- no PS. Five employees, 2 principals, 3 NHCEs. For some reason it was decided to exclude one of the employees from the DB, but he is included in the 401(k) with the SHNE contribution. I believe both plans can be tested together, so 410(b), 401(a)(4) and 401(a)(26) can pass but would the excluded employee be included in combo testing?

Number of replies posted  1 reply      Number of times viewed  32 views      Add Reply

draper1 created a topic in Defined Benefit Plans, Including Cash Balance

Normal Retirement Age Forfeitures Due to 415

I've heard that a participant stuck at the 415 comp limit post-NRA will suffer an impermissible forfeiture unless a suspension of benefits notice has been timely provided. If true, what are the acceptable corrections? If the plan contains a RASD feature can this be used? If not, can the plan simply self-correct by paying the forfeited annuity payments with interest?

Number of replies posted  4 replies      Number of times viewed  52 views      Add Reply

rblum50 created a topic in 401(k) Plans

Minimum Distribution from 401(k) Plan

I have a participant who has terminated from his 401(k) and has maintained his account balances in the plan. He is over 70-1/2 and has started to take RMDs. He now wants to transfer all of his assets into an IRA and use a portion of those assets to make charitable donations. He was told by his accountant that he is not allowed to transfer his entire balance as the amount of his RMD for 2019 would need to be removed first. Agree?

Number of replies posted  3 replies      Number of times viewed  56 views      Add Reply

austin3515 created a topic in 401(k) Plans

Merging Two Safe Harbor Plans Mid-Year

Recent acquisition (last year or two). Both plans are calendar year.

Scenario A: Both plans have the exact same match formula and eligibility. Can I merge these plans together mid-year (Say May 1, 2020)? Eligibility would be expanded to additional people after the merger because the surving plan has a more liberal eligibility policy.

Scenario B: One plan with a dollar for dollar match on the first 4%, would merge into a plan with the basic safe harbor match. I assume this would be a reduction in match?

I know Notice 2016-16 solicits comments on the need for additional guidance, but what are we to do in the interim? Scenario A seems doable but probably not B. I saw Tom Poje had posted the idea of changing the plan year ends to create a short plan year, but I just don't think that is realistic in this case.

Number of replies posted  0 replies      Number of times viewed  30 views      Add Reply

gdlfa created a topic in 401(k) Plans

Calculating 25% of Eligible Compensation for Deductibility Limit

The IRS says: "However, an employer’s deduction for contributions to a defined contribution plan (profit-sharing plan or money purchase pension plan) cannot be more than 25% of the compensation paid (or accrued) during the year to eligible employees participating in the plan (see Employer Deduction in Pub 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)." So who are considered eligible employees participating in the plan? For profit sharing purposes, does this include employees who were participating during the plan year but terminated before the last day of the plan year, specifically if the plan document states that profit sharing won't be paid to employees not employed on the last day of the year?

Number of replies posted  6 replies      Number of times viewed  88 views      Add Reply
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