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Message Boards Digest

August 28, 2019

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

Purplemandinga created a topic in 401(k) Plans

Forfeiture of Excess Matching Contributions: Before Running ACP Test or After?

If the employer over matched on deferrals because they got the formula wrong, are the excess matching contributions forfeited before the ACP test is run or are they included in the ACP test? I read somewhere they're possibly excluded from the ACP test and included in the general test. Yeesh. Any clarification would be appreciated.

Number of replies posted  4 replies      Number of times viewed  56 views      Add Reply

WCC created a topic in 401(k) Plans

Twenty Plan Sponsors in a Controlled Group But No Combined Coverage Testing Since George W. Bush Was President

Company A owns 20 other companies at 100% ownership. All 21 (20 plus company A) entities have their own separate plans with different record keepers, TPA's and financial advisers. No one has performed combined coverage testing for the past 15 years. The plans vary from safe harbor to traditional 401k with profit sharing. All plans are small plans so on their own have not had an audit requirement. All plan year-ends are calendar year. Is this an obvious VCP submission requiring them to go back and run coverage testing for X years? Or can this be self corrected?

Number of replies posted  2 replies      Number of times viewed  58 views      Add Reply

pam@bbm created a topic in Correction of Plan Defects

Match Wasn't Capped in Practice Despite Board of Directors' Earlier Decision

I have a plan with a discretionary match that is calculated and deposited each payroll. At the beginning of the year the board of directors elected to cap the match at 15% of compensation. The payroll department didn't apply the 15% cap and 3 participants received excess matching contributions (2 were $4000 and one was $6000). Is the cure for this error to forfeit the excess?

Number of replies posted  0 replies      Number of times viewed  23 views      Add Reply

ldr created a topic in 401(k) Plans

Non-Profits and New Comparability -- Employer Gets to Vary Contribution Among Employees?

We have a 401(k) plan for a non-profit entity with a new comparability formula for the profit sharing. The intention in the design was to have each participant in his own group and to vary the contribution level at will. There are no HCEs and of course no "owners." Can the employer give 10% of pay to the 3 oldest employees and nothing to the 3 youngest employees? Can the contribution be literally whatever they want to give to each person? We are so accustomed to the world of small closely held companies that it's hard to think outside the parameters of normal non-discrimination testing. Our first instincts are to say "Oh no, you can't do that!" but perhaps you can!

Number of replies posted  5 replies      Number of times viewed  69 views      Add Reply

BG5150 created a topic in 401(k) Plans

No More Suspension of Deferrals Upon a Hardship Withdrawal

We are planning on amending our plans in 2020 for the new hardship rules. That includes the no more suspension of deferrals. What happens is some takes a hardship now? Their suspension period would go until February. Does the suspension just go away January 1?

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

Bri created a topic in Retirement Plans in General

LLCs Paying Other LLCs (It's Just Turtles All the Way Down)

Client set up an LLC for himself. He's also a partner in a larger company. That LLC issued him a K-1 for his income, and then also issued his own separate (single member) LLC a K-1 as well for a separate source of income from the larger partnership. It's that "smaller" LLC that sponsors his plans. The first year, he had a Schedule C to reflect the payments from the smaller LLC to the individual. Since then (the past 2-3 years), the income is not being shown as flowing through the smaller LLC - he just received it on a second K-1 issued by the larger company. So I think that's wrong to use for purposes of funding his plans. But - is it enough for the big LLC to pay the little LLC on that K-1, or does the little LLC then need to turn around and issue a Schedule C every year? Or, is it enough that as the single member, the earnings on the K-1 (from big LLC paid to little LLC) enough to count as income for the individual himself? We're trying to figure out if the CPA needs to re-address past years' tax statements, in terms of how the payments were reported, before we get into tracking what sort of benefit he's actually due under the DB plan.

Number of replies posted  3 replies      Number of times viewed  26 views      Add Reply

t.haley created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Davis-Bacon and Level Funded Health Plan

Anyone with experience with use of level funded health plan and Davis-Bacon? Client has MEWA with a level funded health plan and would like to offer to employers subject to Davis-Bacon. Would contribution of employer premium to MEWA sponsor be considered an "irrevocable contribution to an unrelated third party" under Reg. Sec. 5.26? Because a level funded plan is a partially unfunded plan, we are trying to verify whether the contribution of the premium to the sponsor makes the plan a bona fide fringe plan, despite the fact that the plan is technically partially unfunded.

Number of replies posted  1 reply      Number of times viewed  15 views      Add Reply
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