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Message Boards Digest

September 9, 2019

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

legort69 created a topic in 401(k) Plans

Don't Have Enough to Contribute Promised Matching Contribution

A sponsor is required to fund a safe harbor match for 2018. They changed their formula from basic to 200% of 5% in 2018, however they only funded the basic amount. They are now saying that they can't afford to fund the SH match for the difference between the basic and the updated formula. What would be the consequences for not funding the full amount which was included in their safe harbor notices?

Number of replies posted  2 replies      Number of times viewed  63 views      Add Reply

BG5150 created a topic in Retirement Plans in General

Foreign-Owned Company Wants to Recognize Service with the Parent

Company A is based overseas, has wholly owned subsidiary in U.S. with a plan. Several employees from parent will be working for the U.S. company. [1] Do they HAVE to recognize service with the parent company? [2] If yes, do we even have to do an amendment? [3] Is the same controlled group testing done for foreign companies (in case this parent owns some or all of other companies not based in the U.S.)? If not, I guess we would list the companies for which service would be credited.

Number of replies posted  1 reply      Number of times viewed  54 views      Add Reply

LauraAT created a topic in Form 5500

Power of Attorney Rejected by IRS

We have had several clients receive rejection notices related to our Forms 2848 recently. All were related to DFVC filings. The notice stated the plan number was not included. However, the plan number was listed on the Form 2848 in the top right hand corner in the applicable box as well in the table on line 3. Has anyone else been receiving these? Are they being sent in error?

Number of replies posted  0 replies      Number of times viewed  35 views      Add Reply

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

Gateway Contribution Required for New Participant in DC Plan Who's Not Yet Eligible under DB Plan?

DB Plan has 2 year eligibility. DC Plan has 1 year eligibility. Employee enters the DC Plan on 7/1/2018. He has not entered the DB Plan. Key Employee has no DC Plan account addition for 2018. Is this employee required to get Gateway (or any contribution)? If Key Employee had made a 401k contribution, Employee would be required to get DC top heavy contribution. Would any additional contribution (i.e., Gateway or 5% top heavy) for this new DC Participant be required?

Number of replies posted  1 reply      Number of times viewed  36 views      Add Reply

Cynchbeast created a topic in 401(k) Plans

Putting Safe Harbor Nonelective Contributions in a Different Plan

Client has both a 401(k) and a PS plan. 401(k) previously had SH match to NHCEs only. We are amending to no SH, with provision that SH NEC will be paid to another plan: the sponsor's PS plan. Does the PS adoption agreement have to state somewhere that it will receive SH NEC contributions to cover the 401(k), or is it all okay just as long as all 401(k) eligible participants receive at least 3% in the PS? (We can't seem to find any provision in the PS adoption agreement.)

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

EBECatty created a topic in 401(k) Plans

Contingent Benefit Rule in Terminated Plan

Say you have the following scenario: Plan sponsor is being acquired mid-year and terminates its 401(k) plan, say, November 1. For administrative/payroll reasons, employees of the acquired company will not participate in the buyer's 401(k) plan until January 1. Plan has a safe harbor matching contribution. The plan sponsor wants to make the participants whole for missed matching contributions during the two-month gap, but profit-sharing allocation provisions would not allow a PS contribution targeting only people who deferred. If the plan sponsor paid the participants a bonus (outside the plan) in the amount of matching contribution they would have received for the rest of the year at their deferral rate in effect on the date of plan termination, does this violate the contingent benefit rule? It arguably does because the cash bonus is contingent on the employee having had a deferral election in place at plan termination. What if the bonus is paid after the plan is already terminated? No one has any further deferral right or election, so it's hard to make something "contingent on" an election that no longer exists. If it does violate the contingent benefit rule, what would be a correction? Appreciate any thoughts.

Number of replies posted  0 replies      Number of times viewed  36 views      Add Reply
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