Message Boards Digest

September 12, 2019

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

MTWeeks created a topic in 401(k) Plans

Catch-Up Contributions in 457 Plan of Non-Governmental Sponsor

Client recently came to us with a 457 Plan (deferral only). From what I can see, they are a 501(c)(3) non-profit. I do not know if they have any government funding or oversight. The plan has allowed catch-up contributions for the last several years. I think catch-ups are only allowed on government entity plans. Is that black and white, or if there are any other factors they may be relevant?

Number of replies posted  1 reply      Number of times viewed  33 views      Add Reply

spencerhastings created a topic in 401(k) Plans

Incorrect Expense Ratio Disclosed

Has anyone ever fixed or dealt with the disclosure of an incorrect expense ratio on fee disclosure notices? Here, the client inadvertently understated the expense ratio for at least a year and half (and maybe longer). Presumably, we'll need to issue a corrected fee disclosure notice, but I'm wondering if any other corrections may be necessary here.

Number of replies posted  0 replies      Number of times viewed  25 views      Add Reply

kmhaab created a topic in Correction of Plan Defects

403(b) Plan Made Involuntary Cash-Outs But Not Authorized by Terms of Plan

403(b) plan has been operated as if it allowed involuntary cash outs of small amounts (i.e., without the participant's consent), but the plan document does not include this provision. How is this corrected? Under Rev. Proc. 2019-19, it appears it should be corrected according to Section .07 of Appendix A, which addresses failure to obtain participant consent under 411(a)(11). But the correction method described is to offer participant a choice between consenting to the distribution already made and receiving a QJSA. Receiving a QJSA makes no sense in this situation. Any thoughts?

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

Evelyn created a topic in 401(k) Plans

Employer Unilaterally Decides to Deduct Portion of Employee's Prevailing Wage Rate

My husband was notified that after several years that the 'pension' portion of his Prevailing Wage Rate is required to be contributed to the company's 401k program. We have our own savings plan independent of his company and do not want to use them. The employer says there are no exceptions. So now 26% of his wages have been deducted for this reason. Is this legal? They will not allow him to lower the percentage of contribution either.

Number of replies posted  2 replies      Number of times viewed  47 views      Add Reply

TPApril created a topic in Form 5500

Completing 8955-SSA for Last Year When Participant Is Taking a Distribution This Year

Small plan (fewer than 10 participants). On Form 8955-SSA, participant with vested balanced who terminated in prior year is required to be reported in current year filing. Current year filing is being prepared during following year, during which said participant takes distribution (to be specific, 2017 terminee to be reported on 2018 form being prepared in 2019, takes distribution in 2019 prior to filing form). I'm curious the general approach. Required to report as 'A' only to report as 'D' in following year, or just ignore?

Number of replies posted  1 reply      Number of times viewed  20 views      Add Reply

DDB BN created a topic in Retirement Plans in General

Mortgage as Investment of One-Person Plan

A self-employed owner (the only participant) has mortgages as investments within the plan. The owner has died. His wife continues to take RMD after his death. The plan has not been terminated, because the wife beneficiary wants to keep it open until all of the mortgages have been paid off. The business still has activity at this time. The wife would like to purchase one of the mortgages from the plan personally. Because this is a one-person plan, is it subject to the prohibited transaction rules? (The mortgage is $150,000 and the RMD is roughly $40,000 each year.)

Number of replies posted  2 replies      Number of times viewed  29 views      Add Reply

Megandps created a topic in 403(b) Plans, Accounts or Annuities

Effective Date of 403(b) Restatement?

The way we are reading the guidelines, the effective date of the restatement period is the later of January 1, 2010 or the plan effective date. Example: 403b plan that was effective 10/1/1991 and restated 10/1/2012. Are we now restating effective 1/1/2010 or 10/1/2012? Our initial reaction was to use 1/1/2010, but we are second guessing that because of the later 10/1/2012 restatement.

Number of replies posted  1 reply      Number of times viewed  16 views      Add Reply, Inc.
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