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Message Boards Digest

September 17, 2019

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

PFranckowiak created a topic in 401(k) Plans

Plan Design - Excluding Service Performed for Staffing Company

Plan will be a 401(k) with 90 day eligibility and quarterly entry dates. They currently use a staffing company to fill new positions and then either hire them or not. They are usually hired within 4-6 months. No one makes the year required for leased employees. The company wants to exclude credit for any service they had with the staffing company and count service once they are hired. Is this allowable? How can it be worded in the document. I had someone suggest excluding service with any other company not sponsoring the plan.

Number of replies posted  3 replies      Number of times viewed  56 views      Add Reply
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erinak03 created a topic in 401(k) Plans

'Taxable Living Expense Allowance' as an Excluded Fringe Benefit

I have a client whose plan defines compensation to not include taxable fringe benefits. I learned today that one of the employees is paid a "taxable living expense allowance," which I believe qualifies as a fringe benefit. He was permitted to defer from (and be matched on) the allowance throughout 2018, and I imagine most of 2019. I can deal with the excess match contributed but my question is whether there is a 'fix' for the failure as it pertains to the deferrals. I'll need to confirm with the client if the allowance is paid with his salary in the same paycheck (which would mean his 15% deferral election was actually a higher rate of deferral based on the lower eligible wage) or if it's done in a separate monthly check (in which case there shouldn't have been deferred from at all). Do I just document as an operational failure, implement new procedures, lecture the client and move on? The participant was clearly content with the deferrals as they were being withheld so I don"t think a corrective distribution is the appropriate path as it would be a detriment to the participant.

Number of replies posted  4 replies      Number of times viewed  53 views      Add Reply

QP_Guy created a topic in 401(k) Plans

'Effective Opportunity' for a Participant to Defer

Anyone have experience with an IRS audit or a cite to authority on what are the facts and circumstances around the requirement to provide an 'effective opportunity' for a participant to defer? Hypothetically: we have a client who will sign a new plan document with SH basic match on 9/30/19. The recordkeeper chosen by the client has previewed that it will likely take 60 days to set up the new plan and to provide enrollment materials to the participants. So the participants will likely only have 1 month of match. Of course the owner will max out. So the plan will be in existence for 3 months, but... Again, I'd really appreciate anyone who's been challenged by the IRS on this point, or if you have a citation that says more than "Whether an employee has an effective opportunity is determined based on all the relevant facts and circumstances" (Treas. reg. 1.401k-1(e)(2)(ii).) I don't think this is an EPCRS issue, because the reason for the Employee Elective Deferral failure is NOT due to the plan improperly excluding anyone. EPCRS App A .05(10)

Number of replies posted  5 replies      Number of times viewed  63 views      Add Reply

Sara created a topic in 401(k) Plans

Change of TPA and Custodian: Looking for Sample Disclosure

I am working on a 401(k) audit. The client changed its TPA and Custodian in February 2019. I need to disclose it as a subsequent event. Do you know where I can find a sample disclosure?

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

KMMB created a topic in 401(k) Plans

Correcting a Late ACP Testing Failure

This employer is correcting failed nondiscrimination testing for a prior plan year using the one-to-one method under Revenue Procedure 2013-12, Appendix B, section 2. When allocating the QNEC to eligible NHCEs should the employer use the plan's definition of compensation for the year of the failure or total compensation for the year of the failure? IRS guidance does not appear to address this specific question; the revenue procedure merely states it must be a uniform allocation as a percentage of compensation.

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