Message Boards Digest

September 18, 2019

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

rocknrolls2 created a topic in VEBAs

VEBA Being Reorganized as 501(c)(3) Organization

A client is interested in having their existing VEBA reorganized as a 501(c)(3) organization. Has anyone ever heard of this being done? Even assuming that the IRS would agree to grant this type of request, what are the pros and cons of going down this route?

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

Jaclyn created a topic in 401(k) Plans

I Have to Pay Back 401(k) Loan Before I Am Eligible for Re-Hire?

I was terminated from my job in July. I was told I am eligible for rehire as long as my 401k loans are paid back. I have more money in my 401k than the loans that I borrowed. I do not owe the employer the money, because it was MY money that I was contributing to the plan, that I borrowed from. Since I am unable to pay back the loan, I have to let it roll over as earned income in my taxes. Why am i being told I have to pay back MY money before I am eligible to reapply and be considered for employment again with the same company? I could understand if I owed the company money, but it was my money. Is this legal? (And I know, why fire me if you're just going to tell me "you're eligible for rehire...")

Number of replies posted  3 replies      Number of times viewed  68 views      Add Reply

JPIngold created a topic in 401(k) Plans

New Employee Entered 401(k) Plan Earlier Than Document Allows

I have a client that let a new employee enter the plan before meeting the eligibility date. I know EPCRS allows the plan to be retroactively be amended to waive the eligibility conditions as long as it meets the conditions of EPCRS. However, they don't want to do this because it would trigger a top heavy contribution for the employee. Can we claim that her 402(g) limit with respect to this plan was zero and process a taxable distribution as a corrective distribution for exceeding the 402(g) limit or do we have to return the money to the employer and have them make her whole? The problem with that is dealing with payroll taxes as it would be taxed a second time if you process a taxable bonus. Anyone do something different?

Number of replies posted  2 replies      Number of times viewed  50 views      Add Reply

Nuggetjr created a topic in Distributions and Loans, Other than QDROs

401(k) Provider Denies Hardship Withdrawal for Home Purchase Despite Having All Required Documents

We’re being forced out of our rental. We had tried to buy because the appraisal fell short. We’re trying to buy a different house and my husband's 401k provider keeps denying it and wanting more info. We've sent the the purchase agreement signed at the real estate agency as well as a loan estimate. We have the purchase price, closing date and everything they previously asked for. I just don’t know what to do or why they’re doing this to us. We’re weeks from being homeless if they don’t release our funds. Does anyone know who I can contact for help or what we can do?

Number of replies posted  3 replies      Number of times viewed  55 views      Add Reply

EBECatty created a topic in Governmental Plans

Governmental 401(a) Plan Wants to Have Multiple Allocation and Vesting Schedules

An existing governmental 401(a) plan holds matches as well as allows employer nonelective contributions. Is there any problem with describing multiple different allocation formulas with different eligibility and vesting schedules for match, nonelective, or both? Since it's governmental, we don't need to worry about 410(b), 401(a)(4), or other nondiscrimination testing. Any variations in vesting schedules will be more favorable than the longest permissible vesting schedules and will slightly favor non-HCEs. So, for example, people in category A get a match, but no one else does. People in category B will get a nonelective contribution of X% of compensation, with a six-year graded vesting schedule. People in category C will get a nonelective contribution based on years of service with a two-year cliff vesting schedule. And so on. Appreciate any thoughts.

Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply, Inc.
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