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Message Boards Digest

September 30, 2019

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

cpc0506 created a topic in 401(k) Plans

Active Duty and Loans

If plan allows for Loans, can an employee who is on active duty (and has been 3 years) take a loan? Plan does allow for distribution for deemed severance of employment, but client wants to give loan option to employee if allowed. Thanks.
Number of replies posted  2 replies      Number of times viewed  64 views      Add Reply
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oldman63 created a topic in 401(k) Plans

RMD

My understanding is a more than 5% owner of a business who is still actively working has to take a minimum distribution each year. Does it make sense to contribute to their retirement plan? If they have an IRA, can they aggregate the 401k balance and IRA balance, taking the RMD out of their IRA? Thoughts?
Number of replies posted  5 replies      Number of times viewed  88 views      Add Reply

perplexedbypensions created a topic in Retirement Plans in General

Key or Former Key?

Company owned 51% by Participant A and 49% by Participant B. December 28, 2018, Participant A sells shares to Participant B, who is now the 100% owner. Participant A compensation in 2017 was $108,000. For the 12/31/2018 Plan Year, both A and B are HCE's. Is Participant A considered a Key Employee or a Former Key Employee, since there is no ownership as of 12/31/2018. Thank you!
Number of replies posted  2 replies      Number of times viewed  61 views      Add Reply

oldman63 created a topic in Distributions and Loans, Other than QDROs

RMDs

My understanding is a more than 5% owner of a business who is still actively working has to take a minimum distribution each year. Does it make sense to contribute to their retirement plan? If they have an IRA, can they aggregate the 401k balance and IRA balance, taking the RMD out of their IRA? Thoughts?
Number of replies posted  2 replies      Number of times viewed  39 views      Add Reply

ConnieStorer created a topic in Form 5500

Extension for Form 5500 Denied

Has anyone else had their Form 5500 extensions denied? We have had two clients contact us this week regarding the extension letters they just received from the IRS that said their extension was denied. One client that had two plans had one plan extension approved and the other plan extension denied. I have never seen this happen before.
Number of replies posted  12 replies      Number of times viewed  115 views      Add Reply

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

ISW delayed, now maybe the EE will terminate?

I've got a small pooled PS only plan. Participant R, who is a 10% owner, has about 80% of the money in the plan. She has had a medical setback and requested an in-service withdrawal to be paid as soon as possible; she completed the proper form and submitted it. I advised that the Plan Administrator should consider running an interim valuation, given that the assets are up ~20% year-to-date, and that's when I found out that there is currently a changeover in ownership and management and everything. So it's been almost two weeks as the other/remaining/new top people argue amongst themselves who will be the Plan Administrator and who will be Trustee and who will get to make this decision, and R has been waiting patiently. R called to ask where her money is, and noted that she might be separating from service soon. That triggered an alarm, because terminated participants are eligible to receive a distribution only after the end of the year of termination (to allow for the allocation of gains/losses during the year). So... if she does terminate while these people are still dithering about who should authorize what, or even if they get their acts together and authorize the interim valuation and she terminates while we're in the process of doing the interim valuation, would you think that invalidates her in-service request? I don't think so, since she made the request in good faith while she was an active participant, and it was only due to the... well, call it what you will of the people around her that caused it to not get paid timely.
Number of replies posted  2 replies      Number of times viewed  51 views      Add Reply

stan evans created a topic in 401(k) Plans

plan terminated before VFCP amount put in

I had a 401k plan for myself and one employee but was told in 2016 that they (Prime Plan Solutions) would no longer service the plan.... the document administrator was DST of kansas City, MO Prime Plan Solutions then merged with DST. Long story short .... I decided to terminate the plan at the end of 2016 however there were some late contributions for my one employee for plan year 2016. According to the VFCP calculater I needed to put in about $30 into her account which was transferred to a Fidelity IRA after the termination. So in other words that $30 was not added to her account before the termination. To make matters worse, Prime Plan /DST failed to send in the 5500SF form to the DOL, in 2016 ...which I did not know of util this summer 2019. I recently did get help to file the 5500 however still not sure what I need to do about getting the VFCP amount ($30) into her retirement account which now sits with Fidelity.
Number of replies posted  0 replies      Number of times viewed  39 views      Add Reply

thepensionmaven created a topic in 401(k) Plans

Another Asset Sale Question

Client sponsors safe harbor 401K/profit sharing plan was going to be terminated as the employer would no longer be in business.All participants received the safe harbor non-elective. The non-highly compensated employees were terminated as of 8/30/2019. Plan is still active, employees have rolled over; owners are the only participants in the plan. Accountant now tells us the sale was an asset sale, the company is not out of business; he wants to take a deduction for 2019 for only the 2 owners and their sons. I don't see how he can.
Number of replies posted  1 reply      Number of times viewed  50 views      Add Reply

Buddy M created a topic in 401(k) Plans

Taxes from 401(k)

I'm 60 years of age and withdrew out of my 401K for $5000.00 they took out $10.00 for a processing fee and $998.00 for Fed tax and $99.80 for Calif state tax ending with a check of $3892.20, do I need to worry about having a penalty or paying more taxes on this money?

Number of replies posted  2 replies      Number of times viewed  65 views      Add Reply

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

403(b) to 401(k) - Apologies if redundant

Hello - I am trying to get some clarification on terminating a 403(b) plan and starting a 401(k) plan. This is already an ERISA B plan. They are a almost at the point of being a large plan filer. We are trying to avoid that of course. I have read so many different replies on if the 12 month waiting period applies. What I would like to propose is terminating the B plan 12/31/2019 and starting a K plan 1/1. However, the 12 month wait is the question. Help! The plan is invested in on the record keeper direct platform of AM Funds just as a side note. Please, any concerns or issues that occur with this, I would love the insight.
Number of replies posted  2 replies      Number of times viewed  34 views      Add Reply

Fiduciary Guidance Counsel created a topic in Plan Document Amendments

Adding an arbitration provision?

If a user of an IRS-preapproved document wants to add an arbitration provision, does any sponsor's document allow a user to specify an arbitration provision through an adoption-agreement choice or other norm of the preapproved document? If not, is an arbitration provision something a user can add without defeating reliance on the IRS's approval?
Number of replies posted  4 replies      Number of times viewed  37 views      Add Reply
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