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Message Boards Digest

October 1, 2019

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

ldr created a topic in Retirement Plans in General

Open a SEP for a Commonly Controlled Business?

Individual owns 100% of an S corporation. Only two employees are husband and wife. They have a solo 401K plan. They both maxed their elective deferrals and the employer contributed max profit sharing. Husband also owns another business with no employees that is taxed as a sole proprietorship. Sole proprietorship is profitable in 2018. Can they also do a SEP for the sole proprietorship?

Number of replies posted  4 replies      Number of times viewed  69 views      Add Reply

kmhaab created a topic in Employee Stock Ownership Plans (ESOPs)

ESOP Termination Post-Acquisition -- Distributions in Cash Only?

Is there a specific exception to the rule that an ESOP participant must have the right to receive a stock distribution that applies to an ESOP termination related to a merger/acquisition? I think I've seen this before, but now can't find anything on it. Here's the situation -- ESOP plan sponsor was acquired in a stock purchase transaction and merged into the buyer. ESOP was terminated prior to the close of the transaction. Stock of plan sponsor was exchanged for stock of buyer. Can the shares owned by ESOP be liquidated following the plan termination and all plan participants paid distributions in cash?

Number of replies posted  2 replies      Number of times viewed  34 views      Add Reply

Molgilny89 created a topic in 401(k) Plans

404(a)(5) Disclosure Required for Mid-Year Administration Fee Reduction?

If the custodial fee being charged by a service provider is decreased mid-year (after the annual disclosures were already made), is there a requirement to notify participants under 404(a)(5)? It seems a strict reading of 404(a)(5)(c)(2)(i)(B) would require that any changes made to administrative expenses (either up or down) would trigger a participant disclosure. However, from a policy perspective, it would make sense that a participant disclosure would only be triggered in the event of a fee increase.

Number of replies posted  1 reply      Number of times viewed  46 views      Add Reply

Thornton created a topic in Qualified Domestic Relations Orders (QDROs)

Changing Form of Distribution From DB Plan While in Payment Status

A married participant in a DB plan retired and elected a Joint-and-75% Survivor Annuity. Several years into retirement, he and his wife divorce. I was retained to draft the QDRO, which split the participant"s monthly payment 50/50. If the participant dies first, the alternate payee receives the survivor amount of 75%. If the alternate payee dies first, the participant reverts to his full benefit. Pretty simple. The plan administrator supplied the language and of course pre-approved the QDRO. The participant won't sign it, says it's unfair. The plan administator now says that the J&S can be removed. The participant and the alternate payee would each receive a higher monthly benefit, which sounds like a life annuity. If the participant dies first, the alternate payee continues to receive the same amount for her lifetime. If the alternate payee dies first, the benefit reverts back to the participant, which doesn't sound like a life annuity. I recognize that none of this is my business and I should revise the order as directed, but I'm curious. [1] It's been my understanding that an elected DB benefit can rarely be changed once in payment status, especially by QDRO. Am I missing something? [2] Does my rough description of the single life payment for the alternated payee but an increase for the participant if the alternate payee dies first make sense? I'm not an actuary or anything, so thought I'd ask.

Number of replies posted  5 replies      Number of times viewed  44 views      Add Reply

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

415 Lump Sum Issues After Age 70

I have an issue with a case involving two concurrent pension plans covering an employee who is 72 years old and has 6 years of service and 5 years participation (at NRA). Both plans are being terminated in 2019. Plan A was started 1 year before plan B. Both have the NRA = 65+5 participation. Plan A NRA for this employee is 69-1/2, Plan B it is 70-1/2. High 3 years comp is about $170,000 so the C Limit will apply. In order to compute the dollar amount and equalize the benefit and retirement ages, I actuarially adjusted the 69-1/2 benefit in plan A to age 70-1/2. Then computed the lump sum for both plans with the age 70-1/2 APR and the distributions were made earlier this year. I think I blew 415 because I actuarially increased the benefits before the LS payment and under C limit which doesn't adjust; not sure what to do to correct them. Have any of the actuaries faced this before? [1] How do I avoid blowing the C limit if I have to compare both benefits as of the same age? [2] Because a forfeiture occurred by not paying out the LS at the NRA, do I have to produce a benefit notice? Is there a sample notice others have used?

Number of replies posted  0 replies      Number of times viewed  26 views      Add Reply

Catsby created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Form 1094-C Correction

Has anyone dealt with filing corrections for entities that filed Form 1095-Cs under the wrong entity? For example, entities A and B are part of the same controlled group. B pays this group of employees (and provides their Form W-2s), but their Form 1095-Cs were filed under entity A. This means that entity B has filed Form W-2s but no corresponding 1094-Cs or 1095-Cs, which is likely to trigger a letter from the IRS. Is there a way to correct this before the IRS sends the penalty letter? I read the Publication 5165 correction rules to say no -- you need an original record to correct. In this case, there's no original record to correct.

Number of replies posted  0 replies      Number of times viewed  9 views      Add Reply
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