Message Boards Digest

October 29, 2019

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

AJC created a topic in Retirement Plans in General

New 401(k) Plan in 2020 But How to Credit Service for Certain 2019 Rehires?

"A new 401(k) plan with a January 1, 2020 effective date. The plan requires age 21 and a year of service (1000 hrs in 12 mo) for participation, with semi-annual (Jan & Jul) entry dates. As we establish which employees will enter the plan on the effective date, we have noticed there are several rehires during 2019, who had previously worked for the plan sponsor. So, how do we determine initial eligibility for people such as JOE and SUE, below? JOE previously worked (fulltime) for the plan sponsor from January 1, 2015 until December 31, 2018. JOE was rehired (fulltime) July 1, 2019 and worked 1,000 hours during 2019. SUE previously worked (fulltime) for the plan sponsor from January 1, 2015 until April 15, 2019. SUE was rehired October 15, 2019 and worked 1,000 hours (combined) during 2019. And what other factors related to "eligibility and past service" should we consider, if any? (By the way, determining years of service for vesting appears much simpler. Or, at least, it does with the plan document in use for this plan.)"

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

Lenny van den Hof created a topic in 401(k) Plans

Never Offered Chance to Participate in My Employer's Safe Harbor 401(k) Plan

"My employer had a 401k plan set up in his office. He is small business owner. He never offered the plan to anyone and actually lied and said at times he didn't have one. He did in fact have one and he is the only one who participated in the plan. He is incorporated so he as an employee was the only was that invested in the plan. I've told him I know and tried to let him make it right and he fails to admit he has it and said it was not set up properly so its not a valid complaint. It's a lie. I talked to the person who was his contact with the 401k plan and she explained to me what a safe harbor plan is. What do I do? How can I report him and make him pay me?"

Number of replies posted  3 replies      Number of times viewed  89 views      Add Reply

justanotheradmin created a topic in Retirement Plans in General

Closed MEP -- How Does the Top Paid Group Election Work?

"A closed MEP is forming and has asked about the 20% Top Paid Group Election. Does anyone have any insight as to the mechanics of how that would work? The plan document is sparse on this topic. Some well-paid folks may occasionally switch between entities. Does their compensation from all participating employers count when ranking by compensation? I would think not. The document does say Total Compensation is used, and Total Compensation is that of the Employer. In this case each Employer is separate (as opposed to a related CG or ASG where there are multiple entities treated as a single employer). So only compensation from the entity doing the analysis would count? I believe each entity would do its own 20% analysis, since each entity's annual testing is mostly done separately, but I don't deal with MEPs often. The top paid group election is a choice the businesses plan on making as a group, as the current game plan is to have all entities (5 or 6 small employers) have identical provisions."

Number of replies posted  0 replies      Number of times viewed  24 views      Add Reply

ldr created a topic in Retirement Plans in General

K-1 Income and Contribution Calculations

"In calculating the potential maximum contribution for the partners in a LLC, which number on a K-1 for Form 1065 is used as the equivalent of a regular employee's W-2 wages for purposes of calculating a contribution? We're working on a plan where a prior administrator in past years has used Item 14A, 'Self-employment earnings (loss)' as the magic number for the year upon which to make calculations. We'd like to know if this is the correct approach. Maybe I should clarify that Item 14 does not automatically come with the letter A attached. Whoever prepared the form has put that in there, which according to the list of codes, means that the number is 'Net earnings (loss) from self-employment'."

Number of replies posted  6 replies      Number of times viewed  66 views      Add Reply

Mike31 created a topic in 409A Issues

Adding Retirement Distribution Option to Plan Subject to 409A

"Current 409A plan does not allow participant elections of time or form of payment. The plan specifies that payment will be made at the earlier of: [1] Separation from service, [2] Disability, [3] Death, or [4] Change in control. The employer now wants to add a Retirement Age of 65 (currently no Retirement Age is specified in the plan) and add Retirement Age as a payment event so that the new time of payment will be the earlier of: [1] Separation from service, [2] Disability, [3] Death, [4] Change in control, or [5] Retirement Age. It is my understanding that this could be considered an acceleration of payments and is therefore not permitted for existing amounts already deferred. Can the plan be amended to add Retirement Age for future deferrals of compensation without violating 409A?"

Number of replies posted  3 replies      Number of times viewed  44 views      Add Reply

Tom created a topic in Retirement Plans in General

Employee Works 50% for Business and 50% as a Domestic -- Plan Coverage Needed?

"We have a client who is sole owner of a Sub-S LLC. She has no employees at this point and has K and DB plans. She informed us she is going to hire a personal assistant who will work for the business but also do domestic work in home -- likely split about 50/50 and will work over 1000 hours between business and domestic. The problem is the client has relatively low income but makes significant K/DB contributions. She does not want to cover the employee. The employee is only 4 years younger which is not helpful for the DB plan. Fortunately the employee will not be eligible until 1/1/2021 but we have been asked to advise the client as to coverage. Is a sole-owner business required to be aggregated with that owner's domestic employee? Likely the IRS would say yes."

Number of replies posted  2 replies      Number of times viewed  51 views      Add Reply

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

My Rights to a Portion of My Spouse's Pension Benefit When We Divorce

"I'm currently going through a divorce. No excuses, but I trusted a few people along the way to guide me and now I'm very confused. Signed Stipulation of Settlement in regard to my ex's Defined Benefit Plan. It says my ex-husband will be required to take a 100% survivor option with a pop up. My ex's plan has the Shared Method and Separate Interest Method. We hired a third party to prepare the QDRO. I was told that, based on that language, I had to go with the Shared Method. There was no mention of preretirement survivor benefits. We went back to court a couple of weeks ago and amended the Stipulation of Settlement to add that 'Plaintiff will agree that Defendant is a surviving spouse for the purposes of Qualified Preretirement Survivor Annuity (QPSA). Plaintiff is directed to elect the QJSA if there is post retirement death. Defendant can elect to receive her benefits at the age of retirement.' I'm the Defendant. I was married for 28 years to a narcissist. If I'm forced to go with the Shared Method, he will never retire. Can anyone offer me any guidance? I'm feeling very defeated."

Number of replies posted  7 replies      Number of times viewed  64 views      Add Reply

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

Carry Forward Part of a Contribution to a Qualified Plan If Not Maxed Out?

"Is it possible to carry forward part of your contribution of your aggregated qualified plan if you don't max it out?"

Number of replies posted  1 reply      Number of times viewed  41 views      Add Reply, Inc.
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