Message Boards Digest

October 31, 2019

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

jim241 created a topic in 401(k) Plans

New Hardship Guidelines - Impact of in-service distributions

"Part of the newly issued hardship regulations in determining whether an amount satisfies an immediate and heavy financial need was to replace the facts and circumstances test with the three requirements here: Amount Necessary to Satisfy Need. A distribution will be considered as necessary to satisfy your immediate and heavy financial need only if: (1) You have obtained all distributions, other than hardship distributions, under all plans maintained by the Employer; (2) The distribution is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). (3) You have represented in writing or by electronic medium that you have insufficient cash or other liquid assets to satisfy the financial need. My question is, in regards to (1) above - does this mean theoretically that a participant who is age 59 1/2 or older and thus eligible for an in-service distribution, must take the in-service distribution and get hit with a 20% withholding prior to taking a hardship distribution?"
Number of replies posted  4 replies      Number of times viewed  56 views      Add Reply

cathgrace created a topic in 401(k) Plans

401(k) to 403(b) spin-off/merger within same controlled group?

"Hi! First-time poster, ERISA-newbie here. Here's the situation: Parent Non-Profit Company sponsors a 403(b) plan and Subsidiary For-Profit Company sponsors a 401(k) plan. The company wants to transfer a group of employees from the Subsidiary to the Parent (i.e., within the same controlled group). My question is this: What are the options for transferring assets from the 401(k) plan to the 403(b) plan? I realize that the IRS generally does not allow mergers or transfers of assets between 401(k) and 403(b) plans. I also conclude that transferring employees to the Parent would not automatically create a distributable event in order to rollover assets from the 401(k) to the 403(b) plan, as they are transferring employment to a member within the same controlled group. Thus, there is no severance of employment that would allow for the distribution. I'm exploring other options, including a complete termination of the 401(k) plan, but I'm having trouble finding a viable solution. Any ideas?"
Number of replies posted  1 reply      Number of times viewed  34 views      Add Reply

digger created a topic in Retirement Plans in General

Employee in both union plan and employer plan?

"I have a client with a safe harbor match only plan, which excludes union employees. The union plan is DB. Employer now wants to include only one of their 14 union employees in the 401k plan. All union employees are NHCEs. Assuming the CBA allows it, and aside from creating dissention in the ranks, is this ok?"
Number of replies posted  5 replies      Number of times viewed  53 views      Add Reply

Mr401k created a topic in 401(k) Plans

2016 Safe Harbor Contribution missed

"A calendar year plan still hasn't deposited its Safe Harbor Non-elective for 2016. The operational failure can be Self Corrected as long as it's done within the Correction Period. Regs say the Correction Period starts the year after the failure occurred......but in this case, did the failure occur in 2016 (the year the contribution is for), or 2017 (12/31/17 was the latest the contribution would have been considered timely)? Thanks"
Number of replies posted  0 replies      Number of times viewed  27 views      Add Reply

AJ North created a topic in Correction of Plan Defects

Delinquent Loan Payments

"If a loan is delinquent with loan payments (or in default for that matter), the situation can be corrected by either making a lump sum payment to bring the loan current or re-amortizing the loan within the maximum loan amortization period permitted for the type of loan. Or in the alternative a combination of both methods. My question is can the loan be re-amortized if the plan specifically does not permit a participant to refinance a loan? Could you make a distinction between re-amortizing and refinancing if there is no addition amount added to the loan amount? Say for example the participant or the plan sponsor pays any accrued interest on late loan repayments and only whatever remains of the original loan amount is re-amortized? Thank you to anyone who wishes to respond."
Number of replies posted  3 replies      Number of times viewed  38 views      Add Reply

Stephen Michael created a topic in 401(k) Plans

401k Funded Business (ROBS) Exempt in Personal Bankruptcy?

"The situation is simple. Nowadays many people will roll their retirement funds (401k, 403b, IRA, etc.) into a ROBS account to self-fund a business. So imagine for a moment, you take out retirement funds, self-fund a business. The business technically is 95% owned by your Retirement Accounts (call them 401k for simplicity) and 5% funded by you. As a business owner, you take an SBA loan, your bank of course never gives the correct amount of working capital, so you end up using personal credit cards, personal funds, etc. to help your business succeed. And in fact your business does succeed. But you are left in the unenviable position of being essentially bankrupt. But you have a business that has a great chance of success. You still have monies in your 401k funds. And to survive you need to consider personal (not business) bankruptcy as your debts exceed your ability to pay them. And you are not taking a salary from your business because it needs the working capital to continue growing successfully. So the question becomes, if this individual files for personal bankruptcy, and if there 401k retirement funds are protected, and it so happens that the 401k owns 95% of the business, is that business protected?? The question posed here - Is a 401k funded business (ROBS) protected or exempt from personal bankruptcy???"
Number of replies posted  1 reply      Number of times viewed  53 views      Add Reply

ESI2015 created a topic in 401(k) Plans

Filed Form 5558 and now we determine 5500 is not required

"In July, our team filed Forms 5558 on multiple plans that would need to be extended. However, we had a new one-man plan that we filed Form 5558 for that didn't end up needing to file a Form 5500 because his assets were below $250,000. Client received the acknowledgement letter stating the extension of time was received. Will we receive a notice stating the filing was late? Are we better off to just wait and respond to a notice when one is received or attempt to call the IRS or write a letter in response to the extension letter?"
Number of replies posted  4 replies      Number of times viewed  49 views      Add Reply

dmb created a topic in Cross-Tested Plans

S-Corp New Comparability 401k plan

"We are looking at a prospect, small law firm, one 100% owner, his wife and about 6 staff. Entity is an S-Corp. It's been a while since i've dealt with an S-Corp, but back then i remember the S-Corp owner being paid by W-2. I remember, I hope correctly, that they had be paid by W-2 for plan purposes. This S-Corp has K-1 income. Can that be used for similar to partnership calc for retirement plan contribution purposes (without SE tax)? Or must it be be W-2 comp? Thanks in advance for all replies."
Number of replies posted  1 reply      Number of times viewed  40 views      Add Reply, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright 2019, Inc. All materials contained in this mailing are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than and are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy