Message Boards Digest

November 6, 2019

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

Cynchbeast created a topic in Retirement Plans in General

Fees by Service-Provider to Handle Distributions from the Plan: Can Pay from Plan Assets?

"We have a PS plan with pooled accounts and several terminated participants with small balances (under $200). We will be sending to PenChecks for check processing and the fee they charge is $35 per participant. The sponsor would like to pay the charges from the plan's forfeitures. Is this a legitimate plan expense?"

Number of replies posted  4 replies      Number of times viewed  61 views      Add Reply

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Mr Bagwell created a topic in 401(k) Plans

Cross Tested, 3% SH, and Top Heavy, Gateway Comp -- One Participant Skews Benefit Percentage Wildly

"Cross Tested Plan, 3% SH non, Top Heavy, Semi Entry at 4/1 and 10/1. I have an employee with a legitimate participating compensation of $163.01. Participant was eligible 4/1 and terminated 4/5. Employee is entitled to 3% safe harbor and then a 2% profit sharing for the year. So the Gateway 414(s) compensation would show $163.01 with a 401a allocation of $8.15. So I need to check to make sure the employee is receiving at least 3% compensation on full year comp for top heavy status. Employee needs another $516.80 to receive top heavy minimum. Full year comp was $17,498.33. So here' the rub and the question: The benefit percentage of the employee in question would be like 300% plus based on the 524.95 401(a) total and compensation of $163.01. Would you leave it this way? Or do something different? On this plan, there are generally 2 to 3 employees that come in mid-year and need a top heavy minimum. Where everyone else would show a benefit percentage of 5%, the 2 or 3 might show as 5.8%. Gateway then passes, and then I go to the next steps of making sure the other test pass. I just haven't seen a legit participating comp scenario skew the percentage this wildly."

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

Alex16 created a topic in Employee Stock Ownership Plans (ESOPs)

Time and Form of Distribution from ESOP to Me as a Terminated Employee

"I'm a 25-year employee of a company that started an ESOP in 2007. I was terminated in 2011 with 60 percent vesting. Company took out a 10 year $32M loan for the ESOP. Loan was paid back in 2018. I am expecting paperwork for first distribution any day. Distribution according to administrator will be over 5 years. My understanding from a pamphlet from NCEO (an ESOP advocacy organization) is that since I was made to wait more than 6 years for my distribution, I am now entitled by general rules to get a lump sum distribution. Is this correct? Where would I find the Internal Code section that requires this? More than $200k is involved and I would very much prefer to have a lump sum (I'm over 60 years old and on SSDI now). Administrator & I do not speak. Thanks for any direction and info you can give me."

Number of replies posted  1 reply      Number of times viewed  40 views      Add Reply, Inc.
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