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Message Boards Digest

November 8, 2019

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

WCC created a topic in 401(k) Plans

match formula based on compensation bandwidths

"Plan sponsor wants to provide a greater match formula for lower paid participants. For example:
    1. Tier 1 if you make < $45,000 your match is 100% on 5%
    2. Tier 2 if you make > $45,000 < $75,000 your match is 75% on 5%
    3. Tier 3 if you make > $75,000 < $125,000 your match is 50% on 5%
    4. Tier 4 if you are a HCE your match is 25% on 5%
Let's assume the match is based on plan year comp (not funded per pay period) so at the end of the year you know which category each participant is in. If the plan passes BRF for both current availability and effective availability, then is this acceptable (pending ACP testing)? Is this type of match formula possible within the regulations? If so, we obviously need to make sure our document allows for it. Our document allows for us to write in tiers, but I am not sure that tier section means compensation bandwidths. Thank you"
Number of replies posted  1 reply      Number of times viewed  52 views      Add Reply
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rocknrolls2 created a topic in VEBAs

Seeking Retroactive Reinstatement of VEBA's Exemption; IRS Penalties if Reinstatement Limited from Date of Submission?

"A client with a VEBA had its exemption automatically revoked for failure to file 990s for three consecutive years. Seeking retroactive reinstatement of the exemption. According to Rev. Proc. 2014-11, the IRS will not assess failure to file penalties against the organization if IRS grants the organization's request for retroactive reinstatement. What if the IRS does not accept the argument raised in the reasonable cause statement, in which case reinstatement would not become effective until the date the reinstatement submission was mailed? Would the IRS assess failure to file penalties for the period between the revocation date and the mailing date of the reinstatement filing? Did anyone have this happen in a real-live situation with respect to a client where the IRS rejected the reasonable cause statement and assessed failure to file penalties for the period that the VEBA remained non-exempt?"

Number of replies posted  0 replies      Number of times viewed  14 views      Add Reply

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

Minimum distribution timing for surviving spouse

"We have a plan that has a participant who died in 2019 after attaining age 70.5. Had he survived, his first RMD would have been due by 4/1/2020. His spouse is his sole beneficiary. Section 1.401(a)(9)-3 allows her to delay commencing benefits until 2020, however she is electing a distribution now. Does a distribution now trigger an RMD requirement for 2019?"
Number of replies posted  0 replies      Number of times viewed  21 views      Add Reply

Madison71 created a topic in Retirement Plans in General

Question for Those with CPC Designation; Get TGPC Designation Instead?

"I am contemplating whether to first get the TGPC designation or work towards my CPC designation (I have completed the pre-requisites). I see there is a governmental and tax-exempt module in CPC, but not sure how comprehensive it is. I have more experience on the private sector side and would like to gain more expertise on the public sector side. I would rather begin the CPC and take the governmental module unless that module is not very comprehensive. Thoughts?"

Number of replies posted  4 replies      Number of times viewed  70 views      Add Reply

Seattle260 created a topic in 401(k) Plans

ROBS Exit Strategy

"This might have been asked before but I wasn't able to find this exact question- If I use a ROBS and open up a corporation with $300k, so lets say then my 401K plan gets 300K shares @ $1 each. Fast forward 5 years and now my corporation is worth $600k, so my 401k plan now has 300K shares @ $2 each for a total value of $600k. How do I exit the robs in this scenario? Do I have to pay $600k (assuming the valuation is comes in at that number or close to it)? I'm fairly certain I won't have $600K sitting around. Thanks"
Number of replies posted  6 replies      Number of times viewed  68 views      Add Reply

M Norton created a topic in Retirement Plans in General

choosing which assets to distribute to HCE

"SH 401(k) has assets held in pooled account from inception (1997) - no participant direction. Plan sponsor has decided to move assets to American Funds platform and allow participant direction beginning 2020. Some assets in the plan will not transfer to the AF platform and must be liquidated or distributed. They include a Certificate of Deposit and some corporate bonds. Two of the three owners are over age 70 1/2 and must take RMDs. Can they choose which assets are distributed for the RMDs? And if the plan allows inservice distributions for participants who are NRA (65) or older, can those participants (the HCEs) select which assets can be distributed/rolled over to IRA (after satisfying RMD requirement)? There is concern that allowing HCEs to "cherry-pick" assets for distribution might be discriminatory, even though they would be distributed at current market value and there would seem to be no harm to the NHCEs. (There are no NHCEs who are NRA or older.) Thanks for any advice with this!"
Number of replies posted  3 replies      Number of times viewed  37 views      Add Reply
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