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Message Boards Digest

November 13, 2019

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

Tracy Fedele created a topic in 401(k) Plans

Auto-Enroll with Auto-Escalate; Allow Participant to Set Limit on Escalation?

"I have a plan that has auto enroll. The sponsor will add auto escalate at 1% per year up to 6%. My understanding is that a participant can elect/agree with the auto escalate but elect a cap/maximum of less than the 6% maximum. Example: Nancy New is auto enrolled at the 2% but completes the enrollment form indicating she wishes the auto increase to stop at 4%. Is this possible?"

Number of replies posted  2 replies      Number of times viewed  40 views      Add Reply

imchipbrown created a topic in Retirement Plans in General

Required Minimum Distribution Table for 2021, in Excel Format

"I cut and pasted the new Required Minimum Distribution Life Expectancies from the Proposed Regulations into two Excel tables: Single Life and Joint Life. The file is embedded in my website (click). At the very bottom of the page, find and click the period (.) right after my email address. It should ask if you want to download the file. Go ahead. It's safe."

Number of replies posted  0 replies      Number of times viewed  33 views      Add Reply

Belgarath created a topic in Retirement Plans in General

Revenue Sharing Paid to TPA Exceeds Current Fees

"Suppose you have a TPA whose engagement letter specifies that revenue sharing paid to the TPA by the investment firm will offset TPA billings to the Plan Sponsor. At some point, due to asset growth, the revenue sharing paid to the TPA starts to exceed the amounts charged, so is basically placed in a holding account with the TPA. The Plan Sponsor is fully informed of this, and as a fiduciary is still happy with this investment arrangement. The amounts accumulating in the holding account start to become substantial, and the TPA is uncomfortable with this, and wants to change things to get rid of the accumulated amount, and to prevent it from accumulating in the future. The gist of a recent discussion about this was that the TPA should issue a new engagement letter, so that the TPA would keep all future revenue sharing fees, even if in excess of what would normally be charged. And the holding account will be used to offset fees charged in the future until it is depleted entirely, which will take, apparently, about 4 years. Plan Sponsor is apparently fine with this. A couple of questions were kicked around, however, which were interesting, and I'm soliciting opinions. [1] Is there really any reason why a new engagement letter couldn't simply say that the TPA will keep the accumulated revenue sharing immediately, as long as the Plan Fiduciary doesn't have a problem with it? In other words, does it have to be allocated over the next (x) number of years until depleted? [2] What happens if the client leaves? Wouldn't this money go to the TPA anyway, as it certainly isn't a Plan asset, or anything 'belonging' to the Plan Sponsor? Seems to me that the solution proposed, while certainly reasonable, is more cumbersome than necessary? Anyone ever encountered a similar situation?"

Number of replies posted  5 replies      Number of times viewed  61 views      Add Reply

52626 created a topic in 401(k) Plans

Participant Loan Procedure: Effect of Cure Period on Immediate Repayment Obligation Upon Employment Termination

"Loan procedure has the standard cure period: last day of the calendar quarter following the calendar quarter. Loan procedure states loan will become payable in full upon termination of employment. A particular employee has an outstanding loan and terminated on 7/10/2019. Does that loan become due and payable (and taxable because the individual cannot pay it back now) as of the termination date? Or is it necessary for the plan sponsor to wait until the end of the cure period (12/31/2019) before defaulting the note?"

Number of replies posted  1 reply      Number of times viewed  28 views      Add Reply
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