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Message Boards Digest

December 18, 2019

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

HL created a topic in 401(k) Plans

Employer Incorrectly Capped My Contributions

"My employer notified me that they had mistakenly limited my total eligible contributions at $56,000 instead of $62,000 (I am 60 and maxing out after-tax) for 2019 and did not withhold my contribution for two pay periods -- 11/28 and 12/13. The first was before the error was discovered, and the second was after the discovering the error and notifying me. Unfortunately for some reason I'm not aware of, they did not update the payroll system for the second pay period resulting in the second missed contribution. I have one more contribution opportunity for the year (12/27). My employer claims they are only required to make a contribution of 25% of the missed contributions which were mistakenly not made. This amount, combined with a maximum deferral on my part on 12/27 will leave me short for 2019 by $1,049. I am trying to find which section of this Revenue Procedure (https://www.irs.gov/pub/irs-drop/rp-18-52.pdf) applies to my case. I see some cases that might apply and put them at 40% instead of 25%. Any pointers would be appreciated. Also, are these percentages specific amounts required and that cannot be exceeded, or are employers allowed to make up the missed deferrals beyond the prescribed percentages if they choose?"

Number of replies posted  0 replies      Number of times viewed  49 views      Add Reply
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Stash026 created a topic in Defined Benefit Plans, Including Cash Balance

Can a Statutory Employee Set Up a Retirement Plan?

"I have a doctor who is considered a statutory employee who wants to set up a plan for himself. All of his income will be funneled into a Schedule C (there's no 1099 or W-2). Could he set up a plan based on that income?"

Number of replies posted  1 reply      Number of times viewed  54 views      Add Reply

rocknrolls2 created a topic in Other Kinds of Welfare Benefit Plans

NJ Short-Term Disability Mandate and Application of Maximum Benefit Limit

"An employer has a number of sites in NJ at which it employs a number of employees. NJ has a temporary disability benefit which is payable for up to the first 26 weeks of short-term disability. An employer can either use the state mandated benefit level and get the administration through the state labor department or purchase insured coverage which provides an equal or better level of benefits than the state mandated benefit with administration provided by the insurance company. Let's say this employer chose solely the state mandated benefit. The maximum weekly benefit for disabilities beginning and ending between January 1, 2020 and June 30, 2020 is $667 per week (the benefit amount is equal to 2/3 of the average weekly wage). For disabilities beginning and ending between July 1, 2020 and December 31, 2020, the maximum weekly benefit is increased to $881. Thus, let's say an employee who earns $1,321.50 per week goes out on short-term disability, effective June 2, 2020. $1,321.50 x 0.667 = $881, limited to the maximum benefit amount.

Because the benefit begins in early June of 2020, assuming the employee is disabled for 26 weeks, would he get $667 per week for up to 26 weeks or would the employee get $667 per week up through June 30, 2020 and $881 per week from July 1, 2020 through early December 2020?"

Number of replies posted  0 replies      Number of times viewed  23 views      Add Reply

M Norton created a topic in Plan Document Amendments

Deadline for Money Purchase Pension Contribution Change

"Existing Money Purchase Pension Plan has 7% allocation. Eligibility is age 21, 1 year of service - dual entry dates. You will receive an allocation if you have met eligibility and are employed on the last day of the year OR have worked 501 hours. The plan sponsor is considering lowering the contribution percentage. What's the deadline for doing that? Can the plan be amended prior to the beginning of 2020 to reduce the contribution percent to 3%, effective 1/1/2020? Could it be lowered during 2020 if the plan sponsor chooses to do so?"

Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply

Jakyasar created a topic in Form 5500

5500-EZ -- Effect on Filing Requirement When Assets Drop Below $250k

"Have been filing 5500-EZ for a few years because assets exceed $250k. [1] Portion of the assets are rollover. If participant takes out the rollover and rolls it over into an IRA, assets will drop to $100k. Can the sponsor stop the filings? [2] If an in-service distribution is made and all of the assets are rolled over into an IRA, can the sponsor stop the filings?"

Number of replies posted  0 replies      Number of times viewed  28 views      Add Reply

Gilmore created a topic in 401(k) Plans

Catch Ups, 415, and Off-Calendar Plan Years

"Plan year end is 10/31. In the calendar year ending 2018 the participant makes deferrals of $24,500. Deferrals from 11/1/2018 to 12/31/2018 are $4,655 all 2018 catch ups, used in the 10/31/2019 plan year. Participant defers $20,245 from 1/1/2019 to 10/31/2019, with catch up of $1,245 for 2019. For the plan year ending 10/31/2019, I believe I need to consider $5,900 as catch up for the plan year.

Considering the $56,000 415 limit, with the $5,900 that are considered as catch up for the plan year, am I permitted to allocate a profit sharing contribution for this participant of $37,400? That is the total plan deferrals of $24,500, plus the profit sharing of $37,400 for a total addition for the plan year of $61,900, which is $5,900 over the 415 limit for the plan year.

Could the participant then defer the additional $4,755 from 11/1/2019 to 12/31/2019, which would then be catch for the 10/31/2020 plan year?"

Number of replies posted  1 reply      Number of times viewed  39 views      Add Reply

ESOP Rookie created a topic in Employee Stock Ownership Plans (ESOPs)

Proceeds in Sale of Company for Short Tenured Employee

"I have been at my ESOP company for almost 2 years. This is my first experience at an ESOP. We are 100% ESOP and 2019 will be the first year eligible for an ESOP contribution. As an Executive, my pay is on the higher end. However, since I have only been there 2 years I have not had the chance to accumulate any shares. We are in the early stages of selling the customer and I cannot seem to find a good source on how funds are distributed among the employees. I have read that the proceeds of the sales would be distributed based on % compensation on overall compensation (like the normal contributions are). But that doesn't seem logical, because a line and staff employee who has been with the company for, say, 25 years and accumulated a decent amount of shares would not get as much as an executive who has higher compensation but much less tenure. Has anyone had experience with this? As an executive I obviously want to have financial participation in a sale, but if payment to employees is based on shares I would not be receiving much. What other compensation options are there in an ESOP since the company is 100% employee owned and all money goes to the shareholders?"

Number of replies posted  4 replies      Number of times viewed  36 views      Add Reply

jane murray created a topic in Defined Benefit Plans, Including Cash Balance

Simultaneous Participation in Guild's DB Plan and Loan-Out Company's DB Plan

"A client who owns a loan-out company sponsors a one person defined benefit plan and has also accrued benefits under the SAG-AFTRA pension plan. Suppose the client is age 70 and her 415 dollar limit is $30,000/month and 415 salary limit is $22,500/month. She has accrued a benefit of $5,000/month under the SAG-AFTRA pension plan. Do you simply reduce her 415 limit by $5,000/month so that her maximum benefit under her company sponsored defined benefit plan is $17,500/month ($22,500 less $5,000)? I've read some old threads and don't seem to understand exactly how the offset should be applied."

Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply
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