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Message Boards Digest

December 24, 2019

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

Terry Power created a topic in 401(k) Plans

New Plan Tax Credit for Multiple Employer Plan Adopters?

"The provisions of the SECURE Act that were incorporated in the legislation signed last week changed the new plan credit for employers from $500 to a maximum of $5,000 ($250 x number of eligible employees). Would the credit also apply for an employer who currently has no plan but becomes an adopting employer of a 413(c) Multiple Employer Plan?"

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

buckaroo created a topic in 401(k) Plans

Effect of Statutory Employee on the Gateway Minimum

"Plan has 401(k) deferrals and profit sharing. Top heavy. Eligibility for the 401(k) is age 21, 1 month of service, entering monthly. The profit sharing minimum age is 21, 1 YOS, entering quarterly. It is a new comparability plan with each person in their own group.

"One employee has a DOB in 1993 and a DOH of 9/29/2017. Hired as an intern. On 10/24/2019, she was reclassified as a "regular employee." She did not complete the 1,000 hours service requirement during the 9/27/2017 - 9/26/2018 period or the 1/1/2018 - 12/31/2018 period. She will complete the YOS during the 1/1/2019 - 12/31/19 period. Based on her data, she will become a participant in the 401(k) portion on the date that she becomes a regular employee (10/24/2019) and she can begin to defer immediately. Because she did not meet the YOS previously, she will not become a participant in the profit sharing portion of the plan until 1/1/2020. So for 2019, she is eligible for the 401(k) portion of the plan. She is actively employed on the last day of the plan year so she is entitled to the TH minimum allocation.

"The issue:  based on her data and the fact that the 401(k) portion uses an elapsed time methodology for eligibility, I believe that she would be a statutory employee. She has met age 21 and she has met a YOS, on an elapsed time basis, on 9/26/2018. Based on the statutory entry dates, she would be a statutory employee as of 1/1/2019. Do you agree?

"Under the assumption that she is a statutory employee, she is now required to receive the minimum gateway contribution. If this is correct and she does receive it, she will have a high EBAR and cause the testing to go from failing to passing. Does anyone see any issue with this?

"If the allocation changes and the testing then fails, I cannot provide her with an additional contribution that would cause her to get something above the gateway as she is not entitled to it. Agree?

"Finally, the plan calls for compensation while a participant in the plan, so what should her comp be for minimum gateway purposes? Because she received the TH min, should it be her 415 compensation? If not, what should it be, because she has no compensation defined for the profit sharing portion of the plan since she is not eligible."

Number of replies posted  0 replies      Number of times viewed  27 views      Add Reply

Gilmore created a topic in Defined Benefit Plans, Including Cash Balance

Effective Date of New Company's Plan Can Precede Date of Incorporation?

"Would appreciate any opinions on a new employer using a plan effective date prior to the start date of the company. I know the EOB says it may be possible but recommends requesting a determination letter which is not likely possible for a pre-approved plan. Say the employer (in this case a one-person company) start date is November 1, 2019, and the employer wants to start a calendar plan for 2019. If we make the plan effective for November 1, 2019, but define the limitation year as the calendar year, are we still good with not having to prorate limits?"

Number of replies posted  2 replies      Number of times viewed  33 views      Add Reply

PensionPro created a topic in Retirement Plans in General

Excise Tax on Nondeductible Contributions

"Husband and wife one participant plan has made nondeductible contributions in several years. They still have over $100,000 of nondeductible contributions being carried forward to 2019. They want to retire in 2019. What happens to the nondeductible contributions that can no longer be carried forward, and what is the plan sponsor's excise tax obligation?"

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