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Message Boards Digest

January 6, 2020

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

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

Transaction Between ESOP Company and Party in Interest

"A 100% owned ESOP company has some outstanding debt with an unrelated bank. A outside director of the ESOP Company is willing to refinance the loan at a lower rate. What legal authority prevents this transaction from being an indirect prohibited transaction between the plan and a party in interest? I'm thinking the ESOP exception to the plan asset rule set forth in 2530.3-101(h)(3)."

Number of replies posted  0 replies      Number of times viewed  32 views      Add Reply

Chaz created a topic in Health Plans (Including ACA, COBRA, HIPAA)

ICHRA for Small Employers

"Based on my reading of the ICHRA regulations, it would be mathematically impossible for an employer with, hypothetically, one full-time employee and nine part-time employees, to establish an ICHRA for the part-timers because the 'class' for purposes of the ICHRA is fewer than 10 employees. Is this correct or am I missing something?"

Number of replies posted  1 reply      Number of times viewed  59 views      Add Reply

M Norton created a topic in 401(k) Plans

Bonuses Excluded from Plan Compensation -- for 20+ Years

"Traditional large 401(k) plan (not safe harbor) with 9/30 year end. Original effective date 1987. Volume submitter adoption agreement defines compensation as W-2 wages and does not exclude bonuses. This is a new client for us; our firm is doing the audit for the 9/30/2019 plan year end, taking it over from the prior auditor (who recommended us). We see that various bonuses were paid to employees for performance, safety, etc. at year-end. However, the plan sponsor did not calculated or withheld deferrals from bonuses. As far as we can tell, they have never withheld deferrals from bonuses, and did not realize they were supposed to do so. They are restating the plan to give employees the option to elect out of deferring from future bonuses. The question is: what to do about the past? The plan sponsor has been operating in a manner that would have been permissible under law but not in conformity with their plan document. [1] Does their consistency for the past 20+ years show that they never intended to include bonuses in the definition of 401(k) compensation? [2] Will that consistency protect them from penalties and sanctions? [3] If not, what is the fix for this? How far back would they need to go to 'make it right'? Do they need to include all plan participants who have deferred or can they elect to exclude the HCEs from the fix?"

Number of replies posted  0 replies      Number of times viewed  49 views      Add Reply

NW529 created a topic in 401(k) Plans

Family Attribution Rules for Trust Beneficiary

"We have a company that is owned by several trusts at 20% ownership each. Each individual is the primary beneficiary of their respective trust, so they are considered 20% owners of the company. However, are the children of the beneficiary of the trust also attributed 20% ownership of the company? This scenario has come up due to key employee determination for Top Heavy. My initial instinct says yes, but I would appreciate any feedback and/or reg citations."

Number of replies posted  0 replies      Number of times viewed  43 views      Add Reply

Christopher Wilson created a topic in 401(k) Plans

Compensation for ADP Purposes: One Member of Controlled Group Hasn't Adopted the Plan

"I have a controlled group of two companies. Company B isn't a participating employer. For what purposes is compensation aggregated among controlled group members and for what purposes is it not? When performing the ADP/ACP test, do I only use compensation paid to participants by Company A because compensation paid by Company B isn't eligible for deferral?"

Number of replies posted  2 replies      Number of times viewed  45 views      Add Reply

Gilmore created a topic in Retirement Plans in General

SECURE Act -- Withdrawals for Birth or Adoption

"Had a quick question on the withdrawals for birth or adoption section of the Secure Act. Is this intended to be another in-service withdrawal option, or does the participant need to have a distributable event available? Also, in reading the section of the Act it does not appear to say anything similar to 'If the Plan permits', or something to the effect so I'm wondering if this is available even if the Plan does not otherwise allow for withdrawals until, say normal retirement age, for example."

Number of replies posted  5 replies      Number of times viewed  67 views      Add Reply
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