Message Boards Digest

January 8, 2020

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

panther created a topic in 409A Issues

Replace Severance Benefit with Incentive Bonus Under Post-Merger Employment Agreement?

"Company merged with Target and now wants to enter into new employment agreement with Target Executive. The current employment agreement offers $100k severance benefit upon Good Reason termination due to change in employment position, which will occur. To encourage Target Executive to stay, Company offers new employment agreement with $100k signing bonus and no severance benefit. Would this be a 'substitution' under 409A and thus an impermissible change in the time of payment? I think not because under the current agreement he does not get the $100k unless he terminates, which he would not do if he signed the new agreement."

Number of replies posted  1 reply      Number of times viewed  23 views      Add Reply

M Norton created a topic in Retirement Plans in General

Additional Contributions Made Due to Partial Plan Termination -- Requires Retesting?

"It was determined (after year-end) that a large traditional 401(k) plan had a partial plan termination in 2018. The plan operates on the calendar year. Additional match contributions (plus earnings) were calculated and deposited to the plan in late 2019 as a correction for the 2018 partial termination. The plan administrator had originally calculated refunds to HCEs for failed ADP/ACP. Now the PA is saying that the plan had to be re-tested for the 2018 plan year after the correction for the partial plan termination, and additional refunds are due to the HCEs. Should the compliance testing for 2018 be re-run as a result of the corrective actions taken for the partial plan termination?"

Number of replies posted  1 reply      Number of times viewed  50 views      Add Reply

ldr created a topic in 401(k) Plans

'Paid Preparer' of Form 5330 -- Use Your Own PTIN?

"When you fill in the 'paid preparer' section of the Form 5330, do you maintain a PTIN for this purpose? Do you use the PTIN for any other purpose?"

Number of replies posted  9 replies      Number of times viewed  78 views      Add Reply

t.haley created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Employer Is Subject to Davis-Bacon Act; How to Pay HRA Funds After Participant's Death?

"Single participant with no spouse or dependents dies with large balance in HRA account. Employer is subject to Davis Bacon Act so funds cannot revert back. Employer contributions to HRA are held in trust. HRA plan document does not provide for payment of dependent medical expenses after the death of the participant. What do we do with the funds in the participant's HRA account after his death?"

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

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

Former Employee Wants Distribution But 12/31/2019 Valuation Not Completed Yet

"I have a question regarding the retirement account for my company which is a Profit-Sharing Plan, 100% employer contribution. I have a former employee who is 100% vested in the plan but has not worked for me for several years. He elected to keep his money in the plan, without additional employer contributions. At this time, the former employee is electing to have his distribution rolled over to an IRA account. By definition in the SPD, the plan year is 1/1 to 12/31. The valuation date is the last day of the plan year (12/31). The valuation is calculated annually, and this is usually done around October of the following year. Right now, we have the numbers for the valuation up to 12/31/2018. I know that the profit-sharing plan gained money in 2019, but do not have those exact numbers calculated yet. The employee is asking for a partial distribution based on the 12/31/18 valuation and then a total distribution for the 2019 gains once that number is calculated (around October 2020). What are the rules pertaining to this type of distribution? I do not want this former employee to miss out on the profits earned in 2019. Is it possible to do a partial rollover for the 12/31/18 amount and then give him the final 2019 profits once this is calculated?"

Number of replies posted  4 replies      Number of times viewed  57 views      Add Reply

hsctpa created a topic in 401(k) Plans

Safe Harbor 401(k) Plan Wants to Change from 3% NEC to Safe Harbor Match

"We have a Safe Harbor 401(k) Plan client that currently has a three percent nonelective contribution and wants to change to a safe harbor match contribution. I referenced the EOB and it referred me to Notice 2016-16. Under Notice 2016-16 Mid-year Changes to Safe Harbor Plans and Safe Harbor Notices, I see where this might be possible but don't find any specific examples that address this scenario. I could argue either way -- for or against. Anyone have some insight or advice?"

Number of replies posted  1 reply      Number of times viewed  44 views      Add Reply

Mikerbpm created a topic in Correction of Plan Defects

Failure to Distribute Failed ADP Test Dollars Timely

"401(k) Plan has failed the ADP test for 2015, 2016, 2017 and 2018. Refunds were processed each year, but after the March 15th deadline each year. They are not an EACA plan so we can't use the June 30 deadline either. The amounts are insignificant in terms of the total contributions. They failed to file a form 5330 each year to pay the excise tax. What is the proper correction here? The proposal is to file a Form 5330 for each year realizing they are late and that penalties and interest will apply What about the 'stacking' of the penalty on the 5330? For example, say they returned $25k for 2015. The 10% penalty would be $2,500.00. The instructions under the prohibited transaction rules say 'If the prohibited transaction is not corrected within the taxable period, an additional tax equal to 100% of the amount involved will be imposed under section 4975(b).' The instructions only have that italicized section under the prohibited transaction rules, not the Section H portion about ADP test refunds. I am hoping it isn't $2,500 for 2015, then $25k each year they didn't file."

Number of replies posted  1 reply      Number of times viewed  32 views      Add Reply

rhb401 created a topic in Retirement Plans in General

SECURE Act -- IRA Contributions OK for Person Over 70-1/2 Already Taking RMDs?

"Under the SECURE Act, can an 'actively employed' person who is over 70-1/2 and has been receiving RMD for 4 or 5 years make any IRA contributions starting in 2020? Would they have to take their RMD and then turn around and contribute to an IRA?"

Number of replies posted  2 replies      Number of times viewed  49 views      Add Reply

JohnS created a topic in 401(k) Plans

Carry Over 401(k) to New Company

"I used to work at Wells Fargo, and have about $200k in 401k over there. I've taken a new job at BofA. I haven't explored much fund returns in BofA yet. Any suggestions if its better to move or leave there?"

Number of replies posted  3 replies      Number of times viewed  46 views      Add Reply

mjf06241972 created a topic in 401(k) Plans

SECURE Act's Tax Credit Available for Conversion from SIMPLE Plan to 401(k)?

"If a plan has a SIMPLE and then converts to a 401k plan, can they still use the tax credit under the SECURE Act for the new 401k Plan?"

Number of replies posted  0 replies      Number of times viewed  18 views      Add Reply

jmartinrps created a topic in 401(k) Plans

Audited Plan (Schedule H) -- Use Cash Basis Instead of Accrual Basis?

"Every audited plan I have seen used accrual accounting where you would indicate receivables on the Schedule H. Can an audited plan use cash basis accounting for 5500 purposes?"

Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply, Inc.
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