Message Boards Digest

January 16, 2020

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

AS TPA created a topic in Retirement Plans in General

Tax credit for startup plans

"In regards to the tax credit for plan startup costs (which just recently increased to $5k) does anyone know how this tax credit works if an employer maxed out this credit on a startup plan, then terminated that plan and started up a new plan a year later? Upon establishing that second startup plan would the employer be eligible for that tax credit again on the new plan?"
Number of replies posted  3 replies      Number of times viewed  35 views      Add Reply

sdcurt created a topic in 409A Issues

Bonus to pay option exercise cost

"Can a company give a bonus to an employee to cover the exercise cost of a stock option or will that make it a discounted option subject to 409A provisions?"
Number of replies posted  4 replies      Number of times viewed  33 views      Add Reply

AlbanyConsultant created a topic in 401(k) Plans

participants not returning forms when electing not to defer

"After years of being a client and after being told about the dangers of this situation several times, the HR manager of a plan with ~500 employees with decent turnover and short eligibility (they need it to stay competitive) admitted that she has a hard time getting back the deferral election forms from people who choose not to defer (the only other contribution is a non-SH match) and is asking how to best protect herself. While I love the simplicity of it, I presume holding back paychecks until the form is returned is out of the question ("But I can't pay you until I know what you want deferred!"). I'm thinking that having the employee sign something when given the deferral election form could help show an auditor that even if the forms weren't returned, that the participants were at least notified and given the opportunity. Any other ideas? Let's assume that automatic enrollment is not an option for them. Thanks."
Number of replies posted  6 replies      Number of times viewed  78 views      Add Reply

lcollins300 created a topic in Correction of Plan Defects

Excess Contributions for Prior Years and 1099-R Codes

"We have a situation where an owner deferred fully to his own plan in 2017 and 2018 but had also deferred fully in another employer's 401(k) plan where he was just a participant. CPA is having to amend his 2017 and 2018 returns. We have read that the distributions must be taxable in both the year of deferral and the year oaf distribution. Excess contributions plus earnings were calculated for both the 2017 and 2018 deferrals and distributed in Dec 2019. Question: Unsure what to code the 2019 1099-R? Not P but maybe a 8 which is confusing as this signifies that the excess contribution stems from 2019 deferrals....... Any help would be great!"
Number of replies posted  4 replies      Number of times viewed  44 views      Add Reply

B21 created a topic in Defined Benefit Plans, Including Cash Balance

cash balance with life insurance

"I understand that if a cash balance plan (or any defined benefit plan) permits the purchase of life insurance policies that this benefit has to be offered to all participants to satisfy the nondiscrimination requirements. Does this mean a policy has to be issued on behalf of each eligible participant or only that the participant has to be provided the option to have a life insurance policy purchased on their behalf? I thought, unlike a defined contribution plan, a participant cannot make an election to include a life insurance policy in a defined benefit plan."
Number of replies posted  1 reply      Number of times viewed  23 views      Add Reply, Inc.
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