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Message Boards Digest

January 17, 2020

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

pgold created a topic in Retirement Plans in General

Plan sponsor changes name and lan name in middleof the plan year

"Plan Sponsor changes name and plan name in middle of the year. What name should be used on 1099R forms and 1096 forms? Old name or new name?"
Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply

Cynchbeast created a topic in Retirement Plans in General

Large plan audit

"We had a large plan client that stopped communicating with us and stopped filing 5500s several years ago. Now they have contacted us to bring the plan up to date. This will mean DFVC filing for 7 years (thru 2019) - all large plan 5500. Q: Do they need a separate audit for each year or can they use one comprehensive audit for 01/01/13 through 12/31/19?"
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply

M Norton created a topic in 401(k) Plans

TPA fired - not fired - SH notice not issued

"We are part of a CPA firm, and perform plan administration and reporting services for clients of the firm. Mid-2019 we billed plan sponsor for 2019 plan work. Plan Sponsor was not happy with the amount of the bill and told CPA they were going to find someone else to do TPA work, but CPA would continue to do their accounting and tax work. Today we learn they did not like other TPA options and so decided to stay with us. Unfortunately, they did not inform us (or the CPA) of that decision. They want us to continue to perform TPA work and reporting for their plan for 2019 and going forward. During the time we thought we were fired for TPA work, we prepared the SH notices for our clients, but did not prepare one for this particular client, thinking they had another TPA doing their retirement plan work. So I think it is highly probably that no SH notice was distributed to participants. They have had a SH 401(k) plan for several years, and deposit the SH contribution along with the employee deferrals every pay period. Can they still be a SH plan for 2020? Any options?? Thanks!"
Number of replies posted  5 replies      Number of times viewed  67 views      Add Reply

Tom created a topic in 401(k) Plans

W-2 Box 13 Retirement

"A large payroll company (10,000+ payroll clients) marked box 13 with an X for a 401(k) participant who made no elective deferrals to the plan nor receved an employer contribution for 2019. There is no DB plan. So the employee received no employee or employer contribution into the plan account in 2019 nor was there any employer accrued contribution 2019. The employee was planning to do a deductible max IRA. the employer specifially told them - no X for this person. The Payroll company said because there were 401(k) loan payments they had to mark Box 13 with an X. That has to be wrong in my opinion. I gave them the IRS instructions on this with examples of no employee nor employer contribution but it doesn't say anything about loan payments - probably didn't think it needed to! Comments?"
Number of replies posted  2 replies      Number of times viewed  47 views      Add Reply

Cynchbeast created a topic in Retirement Plans in General

Terminated 401(k) plan

"We have a 401(k) plan that terminated effective 03/31/19. Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19. For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?"
Number of replies posted  1 reply      Number of times viewed  28 views      Add Reply

Cynchbeast created a topic in 401(k) Plans

Terminated 401(k) plan

"We have a 401(k) plan that terminated effective 03/31/19. Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19. For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?"
Number of replies posted  2 replies      Number of times viewed  36 views      Add Reply

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

Limitations On PTE 80-26 Loans - Do They Exist?

"I know quite a few years ago the rules were changed by getting rid of the 3-day rule regarding the length of some 80-26 loans, but I have not been able to find any guidance regarding how long such a loan can remain unpaid. Also, seemingly absent is anything addressing the amount of the loan in relation to the amount of ongoing expenses. For example, a large profit sharing plan is constantly making distributions to terminating participants. The plan's assets are held in two accounts, one with TD Ameritrade for all of the equity investments, and a bank account specifically for payouts. The trustees are reluctant to liquidate securities to make the payouts and would prefer to make 80-26 loans to the bank account. The trustees, who try to pay terminees asap, try to invest as many assets as possible in stocks, thereby sometimes leaving the plan cash poor. Would it be acceptable for the employer to loan the plan $40K so that terminees over the next few months can be paid out when the actual amount of cash needed is currently unknown (which could result in the cash just sitting there for months)? How long can the loan remain outstanding? I'm guessing there may not be any restrictions regarding how soon an expense must be paid after the plan receives the loan. In the absence of any guidelines, I would be curious to hear how such loans are typically handled, especially since loans lasting over 60 days must be in writing and I'm not sure how to word the promissory note. All help is greatly appreciated."
Number of replies posted  2 replies      Number of times viewed  39 views      Add Reply

Lou81 created a topic in Retirement Plans in General

Integrated/Top Heavy with shmt and disc match

"Good Morning, Have an integrated profit sharing plan, that is top heavy. It also has basic safe harbor match as well as discretionary match (66.67% up to 6%) I have a new participant that entered 7/1, the plan uses date of entry comp. I am trying to determine her profit sharing allocation. i.e full year comp 30,000, entry date $15,000, she is receiving the SHMT 3.5%, her disc MT is 2.68% of entry date comp When i run the profit sharing, (the allocation is 3.22%) should she get 3% of full year, or just the 3.22 of entry date comp? Between all employer sources she is receiving greater than 3% of full year comp. I just want to make sure meeting the top heavy requirements for an integrated plan. Thank you for your help!"
Number of replies posted  3 replies      Number of times viewed  30 views      Add Reply

waid10 created a topic in Correction of Plan Defects

1 Participant RMD Failure Over Multiple Years - How do we correct and report?

"We have one participant for which RMDs should have been taken for last ten years, and were not. Since it is only one participant, we think we can use SCP (even though it is several years) to correct. My question is the correction process and how to report it. We intend to calculate the missed RMD amounts, with earnings. When we distribute those amounts, do we just issue a 1099 for 2020 and the participant includes in income for 2020? Or does he have to amend each tax return and include the individual RMD amounts in the year each one should have been paid? For the Form 5329: do we file one form for all of the years? or do we file a 5329 for each year impacted? We plan to request a waiver of the excise tax. My understanding is that we fill out the form and request the waiver without actually paying the excise tax. The IRS will come back and either grant the waiver; or deny the waiver and then demand payment of the excise tax at that point. Is that correct? If the waiver is denied, how do we report payment of the excise tax?"
Number of replies posted  0 replies      Number of times viewed  18 views      Add Reply
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