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Message Boards Digest

January 20, 2020

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

Ryan Walter created a topic in 401(k) Plans

RMD calculation for a non-spouse beneficiary

"I am trying to determine the proper calculation for an RMD for a non-spouse beneficiary. The original account holder was a greater than 5% owner and was taking RMDs before the time of his death. His sole beneficiary, his wife, became the account holder and opted to leave the funds in the plan. She continued to take RMDs using the uniform life table based on her D.O.B. This beneficiary, now the account holder, died and the account fell to her sole beneficiary, her daughter. Her daughter opted to leave the funds in the plan as well. The beneficiary was 88 at the time of her death in 2017, in 2018 she would have been 89. Using the single life table, this results in a factor of 5.9. The daughter was 68 in 2018 which results in a factor of 18.6 using the single life table. Is the single life table the correct one to use in this situation? If so, am I correct to use the greater factor of the two and reduce the 18.6 factor by one each following year? If not, what is the proper way to calculate the RMD for the daughter?"
Number of replies posted  1 reply      Number of times viewed  44 views      Add Reply

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

Fractional Accrual Rule-411(b)(1)(C)

"The flat benefit formula using the fractional accrual rule--the question I am having is when is the 415 comp limit first applied. Is it to the projected benefit first, or to the accrued benefit. We have a plan document where it is not specified. My interpretation has been that without specific language in the plan as to when it is applied, it seems it should be applied to the projected benefit first since we can't accrue a fractional benefit to something that exceeds 415. In this plan the normal retirement benefit is 300% of average comp for 25 yrs of service at NRA. Consider an employee who is 40 yrs old, NRA 65 and has $300,000 average salary."
Number of replies posted  0 replies      Number of times viewed  28 views      Add Reply

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

Reporting for Lost Participant Money Sent to PBGC

"I apologize, I'm sure this question has been asked and answered - so if someone could point me to the correct thread, I'm happy to read up on it. I also wasn't sure if this question was better suited for the distribution message board or this on. I don't deal with PBGC covered plans often - so my apologies in advance if I am using the wrong terminology or asking the wrong type of question. PBGC covered plan - terminated and closed. There were a about a dozen participants whose benefit was sent to the PBGC per the lost participant rules. We are now preparing 1099-Rs for the plan. The participants who elected something ( lump sum cash, rollover, etc) I have no problem preparing the 1099-Rs. But I don't know how to report those whose benefit was transferred to the PBGC. Do they get 1099-Rs? I'm thinking yes - but I've been wrong before If they get a 1099-R what code goes on the form? I'm sure there is a publication or guide that deals with this - I'm just not sure where to look. I called the PBGC for an answer and was told I would get a call back - but I haven't heard yet so thought I would ask all you smart folks here."
Number of replies posted  3 replies      Number of times viewed  46 views      Add Reply

pensiongeek created a topic in 401(k) Plans

Match is offset by Prevailing wage

"I have a plan that offsets Discretionary Match with the prevailing wage in their other plan. Does the ACP test include ALL calculated match, or just what they get after the offset?"
Number of replies posted  3 replies      Number of times viewed  60 views      Add Reply

M Norton created a topic in Distributions and Loans, Other than QDROs

rollover to spouse in same plan

"Husband and wife own a small business and sponsor a qualified retirement plan. Both are over age 70 1/2, and take RMDs. Husband died in 2019 before taking RMD. As his beneficiary, wife took his RMD, and also took her RMD. The balance in the plan was then rolled from the pooled account into an IRA in the wife's name and the plan was terminated, in 2019. The questions is: how many 1099-R forms must be filed? One for his RMD paid to her from the plan as beneficiary, and one to her for her own RMD from her account in the plan, and a third to her for the rollover to the IRA. Is there any reason to do a separate RMD for his remaining balance in the plan that rolled to her IRA? Thanks!"
Number of replies posted  1 reply      Number of times viewed  46 views      Add Reply

ASmithCPA created a topic in Plan Document Amendments

Abandoned Prototype Plan

"We have a situation that I am trying to sort through. Attorney sponsors a prototype document from a national provider. Gets opinion letter on that document so all of the sponsored plans adopted by plan sponsors are covered by an opinion letter for that firm. Attorney is retiring and will no longer sponsor the prototype effective 3/31/2020. Plans adopted are in essence abandoned. Per my reading of 2015-36 Section 10, those plans can't rely on opinion letter and now fall into IDP arena. Assuming all amendments are up to date by 3/31/2020, is the biggest issue with entering the IDP arena is, if I understand, that the Plan wouldn't be eligible for SCP under EPCRS. Am I missing something? ideally, we'd like to restate to our document (which conveniently enough is through same national provider) when Cycle 3 becomes available, hopefully before 12/31/2020. They would avoid clients having to pay for a restatement to our sponsored PPA document followed in close timing to Cycle 3 document. What risks am I missing? Are we on right track? What would you do in this situation?"
Number of replies posted  0 replies      Number of times viewed  36 views      Add Reply

Eddiecaps created a topic in Qualified Domestic Relations Orders (QDROs)

Ex wife isn't pushing for qdro

"I'm divorced for 7 years and all property and assets were split but not retirement and pension (QDRO). When we split we used her lawyer who was mediator trained and it greatly reduced the cost. I hired a lawyer to look over what I was signing as I needed someone with a fiduciary relationship towards me. Divorce went fine, I had my attorney draft QDRO through my company trustee for 401k and pension (and I paid to do that) but my ex and her lawyer for some reason never signed it(didn't understand or didn't want to deal with it). My lawyer a few years go said don't press the issue as if he never signs it then it will not be agreed and not split (she passes away - I do not wish that as we have children). Pension if I work for 30 years she could be entitled to portion the 10 years while married (1/6 of pension)401k when I had 600k her portion was 200k (from my recollection). Since I have been maxing it out and it's grown is worth 1.2M. Don't know how much her portion of growth would be but I imagine it would be 400k. Clearly that will need to be recalculated by working through the pension/401k trustee.Question: should I bring this up and settle (ex will likely think I'm doing that for nefarious reasons - just always thinks I'm up to the worst despite trying to give her what's fair) or should I listen to my lawyer? Benefits to do in my mind are to get it behind me and have clear understanding of what's in my 401k. Downside is dealing with her on this and purely losing financial benefit. Clearly there is a legal recommendation and a ethical consideration (I always try to do right thing but it will come with drama and argument)I appreciate anyone who has had experience on this topic."
Number of replies posted  2 replies      Number of times viewed  53 views      Add Reply
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