Message Boards Digest

January 28, 2020

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

JulesInCNY created a topic in 401(k) Plans

RMD for an Alternate Payee

"A QDRO alternate payee has left their transferred balance in a qualified group 401k plan, essentially becoming a non-contributing participant. Assets were transferred during 2018, when the alternate payee was already over 70-1/2. Should the alternate payee have taken a 1st RMD from the plan (for 2019) by 12/31/19, or is the deadline 4/1/2020?"

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

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

Using an RMD to Make a Charitable Contribution

"If a participant is required to take an RMD and wants to roll over a large portion of their account balance to an IRA, can they do this and take the plan's required RMD out of that IRA account to cover the amount of the RMD due from the plan? They want to make the whole RMD as a charitable donation. Would this be allowed? The donations would be larger than the allowable amount to process from the plan as a donation. Or is there any other way around it so they can make the donations they want to make?"

Number of replies posted  1 reply      Number of times viewed  45 views      Add Reply

Megan H created a topic in 401(k) Plans

SECURE Act's Effect on Safe Harbor Notices

"Question on the SECURE Act's elimination of the safe harbor notice requirement for nonelective safe harbor plans. I have read this: "Nonelective contribution safe harbor plans that have matching contributions intended to fall within the ACP safe harbor must still give notice." That would mean that even if a plan is utilizing a safe harbor nonelective contribution for the year, and it provides a discretionary matching contribution as well, the notice is still required each year. Is that correct? The reasoning is that Code Section 401(m)(11) was not amended by SECURE Act. Code Section 401(m)(11) defines the ACP test safe harbor and says the plan must meet the contribution requirements of 401(k)(12)(B) (match) or (C) and meet the notice requirements of 401(k)(12)(D). Is that your understanding?"

Number of replies posted  1 reply      Number of times viewed  63 views      Add Reply

MNO created a topic in 401(k) Plans

Deferrals Not Resumed After a Leave of Absence

"A participant was deferring prior to a leave of absence without pay. Participant was on leave from April 1 to June 30. Employer forgot to resume participant's deferrals after participant returned to the company. Is the corrective deferral from July 1 through December 31 based on the participant's original deferral election, or 50% of the participant's deferral election?"

Number of replies posted  0 replies      Number of times viewed  41 views      Add Reply

John314 created a topic in Defined Benefit Plans, Including Cash Balance

FAS Discount Rate -- What Is Reasonable?

"I am having a debate with some other actuaries about what would be considered a reasonable discount rate for accounting purposes. If we use a strict yield curve matching approach based on FTSE above median curve, we are getting an effective rate of roughly 3.25%. Client wants to use 4.00%. They used 4.50% last year and rates have dropped about 100 bps. My understanding is that for accounting purposes, the assumptions belong to the client. I know the rate is subject to auditor approval, client approval, etc. but I am interested in the actuary's requirement to assess the rate. ASOP 27 requires that for assumptions set by another party, the actuary must state whether or not the prescribed assumption significantly conflicts with what, in the actuary's professional judgement, would be reasonable for the purpose of the measurement.

Reasonable for one actuary may be very different from another. So what leeway do we have in determining what is reasonable? What items can/should be considered -- for example, historical market bond rates relative to current? Impact on plan results? Impact on overall company results? Whether the company is publicly traded or not? Discount rate relative to other plans?"

Number of replies posted  2 replies      Number of times viewed  42 views      Add Reply

lisabroc created a topic in SEP, SARSEP and SIMPLE Plans

SIMPLE IRA for 2020 -- Too Late to Stop and Replace with 401(k)?

"Is there any possibility that SIMPLE IRA deductions can be reversed in January so that it can be replaced by 401(k) for 2020? I know the rule that both can't be maintained the same year. However, does the employer really need to wait another year to put in a plan with higher contribution benefits? Is there a fix or way to correct? Seems like it could still be done this early in the year."

Number of replies posted  1 reply      Number of times viewed  34 views      Add Reply

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

Accrual Needed for Employee Who Terminated During First Plan Year?

"We are designing a new DB plan. Company been in business for quite a while. Effective 2019, document signed prior to 12/31. There is one employee that terminated in 2019 and had 692 hours. If service for vesting was defined as service from effective date, obviously not vested, but would she get an accrual for 2019 as she worked >500 hours?"

Number of replies posted  2 replies      Number of times viewed  29 views      Add Reply, Inc.
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