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Message Boards Digest

January 31, 2020

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

Anagoge created a topic in 401(k) Plans

Is a Safe Harbor QACA Match of 100% of 6% OK?

"Would a QACA match of 100% of the first 6% be classified as safe harbor to avoid ADP/ACP testing on an automatic enrollment/increase plan? I know safe harbor formulas can"t match on anything over 6%, but I generally only see QACA matches quoted as one of these 3 options:

  • Match 100% of first 1% and 50% of next 5%
  • Match 100% of first 3.5%
  • 3% non-elective for everyone (not a match)

Some sources say 3.5% is the maximum possible QACA match, which seems like a low limit for some employers that want to do more."

Number of replies posted  1 reply      Number of times viewed  43 views      Add Reply

wifrbr created a topic in 401(k) Plans

Refund of Deferrals Made by Ineligible HCE

"An HCE started to make employee contributions in the middle of a plan year but the document says HCEs cannot participate. We are refunding the 2019 contribution in 2020. Do we treat this like a 402(g) refund such that the 2019 contribution would be taxable in 2019 and earnings would be taxable in 2020, or is everything taxable in the year of distribution (2020)?"

Number of replies posted  1 reply      Number of times viewed  36 views      Add Reply

TN CPA created a topic in 401(k) Plans

Safe-Harbor Plan -- Employee Transitions from Full-Time to Part-Time

"Our client maintains a safe-harbor matching 401k plan. A long-time employee (HCE) transitioned to a part-time role and is now working less than 1,000 hours per year (which, along with being age 21, is the participation eligibility requirement in the plan document). Is this employee still eligible to make 401k deferrals and receive the safe-harbor match, or is he now excluded because he no longer meets the participation eligibility requirements?"

Number of replies posted  2 replies      Number of times viewed  54 views      Add Reply

tjw572 created a topic in 401(k) Plans

Contribution Required for Year of Death?

"An adoption agreement has a last day requirement waiver for normal or early retirement. I have a Participant who has met Normal Retirement Age but is not employed on the last day of the Plan Year due to death. Would this person get an employer contribution? My thinking is leaning towards no, because there is a separate waiver for death as an option in the adoption agreement. This is a Relius Document."

Number of replies posted  1 reply      Number of times viewed  38 views      Add Reply

cybertruck created a topic in 401(k) Plans

Neglected to File Form 5500-EZ for My Solo 401(k)

"I have a solo 401(k) account that was set up in 2003 when my business was a sole proprietorship. A few years later I switched our company plan to a SIMPLE IRA because at that time we hired employees and were no longer eligible for the solo 401(k). I neglected to formally close the plan and in 2017 the balance grew to over $250,000. I am now delinquent on 2 years of filing Form 5500-EZ -- penalties of $250 per day up to a $150,000 maximum penalty. My plan is to file for penalty relief for 2017 and 2018, roll the account balance into my TIRA and possibly close the plan. The balance grew solely from investments (no contributions since switching plans). Alternative possibility: I have read that as long as no contributions have been made, the plan can remain open in a 'frozen' state. I was considering keeping the plan open If I can still take out a 401(k) loan from the account while the plan is in this frozen state. I'm just not sure if this is allowed or even advised. Any knowledge and recommendations would be appreciated."

Number of replies posted  6 replies      Number of times viewed  77 views      Add Reply

Lotrfan1 created a topic in Defined Benefit Plans, Including Cash Balance

Can I Exclude an HCE from My Company's DB Plan?

"I’m a 35 year old physician with his own practice. I’m about to hire a physician into my practice and pay them a salary of $400k. This physician would be my only employee. I want to start a DB and know I can exclude highly compensated employees. However, would that exclude me too since I make over $125k? Even though I own the corp 100%, I W-2 myself. I want to start a DB but not include my employee for the duration of the DB."

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

Pam S. created a topic in 401(k) Plans

Mid-Year Suspension of Safe Harbor Match

"This question is a piggy back question to the one posted by ratherbereading back in December of 2019 (https://benefitslink.com/boards/index.php?/topic/65198-safe-harbor-match-suspended/). I have the same situation, and understand that the ADP and ACP testing is applicable to the plan for 2019 since the Safe Harbor Match was suspended mid-year. The Safe Harbor Match was funded to the point of suspension. Are the Safe Harbor Match contributions that were funded to the point of suspension considered SH contributions, and thus can be used in the ADP test since they are fully vested? Or are they to be considered 'regular' match (non-Safe Harbor) for 2019 ACP testing purposes (as if the Safe Harbor feature was not in place at all for the entire year)?"

Number of replies posted  0 replies      Number of times viewed  26 views      Add Reply

dmb created a topic in Church Plans

Are Church Plans Subject to 414(s) Testing?

"A church plan employer is looking to exclude bonuses from compensation for salary deferrals under a 403(b) plan. Are church plans subject to 414(s) testing?"

Number of replies posted  1 reply      Number of times viewed  21 views      Add Reply

Belgarath created a topic in Cafeteria Plans

Health Care Sharing Ministry -- Are Costs Eligible Under Cafeteria Plan?

"Are the costs of a health care sharing ministry (https://apps.irs.gov/app/IPAR/resources/help/acamnstry.html) allowable as 'premiums' under a cafeteria plan? If not, can the expenses be considered an allowable expense under a Health FSA?"

Number of replies posted  2 replies      Number of times viewed  16 views      Add Reply
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