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Message Boards Digest

February 3, 2020

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

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

Retirees No Longer Allowed to Be Paid in Form of Paper Checks

"Client with a DB plan recently asked whether they can stop offering new retirees the option of receiving pension payments in the form of paper checks. Client also was curious as to whether they can convert participants currently in pay status who receive checks to direct deposit. Has anyone has considered this issue?"

Number of replies posted  1 reply      Number of times viewed  56 views      Add Reply
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Peter Gulia created a topic in 401(k) Plans

Should a Plan's Administrator Require Proof of a Birth or Adoption? How?

"Imagine an employment-based 401(k) plan allows -- without waiting for age 59-1/2, severance from employment, hardship, or some other distribution-permitting event -- a qualified birth or adoption distribution (up to $5,000) within what Internal Revenue Code section 72(t)(2), as added by SECURE section 113, permits.

The statute defines such a distribution as one 'made during the 1-year period beginning on the date on which a child of the individual is born or on which the legal adoption by the individual of an eligible adoptee is finalized.' The statute does not require (and seems to assume that the plan does not require) showing an expense attributable to the birth or adoption. The only fact needed to support a participant's claim is the fact of the birth of the participant's child, or the participant"s adoption of an eligible adoptee.

Assume the plan's administrator adopts a new claim form, which has check-off boxes for a birth or an adoption, and for an adoption includes the participant's statement that the adoptee is younger than 18 (or is physically or mentally incapable of self-support) and is not the participant's spouse's child. Assume the form includes a strong statement about how a false statement can result in fines, imprisonment, liability for the plan's expenses, and other legal consequences.

If you're advising the plan's administrator: Is it enough that a participant states the necessary facts on the plan's claim form, and signs it? Or do you require a claimant to submit a copy of the birth certificate? (Even if that aberration would frustrate normal processing for a plan that has electronic claims for all kinds of distributions?) Do you require a claimant to attach a copy of the court order or other document that grants the adoption? If a participant's claim attaches instead a notarized affidavit stating a common-law adoption, would you advise the plan's administrator to approve or deny the claim?'

Number of replies posted  4 replies      Number of times viewed  116 views      Add Reply

rocknrolls2 created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Health Plan Limits Hospital Benefits to $1,800 per Day -- Legal Despite ACA Prohibition on Annual Limits?

"A group health plan provides for all of the categories of benefits under essential health benefits. An employee covered under such plan was hospitalized for two days in connection with surgery. He had made a $1,000 copay payment at the time he was admitted to the hospital. The participant also obtained pre-authorization for the hospitalization, as required by the plan. After he was discharged, he found that he was subject to a bill of just under $50,000 for his hospitalization. The plan provides for a $1,800 per day limit on reimbursement of hospital expenses. His plan paid $3,600 ($1,800 per day) for the two days of his admission and after applying his copayment. Because hospitalization is one of the essential health benefit categories, is this a violation of the ACA prohibition on annual limits? Hospitalization, per the SPD, includes the following: semi-private room and board, use of operating and recovery rooms and equipment; use of intensive care and equipment, laboratory or pathological exams, x-ray exams, drugs and medicines provided by the hospital; blood transfusions and use of transfusion equipment; use of cardiographic equipment and supplies, basal metabolic exams, anesthesia supplies and equipment, oxygen and its administrationi, use of physiotherapeutic equipment and supplies and any additional medically necessary services and supplies customarily provided by the hospital. I suspect the $1,800 per day limit violates the prohibition on annual limits. Agree?"

Number of replies posted  2 replies      Number of times viewed  51 views      Add Reply

401Kerfuffle created a topic in 403(b) Plans, Accounts or Annuities

403(b) Plan: Employees Working Less than 20 Hours/Week Get Counted for 410(b) Purposes?

"A 403(b) plan with universal availability for elective deferrals. The plan uses the excludable classification of employees who work less than 20 hours per week. Does the excludable class of employees get counted in a 410(b) coverage test for elective deferrals?"

Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply

Bumppo23 created a topic in Distributions and Loans, Other than QDROs

Account Balance Factoring Into Calculation of RMDs -- At Commencement of Year, or Immediately Prior to Ocurrence of Distribution?

"Does any calculate RMDs by using as the denominator the account balance at the commencement of the year or immediately prior to the distribution?"

Number of replies posted  1 reply      Number of times viewed  30 views      Add Reply

John Trickel created a topic in Employee Stock Ownership Plans (ESOPs)

Private Company Acquired by ESOP Company

"My privately held company was acquired by an ESOP company almost two years ago. I have been told I must go through the 6 years of vesting. I noticed that, in two other acquisitions of privately held companies, their employees became fully vested at the time of acquisition. Shouldn't my company's employees (there are two) be fully vested as well?"

Number of replies posted  3 replies      Number of times viewed  36 views      Add Reply

Emichele0319 created a topic in Cafeteria Plans

Section 125 Plan Must Offer an Alternative to Employer's Health Plan?

"For a plan to fully qualify under Code section 125, must an employer offer an alternative to taking the employer sponsored health plan(s)? Example: Employer requires all full-time employees (no exceptions for full-time employees) to participate in sponsored health care plan(s) (employer/employees share plan cost). I'm confused as to whether there must be an alternate choice for the employee (there are different plan choices -- Kaiser/Blue Shield, etc.) such as pay into health plan OR cash-in-lieu/some other taxable benefit?"

Number of replies posted  2 replies      Number of times viewed  37 views      Add Reply

TPApril created a topic in 401(k) Plans

New Plan Safe Harbor Match Comp When Plan Effective 1/1, 401(k) Deferrals Effective 7/1

"Plan was signed 6/1, with effective date 1/1, but 401(k) effective 7/1. Since plan started mid-year, actual 401(k) and safe harbor match are based on compensation from 7/1. Plan defines compensation for all purposes to be full year compensation. This leads to two questions: [1] If 401(k) wasn't even available for the earlier period, is it possible to use full year compensation? [2] Would this apply equally along the way to new participants who enter mid-year? Nice thing for those receiving contributions is they would be receiving greater contributions with full year compensation."

Number of replies posted  0 replies      Number of times viewed  43 views      Add Reply

grace152 created a topic in Distributions and Loans, Other than QDROs

Solution for the VAT Discrepancy

"In simple words: VAT or value added tax is a value-added tax, known in some countries as a goods and services tax, which assessed incrementally. Like an income tax, it's based on the increase in value of a product or service at each stage of production or distribution.There are several consequences occurs regarding the VAT registration.For overcoming this sort of consequences should follow the suggestions as guided by the tax residency certificate uae .They are the ultimate option to avoid this discrepancy."

Number of replies posted  0 replies      Number of times viewed  17 views      Add Reply

Chippy created a topic in Form 5500

Final Form 5500 for 2019 Gummed Up by Additional $5.29?

"I need to file a final form 5500-SF for 2019. There was an additional $5.29 in residual earnings that posted to the account after all the participants were paid out. The money was returned to the company in January 2020. Can I accrue this on the 2019 5500-SF and mark it final, or will I need to prepare a 2020 5500-SF?

Another question -- A large plan terminated as of 9/30/2018. Large plan audit was done for 2018, participants were paid out in 2019. Does the plan require another audit for 2019, no contributions, just distributions, if not, do I file a Schedule H again for 2019 but with out the audit attached?"

Number of replies posted  2 replies      Number of times viewed  29 views      Add Reply
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