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Message Boards Digest

February 7, 2020

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

chibenefits created a topic in Form 5500

Trigger Audit Risk When Going from Small to Large Plan?

"Client is moving from the short Form 5500 to the long form due to the number of participants. Does that switch increase the possibility of triggering an audit? (There are some other issues that require some expensive clean up.)"

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

PFranckowiak created a topic in 401(k) Plans

Applying the Break in Service Rules

"Eligibility is 3 consecutive months. Assume hired on 2/15/2013. Works only 400 hours a year. Came into plan on 7/1/2013. Terminated on 8/1/2019. Rehired on 2/1/2010. Never had 501 hours, they're all breaks in service. Document says we can exclude if an employee has had 5 or more consecutive breaks in service. Does that include the years he was working? He's never put any money into the plan."

Number of replies posted  3 replies      Number of times viewed  38 views      Add Reply

rblum50 created a topic in Distributions and Loans, Other than QDROs

RMD in Year of 401(k) Plan Termination

"I have a client that has had a 401(k) Plan and has been taking RMD for several years. He terminated the plan in early 2019 and rolled his account into an IRA. In the year of termination, was he required to take an RMD from both the terminating plan and his IRA? In other words, must he take two RMD's in 2019?"

Number of replies posted  2 replies      Number of times viewed  53 views      Add Reply

draper1 created a topic in Retirement Plans in General

Avoiding Coverage of a Shared Employee

"Three solo Professional Associations (A, B, & C) equally own another P.A. (D) that does billing and clerical work for all three P.A.s. No common ownership among A, B & C. A has a 401(k) plan; B and C do not. D has one NHCE employee. If the NHCE of D is a full-time employee he/she will need to be covered under A's Plan because it would seem to be an ASG. Are either of the following acceptable to avoid covering the NHCE in A's plan? [1] Put the NHCE on B's payroll and just have A pay B for clerical work; [2] Have the NHCE part time on A's payroll and part time on B's payroll so that A does not have to make employer contributions for the NHCE provided the NHCE works less than 1,000 hours for A?"

Number of replies posted  0 replies      Number of times viewed  23 views      Add Reply

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

415(b) Limits -- General Questions

"I have a situation where a participant's lump sum is being limited by the 415(b) limit -- 5.5% and 2020 mortality LS factor with their high 3 compensation. This is limiting the lump sum as the plan is fairly rich (1.6% FAE 5 of 10) and the participant has 45 years of service (no cap, very generous). It's unfortunate, as the participant is not a high earner (approx 45k FAE) and it feels like the limit is impacting a participant it was not intended to target. I am wondering if there is any exceptions (other than ME, collectively bargained, church/gov't plans) that might allow this participant to receive their full LS? One item I cannot find clear direction on, the plan was contributory long ago and the value of the participants contributions with interest is higher than the amount that the lump sum is being limited. (Their 415 max LS plus ee contributions is greater than the unrestricted LS). I would think that the 415 limits were intended to apply to the employer portion only? Additionally, the plan offers split benefits (LA and LS) in 10% increments. I also thought perhaps they could take 10% as an annuity to reduce the LS below the limit, but the 90% LS the Administrator is showing is 90% of the restricted (415 limited) lump sum. Is there anything I'm not thinking of 'creatively' on this? Is the participant truly just out of luck on their total benefit (if desire is to take as LS)? Sorry for the ramble, thanks in advance!"

Number of replies posted  3 replies      Number of times viewed  51 views      Add Reply
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