Message Boards Digest

February 10, 2020

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

ldr created a topic in 401(k) Plans

'Back Door Roth'

"The concept of a 'back door' Roth has been talked about lately through the use of Voluntary After-tax Employee Contributions into a 401(k) Plan that permits in-plan Roth conversions. It seems obvious that this strategy would be enticing to many HCEs wanting to effectively increase their salary deferral limit for a given year. But considering most NHCEs would not likely make deferrals of this sort, how do you pass the ACP test? It appears to be a real problem but perhaps there is some solution."

Number of replies posted  7 replies      Number of times viewed  357 views      Add Reply

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

415-Paired DB Plans

"This is a theoretical question but with possible relevance to one of our clients. Plan A is a DB that is has been around for >5 years, has a 10% per year accrual. A is very overfunded, and client wants to adopt a new DB to gain some additional deductions for year X. Plan B is adopted at the end of year X and provides that the 415 limit is first applied to Plan B. Plan A is not frozen. As a result the benefit that employee X would have accrued in Plan A for year X is now reduced due to the 415 limits. Plan A was not yet amended to state that the 415 limit is applied secondary to the new plan. For the year in question all participants are 5% owners. Is this a 411(d)(6) cutback, since the benefit in plan A for year X was fully accrued the day before plan B is adopted and will now be reduced. My understanding has always been that 415 limitations are not 411(d)(6) issues. 1. Is this 415 restriction considered a 411 issue? 2. If Plan A was also amended in yr X to state that 415 limit is applied secondary to plan B, would that amendment give rise to a 204(h) notice? 3. Does the adoption of the new plan require a 204(h) notice for employees in plan A?"

Number of replies posted  1 reply      Number of times viewed  53 views      Add Reply

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

Reporting Plan Loan Payments as Contribution

"Plan has loan feature, 2019 first year any loans. Looking at the fundholder annual report -- it is reflecting loan repayments in the total contribution made during the year. Is that correct?"

Number of replies posted  1 reply      Number of times viewed  292 views      Add Reply

wqpziy created a topic in 401(k) Plans

5305-SEP to One-Participant 401(k) with 'Mega Backdoor Roth'

"I currently have a 5305-SEP at Vanguard where the last contributions were several years ago. I would like to open a one-participant 401k (to enable the 'mega backdoor roth' option) with a provider that is also a TPA. Currently, I'm looking at Employee Fiduciary. I have a few questions about signing up. [1] My understanding is the 401k would be plan 2, with the SEP being plan 1. I know I'll need to 'terminate' the SEP at Vanguard (even if they won't necessarily do anything). There will be no contributions to the SEP in 2020 and the plan will be 'terminated' with the balance moved to the 401k. [2] Can I terminate the SEP in the same year I open the 401k, assuming I make no SEP contributions that year (i.e., can the termination be retroactive to the first of the year). Or do I need to terminate the year before and/or amend to a prototype SEP (e.g., Schwab) as an intermediate step? There was a forum thread on this, but I don't think it quite covered this case. [3] Can the plan fees be paid as a business expense or do they have to be paid from contributions?"

Number of replies posted  1 reply      Number of times viewed  93 views      Add Reply

BrownTrout created a topic in Retirement Plans in General

Mid Year Change in Entity (SP to S-Corp)


  • Company is a sole proprietorship on 1/1
  • On 7/1, company changes to an S-Corp. No change in ownership (the former proprietor owns 100% of the new S-Corp shares) and no change in business operations. Change in entity was done for tax purposes only
  • On 9/30, S-Corp adopts a 401(k) plan with effective date of 1/1


  • Does service with the sole proprietorship count toward service eligibility for the plan even if the plan docs don't specifically call out the sole proprietorship as a participating employer?
  • Is compensation earned by participants under the sole proprietorship included in plan comp for the year?

Seems like such simple questions and common sense tells me that service time should count and comp should be included since the only change made was for technical tax reasons (i.e., no change in ownership and no change in operations)."

Number of replies posted  3 replies      Number of times viewed  60 views      Add Reply

ratherbereading created a topic in Relius Administration

Plan Specification Error -- Database Write Error (Relius)

"Trying to run eligibility in Relius and getting the following error under Plan Specification Errors: Sub PerformBulkWriteNet () :Database write error. Relius no longer has their chat, so I put in an Incident but who knows how long it will take them to respond. Anyone ever have an error like this? The plan specs are fine."

Number of replies posted  0 replies      Number of times viewed  11 views      Add Reply, Inc.
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