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Message Boards Digest

February 14, 2020

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

AMDG created a topic in Governmental Plans

Govt 401(k) and SECURE LT/PT Rule

"Hi. Does section 112 of the SECURE Act (401(k) plans must allow long-term employees working more than 500 hours but less than 1000 hours per year to participate) apply to grandfathered 401(k) plans? I don't think so, but would greatly appreciate additional perspectives. New section 401(k)(15)(A) says the 3 years with 500+ section (i.e., 401(k)(2)(D)(ii)) "shall not apply to an employee unless the employee has met the requirement of section 410(a)(1)(A)(i)" [i.e., age 21]. But governments are exempt from all of 410 by 410(c)(1)(A), and the result is that no governmental 401(k) employee ever meets the requirements 410(a)(1)(A)(i), strictly speaking. If 401(k)(15)(A) were intended to apply to governmental plans, then it could have specified the age 21 requirement directly rather than through cross-reference. Governments don't have a history of excluding part-timers unfairly and plan eligibility is typically very liberal. As public policy, there doesn't seem to be a strong argument that SECURE now wants to apply a part of 410 to governmental plans contrary to 410's blanket exemption and create a new minimum participation requirement for them. And many government EEs are covered by collective bargaining agreements, so those EEs are clearly exempt. It doesn't seem apparent that Congress intends to complicate state and local government plan administration by applying this new part-time eligibility section to nonunion EEs, who are exempt from 410, 401(a)(4), and 401(a)(5). Thanks!"
Number of replies posted  1 reply      Number of times viewed  23 views      Add Reply

VeryOldMan created a topic in 401(k) Plans

415 allocation Issues

"A 401(k) PSP plan for a PC has 2 owners, both over age 50, one makes $280,000 the other $220,000. There is 1 staff making $30,000 per year. Each owner defers $25,000 ( 401k + post 50) and the PC makes a contribution of 18% to all participants. Both owners want to get to $62,000 limit. The plan document (FIS VS) says that an allocation to a participant that would make his total allocation exceed 415 is allocated to other participantslimited to the 415 limit and the excess is allocated to other participants in proportion to salary. So for Owner with $280,000 would get $62,000, the PSP portion of $50,400 is limited to $37,000 and the remaining $13,400 he can't get .that gets allocated to the other participants. that's where I am stuck.The other owner would get his $25,000 plus no more than $37,000 pep and the balance get allocated to the employee. This seems ok to me but am I missing something here?"
Number of replies posted  2 replies      Number of times viewed  45 views      Add Reply

Dr Joe created a topic in Defined Benefit Plans, Including Cash Balance

Pension repayment on rehire

"When I left my employer many years ago, I took a lump sum for my pension. Now I'm rehired by the same employer, and my service pension may be restored if I make a one time repayment to the pension plan. My question is what the tax implication is for this event. I was told I could not rollover a 401k distribution as the repayment. Therefore, the repayment will come from after-tax money. If I take a lump sum pension distribution again upon retirement, the lump sum distribution will be taxed again. Will my repayment be double taxed, or is the repayment amount deductible from the future lump sum pension distribution? For example, if I make a repayment of $50k (which has already been taxed) today to restore the pension, and I retire next year to take a lump sum distribution of $60k. Will the total amount of $60k be subject to tax next year (in which case $50k will be double taxed), or just $10k (= $60k - $50k ) will be taxable? Or is $50k tax deductible in this year's tax return?"
Number of replies posted  4 replies      Number of times viewed  58 views      Add Reply

pskadot created a topic in 401(k) Plans

401K Plans

"Hi to All. I'm new here. I'm have not reviewed the forum thread to see if this has been address and i hope you don't mind me poising my question / concern. Facts: 1) My Employer has a sponsored retirement plan - 401K / Roth 2) Any changes to my elections can be made on the Plan Sponsor or thru my employee 3) I been contributing the maximum required wherein my employer with match my contribution (6%/3% employer) 4) The website where I can see all the investment and also where I can make changes provides the opportunity to enroll on another plan. This plan is the Roth Plan 5) I added another plan and elected a 3% 6) I kept my initial plan and did not make any changes. 7) Payroll comes and my employer changed my 401K elected percentage of 6% and changed it to Roth 3%
Number of replies posted  6 replies      Number of times viewed  84 views      Add Reply

mphs77 created a topic in 401(k) Plans

Is there any safe harbor.....

"Is there any safe harbor contribution which can be made that excludes ACP testing for a Plan which is allowing voluntary after-tax employee contributions? We have an Employer who is making a 3% Safe Harbor non-elective contribution (applied only for ADP purposes) with an HCE making such a voluntary after-tax contribution and it is causing an issue with the potential ACP test. Thanks ahead of time for any guidance you can provide."
Number of replies posted  3 replies      Number of times viewed  50 views      Add Reply
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