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Message Boards Digest

February 18, 2020

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

spiritrider created a topic in 401(k) Plans

Multiple 401k plans covering the same employee

"An employer can have a 401a, 403b and 457b plan, a DB plan and a 401k plan or separate 401k plans for employees covered under a collective bargaining agreement and all other employees, but I have had the understanding that there can not be more that one 401k plan covering the same employees. This was based on the premise that it is impossible for an administrator to serve two masters. I.e. which plan's participation requirements, plan features, etc... would apply. Is this correct or am I wrong. Is there any IRC, CFR or other IRS guidance confirming this either way. Or is there some level of inference that drives this."
Number of replies posted  4 replies      Number of times viewed  38 views      Add Reply
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BUG created a topic in 401(k) Plans

401(k) Self-Directed Investment in Bonds -- Just Before Market Crash

"I am seeing multiple factors pointing/leading to inevitable market crash ... if I modify my self-directed 401(k) investments to be 45% cash, 45% bonds, and 10% stocks (in order to reduce the overall loss to the 401(k), what is the commitment involved regarding the 45% in bonds? Would the account need to remain invested in those particular bonds for a particular amount of time (i.e., until their maturity)? What is the minimum amount of time a person can participate in a bond?"

Number of replies posted  3 replies      Number of times viewed  55 views      Add Reply

AKconsult created a topic in 401(k) Plans

Permissible Allocation Requirement for Match?

"We have a client who wants to condition the annual matching contribution for a terminated employee on the employee having worked 520 hours (obviously OK) AND having given and worked 2-weeks notice before he leaves. I have never seen a plan condition an allocation for a terminated employee on the employee giving/completing notice. I can't really find a reason why this would not be allowed though. Any thoughts on this? I do realize this adds an additional wrinkle for coverage testing, as far as an additional element we are tracking in making the determination as to whether a terminated employee is benefitting for the match."

Number of replies posted  3 replies      Number of times viewed  37 views      Add Reply

MarZDoates created a topic in Plan Terminations

Is 100% Vesting Required for Former Employees in This Plan Termination Situation?

"Two participants terminated employment in July 2019. They are zero percent vested. The plan document says that, if participant's vested account balance is zero, the participant is deemed to have received a distribution. (Plan allows for 'immediate' distribution upon termination of employment.) Document further says that participants receiving a distribution shall forfeit the non-vested portion of their account as soon as administratively feasible after distribution (but no later than end of plan year during which distribution occurred). Plan sponsor decides to make a profit sharing contribution for the 2019 plan year. It's new comparability with each person in their own class. The goal is to maximize the owner's contribution. In order to do so, the terminated eligible participations require an allocation to pass non-discrimination. Plan does not have a last day or hours requirement to receive an allocation. Contribution has not been deposited into the plan yet. Under normal circumstances, I would think the contribution needs to be deposited to the plan, but since they term'd with zero vested balance, the amount can be forfeited. Here's the kicker: Sponsor is terminating the plan in 2020.

One thing I read is that anyone with an account balance is fully vested upon plan termination. [1] Do these terminated employees have an 'accrued' account balance? Also, I have read that 'In General Counsel Memorandum 39310 (1984), the IRS ruled that participants who separate from service and are paid their vested accrued benefits need not become further vested if the plan terminates.' [2] Should the two terminated participants become 100% vested in this instance?"

Number of replies posted  4 replies      Number of times viewed  34 views      Add Reply
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