Message Boards Digest

February 19, 2020

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

Belgarath created a topic in Cross-Tested Plans

414(s) Brain Cramp -- Cross-Tested Plan

"Cross-tested plan. Compensation for allocation purposes excludes certain items such that 414(s) testing is required. Plan requires last day/1,000 hours to receive employer contribution. P;an is NOT top heavy, nor is it a safe harbor. Question: Terminated participants with more than 500 hours, so not excludable -- when doing the rate group testing, for purposes of the 70% ratio test for the rate groups, do these people have to be included for purposes of 414(s) testing? I think they're not included in the 414(s) test for this purpose, because they're not benefiting, but I'm not sure. In other words, are they automatically included in the 414(s) test if you go to the average benefits test, or only if 1 or more rate groups fail the ratio test, and you must move on the the ABPT? The plan in question passes the 414(s) with flying colors regardless, so this is more a question to avoid a future brain cramp."

Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply
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Tom created a topic in 457 Plans

457 Plan Document Compliance -- Restatement

"We do not work with 457 plans but a financial advisor who refers to us asked me about a 457 plan that they took over management of -- specifically what is the plan document restatement cycle like for these plans? Was there an April 2016 PPA deadline like 401(k) plans? Or something else? When was the last required restatement deadline?"

Number of replies posted  1 reply      Number of times viewed  19 views      Add Reply

fmsinc created a topic in Qualified Domestic Relations Orders (QDROs)

Effect of SECURE Act on a QDRO

"I have been searching in vain for discussions concerning the impact of the SECURE Act on the allocation of pension and/or retirement benefits. May a Participant in a 401(k) Plan elect an annuitized payout of his 401(k) Plan account prior to the divorce and thereby deprive the Alternate Payee of the ability to elect an immediate lump sum tax-free rollover or a taxable distribution?"

Number of replies posted  5 replies      Number of times viewed  44 views      Add Reply

Jakyasar created a topic in Retirement Plans in General

RMD Transfer Into Charity

"RMD recipient advises their broker to have $15k of the $30k RMD go to charity and $15k to them. But now gets a Form 1099-R for $30k. Can RMDs still be provided to charities? Does it matter if from a pension plan (any type) or IRA?"

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

Roger389 created a topic in SEP, SARSEP and SIMPLE Plans

SIMPLE IRA Late Salary Reduction Contributions

"My question pertains to the language of the governing IRS rule, IRC section 408(p)(5)(A)(i) for SIMPLE IRA employee deferrals:

'(A) an employer must-- (i) make the elective employer contributions under paragraph (2)(A)(i) not later than the close of the 30-day period following the last day of the month with respect to which the contributions are to be made'

The IRS FAQ states:

'You must deposit employees’ salary reduction contributions to their SIMPLE IRAs within 30 days after the end of the month in which the amounts would otherwise have been payable to the employees in cash'

I'm paid monthly, on the first business day of the subsequent month. For instance:

January-->paid 2/3/20 for January

February-->paid 3/2/20 for February

March-->paid 4/1/20 for March

My interpretation of the IRS regulation is that elective employee salary deferrals should be made as following:

For work performed in January, no later than 30 days from 1/31

For work performed in February, no later than 30 days from 2/29 -- etc.

However, my employer is interpreting this as 'since I'm being paid in February,' the employer has 30 days from the end of February (i.e., end of March) to make what were my January salary deferrals. I strongly disagree and believe this 60 day window is a clear violation of the law. What do you think in response to the IRS definition of 'in which the amounts would otherwise have been payable to the employees in cash'? "

Number of replies posted  3 replies      Number of times viewed  31 views      Add Reply

rocknrolls2 created a topic in Distributions and Loans, Other than QDROs

Age 70-1/2 Now Age 72 Under SECURE Act -- What Effect on Required Actuarial Increases in DB Plans?

"Code Section 401(a)(9)(C)(iii) provides that if a participant who is not a 5% owner has his or her required beginning date be the April 1st of the calendar year following the calendar year in which s/he retires, the plan is required to actuarially increase benefits after the employee attained age 70-1/2. When the SECURE Act increased the age for the required beginning date from 70-1/2 to 72, it did not increase the age at which actuarial increases are required to begin to be made. Is this merely an oversight or intentional? Any thoughts about what the IRS or Treasury intended to do in this provision?"

Number of replies posted  1 reply      Number of times viewed  34 views      Add Reply, Inc.
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