Message Boards Digest

March 4, 2020

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

Peter Gulia created a topic in Correction of Plan Defects

Must a Plan Pay a Corrective Distribution of $0.04?

"A participant's salary-reduction agreement called for $961.54 per pay. The employer did this for all 26 pay periods, with no change to December's last pay. The participant's deferral limit for 2019 is $25,000 [$19,000 + $6,000 -- age 50]. Assume the employer/administrator is unwilling to use the plan's provision for a return of a mistaken contribution. Must the plan's administrator instruct the plan's trustee to pay the participant a corrective distribution of $0.04? Is there any non-frivolous argument for treating this as so small that a correction is unnecessary?"

6 replies   |    77 views   |    Add Reply

Kevin C created a topic in Defined Benefit Plans, Including Cash Balance

Hybrid Plan -- Variable Annuity Exception

"1.411(a)(13)-1(d)(4)(I)(C) says 'If a variable annuity benefit formula adjusts benefits by reference to the difference between a rate of return on plan assets (or specified market indices) and a specified assumed interest rate of 5 percent or higher, then the variable annuity benefit formula is not treated as being reasonably expected to provide a smaller total dollar amount of future adjustments for the participant than for any similarly situated, younger individual who is or could be a participant in the plan, and thus such a variable annuity benefit formula does not have an effect similar to a lump sum-based benefit formula.' What is the significance of this exception, other than that a plan with this type of formula wouldn't be a statutory hybrid plan? The 2010 preamble mentions that people wanted this exception widened to apply to more plans, so it seems there must be some advantage to fitting within the exception."

0 replies   |    23 views   |    Add Reply

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

Employer Funded Pension, 14 Year-Old Divorce with No QDRO

"I started for an employer in summer of 1998. I was separated from my spouse in January 2003. The divorce was finalized in summer of 2006. The DRO only mentioned my 401k and not 'all retirement plans' ( my attorney's mistake -- h has since passed away), which was 100% awarded to me in the property division in the DRO. No QDRO was ever filed. I retired in 2020. I think Fidelity is asking for a QDRO (not sure why -- they are very non-responsive and there's no transparency about the process). What if I ask my ex-husband for an affidavit that he understood the terms of DRO to include all retirement plans? If he agrees to do this, will it be enough for the plan admin/Fidelity? Or must it be a court-approved document? Would I need to draft a QDRO? Or would Fidelity provide one? Would a QDRO have a place for an AP/ex-spouse to sign off without getting a percentage of the pension?"

5 replies   |    61 views   |    Add Reply

Ken_BenefitScape created a topic in Health Plans (Including ACA, COBRA, HIPAA)

ERISA Plan Document for ICHRA?

"Our legal group has sent me a few drafts of their ICHRA document. Does anyone have a template that I can use to compare the content to to be sure we've covered all of the various topics? Does anyone have access to a plan document?"

0 replies   |    21 views   |    Add Reply

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

No Compensation for Current Year But Want to Make a DB Plan Contribution

"In an S-Corp, owner-only DB Plan, the owner didn't take any Form W-2 compensation during 2019. The plan's benefit is based on the 3 highest consecutive years of salary (over entire career). Can a contribution be made for 2019 because a 3 year salary average was established during prior years?"

3 replies   |    44 views   |    Add Reply

Doogan created a topic in SEP, SARSEP and SIMPLE Plans

2 Companies -- Offer SIMPLE IRA Coverage to Employee of One Company Who Now Works for the Other Company?

"I have 2 companies. Company A has existed for some time -- I offered a SIMPLE IRA out for year 2020. Company B was formed in 2019 (under the laws of a different state). An employee of Company A, who worked with me full-time for many years, resigned in 2018. The employee came back to Company A in mid-2019. When I opened Company B, the employee relocated to the state in which Company B is located, and came on board full-time as an employee of Company B in November 2019. Should I be offering this employee the opportunity to participate in a SIMPLE IRA, given that the employee was working for one of my companies (making over $5K during multiple years). Or should this be kept separate and wait for the 2 years period, etc.? I own both entities -- Company A (50/50 with my wife) and Company B (100%). I have no problem offering coverage and making up any discrepancy over the past 2 months if needed."

0 replies   |    17 views   |    Add Reply

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