Message Boards Digest

March 6, 2020

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

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

Subsidized Lump Sum Interest Rate Dilemma

"Client hasa  frozen plan with a subsidized lump sum interest rate using the 30-year Treasury less 50 bp. Plan is currently partially restricted under IRC 436, but in the current environment lump sums are valued at 1.16% -- OUCH! Does anyone have experience with or knowledge of getting a PLR allowing removal/changing of an unsustainable provision such as this? We know this is otherwise protected, but in the interest of protecting the future viability of the Plan we are looking into options."

3 replies   |    51 views   |    Add Reply

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BG5150 created a topic in Retirement Plans in General

Two Plans -- Both Plans Get Top Heavy Contribution If One Plan Is Silent?

"Company has two plans -- Plan A is 401k/Match. Plan B is Profit Sharing. Together they are top heavy (and individually, too). Plan B states the top heavy contribution will be made to Plan B. But Plan A is silent on the issue -- the section in the Adoption Agreement does not even mention the existence of the other plan, it's entirely blank. Does that mean technically the TH is due in BOTH plans?"

9 replies   |    74 views   |    Add Reply

Cynchbeast created a topic in Retirement Plans in General

Corporate Contributions to DC Plans -- Deadline Issues

"[1] We know corporate contributions now due 15th of 4th month (04/15 for calendar year). Does this apply to both S Corps and C corps? [2] Does extension now extend them to 10/15? [3] We have plan with fiscal YE 05/31/19. This means we file 2018 version of 5500s. I can't find anything that tells me when that contribution is due -- would it be 02/15/20 (old rules) or 03/15/20 (new rules)? [4] Exactly when was this change effective?"

6 replies   |    51 views   |    Add Reply

Belgarath created a topic in Cross-Tested Plans

Gateway Allocation for Otherwise Eligible Employees

"Let's say you have a 401(k)/PS, Safe Harbor nonelective, with 1 month eligibiity for deferrals (entry date first of month coinciding with/next following satisfaction of eligibiity requirement), and 6 months/500 hours (entry date 1st of month coinciding with/next following satisfaction of eligibility for both SH and PS). Plan IS top heavy. PS plan is cross tested, everyone in own group. Compensation for SH/PS is from date of participation.

So some people enter on 10/1/2019 for deferral purposes, and therefore get top heavy. Therefore, unless the 'plan' of employer nonelective contributions is disaggregated, they are also required to get gateway. However, they have not yet satisfied the eligibility requirement to be able to receive a PS. Now let's suppose the 'plan' does disaggregate the OEE's, so they are no longer required to get gateway.

[1] If the employer does NOT disaggregate the OEE's, how would one allocate a Gateway -- seems like this situation would preclude cross testing. Agree? And IF the employer disaggregates the OEE's, and WANTS to contribute a PS for them, I recall the employer would be able to allocate to those OEE's who have otherwise actually satisfied plan eligibility (say they were hired in February of 2019, for example) but gateway would still not be required, and this disaggregated 'plan' could still not cross test. Agree?

P.S. - I suppose I should have considered document provisions that allow a gateway allocation to participants who are not otherwise eligible to receive it. Some documents even allow it to people who are disaggregated if it is necessary to satisfy 401(a)(4). That wasn't available in the really 'old' documents, and I think the 'old' documents are what I'm remembering."

2 replies   |    42 views   |    Add Reply

Stash026 created a topic in 401(k) Plans

Participant Makes Maximum Deferrals to 401(k) at Work But Also Has SEP for Moonlighting Income

"Participant has maxed out on his 401(k) at his employer, but he also has a side business where he has a SEP. I don't believe that he can put any employee money into the SEP, but even if he's hitting the $56k between the combination of deferrals and employer contributions under the 401(k), he also could maximize an employer contribution under the SEP, right ($56k)?"

1 reply   |    33 views   |    Add Reply

Tax Cowboy created a topic in Employee Stock Ownership Plans (ESOPs)

Studies Performed After 2008 Market Crash -- More Employees Preferring an ESOP?

"I'm looking for studies performed after 2008-2010 market crash/recession that shows a greater number of employers wanting to set up an ESOP vs. that of having employees put their retirement at risk in the Wall Street casino. Thoughts and comments appreciated."

2 replies   |    30 views   |    Add Reply

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