Message Boards Digest

March 11, 2020

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

Gruegen created a topic in 401(k) Plans

Qualified Birth or Adoption Distributions After the SECURE Act -- Active Employees Only?

"Assuming that the plan sponsor has authorized SECURE Act qualified birth or adoption distributions under the plan, may a terminated employee who maintains an account balance in a plan receive a qualified birth or adoption distribution? I believe so, but I can't find anything in the statutory text or the Joint Committee on Taxation Report that limits qualified birth or adoption distributions to active employees. Agree?"

1 reply   |    35 views   |    Add Reply

It's time to upgrade your Compliance Software!

Sponsored by Wolters Kluwer
Leery of transitioning? Our top-notch customer support team and intuitive software eases the transition. Robust features and competitively priced (upgrade doesn't mean pay more), our 100% web-based Compliance Module is worth exploring. Learn more.

nerd-party-administrator created a topic in 401(k) Plans

QNEC for Plan That Uses Prior Year Testing Method

"It's my understanding that a plan that fails ADP/ACP testing using the prior-year testing method cannot allocate QNECs as a corrective measure. Is there any way around that? Can an SCP amendment be done to retroactively change the testing method to current year so that the plan sponsor can do a QNEC?"

2 replies   |    42 views   |    Add Reply

shERPA created a topic in 401(k) Plans

Maximum 401(k) Contribution for This Self Employed Individual?

"A self-employed individual over age 50 has net Schedule C profit of $22,000 and sponsors a 401(k). No other employees. He has no wages or other business income. He and his spouse have lots of other taxable income such that they would like to maximize his 401(k) contribution/deduction. His SE tax deduction is $1,554. Is his maximum 401(k) deferral $22,000, or is it $22,000 - $1,554 = $20,446, or is it something else? Plan compensation definition in this plan includes the deferral."

2 replies   |    51 views   |    Add Reply

Cynchbeast created a topic in Retirement Plans in General

RMD Start Date for Someone Caught in the Transition Period

"I am unclear on how the new RMD rules apply to someone caught in the transition:

Ex 1: DOB 10/27/48 (turned 70-1/2 in 2019, turns 72 in 2020):

  • If participant in DB plan would have had first RMD due for 2019, but chose to delay until 04/01/20. Now since she hasn't yet started benefits yet, is 2020 now her first RMD (which could be delayed until 04/01/21), or does she still have to start by 04/01/19?

Ex 2: DOB 04/01/49 (turned 70-1/2 in 2019, turns 72 in 2021):

  • If participant already took 2019 RMD, does she still have to take RMD for 2020 or does she skip that and pick up again for 2021?
  • If participant hasn't yet taken 2019 RMD (delayed until 04/01/20), does she still take it or wait until 2021? And if taken again the question does she also take for 2020 or skip that."
2 replies   |    41 views   |    Add Reply

Below Ground created a topic in Distributions and Loans, Other than QDROs

Trouble with 'Qualifying' a Hardship Distribution

"The Plan uses the safe harbor definition of hardship. Participant submits receipts for repair of flooring to primary residence. [1] Does this qualify under repair of damage to primary residence for loss qualifies for casualty deduction? There was no reference to a cause of damage, such as a fire, flood or storm. I think this is actually a home improvement project. [2] If that is the case, would it still qualify since the IRS website says that under the Bipartisan Budget Act of 2018 a plan can permit hardship distributions for repair of the participant's primary residence, even though it would not qualify for as a casualty deduction (see "Changes Coming for 2019" at [3] Is that reference only provided to remove the need for the damage to be related to a federal disaster zone, or are rules being relax to even allow for home improvement projects on a person's primary residence?"

1 reply   |    34 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

Terminating a PEO 401(k) to Create a Distributable Event

"Potential client is a non-profit and we want to set up a 403b plan instead. Can they "terminate" their sliver of the PEO 401(k) plan to create a distributable event?"

3 replies   |    37 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

ADP Refunds for 'Gap Period' -- Adjust for Investment Losses?

"There is no way to reduce refunds for losses in 2020, correct? Our notices tell participants that their refunds are being increased for gains and I wouldn't blame them for asking if that should not reduce their refunds. I just want to make sure I am correct when I say it is impossible."

2 replies   |    38 views   |    Add Reply

ESOP Guy created a topic in Operating a TPA or Consulting Firm

Fee Survey / Question

"I terminated years ago from a CPA firm. I had some pre-tax and Roth money in their 401(k). They used a well known and large platform for their plan. I tried twice to get all of my money rolled over to my Roth IRA at E*Trade. Both times it wasn't possible to do it online. In fact the first time I was told by the person on the phone it isn't legal to roll pre-tax 401(k) money to a Roth IRA.

I got forced out of the plan after being gone for 7 years this last December.

The part that still bugs me the most is I got two distributions to Millennium Trust (MTC) and the large platform that had the 401(k) plan charged me the $90 distribution fee per check not for the single distribution event.

Every place I have ever worked the distribution fee by event not per check. So if you ask for a payment from a plan and one check goes to an IRA and one goes to you the fee is the same as if you asked for just one check to an IRA.

But in the end between those fees and the MTC fees I lost around 10% of my money. I paid those two $90 fees, paid two account set up at MTC and now two distribution fees to MTC to get my money to E*Trade. To me MTC's fees are more justified they would always set up a pre-tax and Roth IRA on a force out like this and they really had to run two accounts at this point.

It is the large platform that bugs me. One because Roth 401(k) money has been around long enough that it seems like it ought to be easy to get an account with a mix of money sent to one place via an online election and two I just don't care for the per check fee. So once again how often do you see a per check fee vs a per distribution event fee?"

1 reply   |    29 views   |    Add Reply

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

Top Heavy Requirement in Dual Plan Situation

"A client has both a defined benefit plan and a 401K plan. Is the top heavy requirement satisfied by the DB plan if each plan participant annually accrues a benefit of 4% of compensation and the 401k plan has a 3% non-elective contribution, but the plan document says the defined benefit plan will satisfy the top heavy minimum?"

2 replies   |    21 views   |    Add Reply

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

Determination of Loan Amount with Market Fluctuation

"When processing new loan requests for daily valued plans, I'm curious how others are determining the maximum amount available. Assume a brand new loan, no previous loans. If a participant requests a $5,000 loan with a $10,000 balance, but the account is valued at $9,750 at time of processing, do you process the original $5,000 request or adjust the 50% to the new balance? The delay in processing may be due to receiving paper forms or else waiting for an employer signature or if there is missing information with an online request.

Per the ERISA Outline Book:

4.d. Difficulties experienced by daily valued plans. Daily valued plans can experience significant swings in the value of a participant’s vested account balance between the time the loan process commences and the time the loan is disbursed from the plan. As a practical matter, how should the plan apply the 50% loan limit (or any lesser limit under the plan) in this context? IRS Notice 82-22 does not provide any guidance here, primarily because in 1982, when that notice was issued, daily valued plans weren’t on the radar screen. IRS Notice 82-22 does say however that “a valuation of the participant’s interest within the last twelve months may be used, provided it is the last valuation available.” Reasonable administrative procedures should be established to ensure that the most recent daily valuation possible is used. For example, the value in effect when the loan obligation becomes fixed (i.e., necessary signatures and consents are obtained) should be a reasonable approach in the absence of more formal guidance from the IRS. In addition, the employer should consider addressing the issue in the loan policy. An approach used by some employers is to set the plan’s loan limit at less than the statutory maximum (e.g., 40% or 45%).

This isn't an issue with our balance forward plans. We use prior valuation plus contributions minus withdrawals, no earnings adjustment."

1 reply   |    24 views   |    Add Reply

Here are the most recently posted jobs on, a service of BenefitsLink:

View job as Pension Enrolled Actuary Pension Enrolled Actuary  View details

Consulting Actuaries Incorporated
Fairfield NJ / Telecommute

View job as Defined Benefit Document Specialist Defined Benefit Document Specialist  View details

TRA, Inc.

View job as Client Relationship Manager Client Relationship Manager  View details

Administrative Fiduciary Services
Houston TX

View job as Regional Sales Associate Regional Sales Associate  View details

July Business Services

►View More Jobs

►Post a Job

►Get Instant Job Alerts, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright 2020, Inc. All materials contained in this mailing are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than and are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy