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Message Boards Digest

March 19, 2020

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

ERISAGal created a topic in 401(k) Plans

Employer Reimbursement of Brokerage Account Expenses

"401k Plan Sponsor is depositing amounts to participant brokerage accounts to cover annual maintenance fees. All participants have individual brokerage accounts. Deposit per participant does not agree to exact Annual Account Maintenance Fee. I understand there is probably many potential problems with this scenario, but my question relates to whether it is "not allowed" for an employer to reimburse participant plan fees this way? They are truly making individual deposits per person for a flat dollar amount. It has always been my understanding that if an Employer pays ANY money into a plan that it must be allocated as plan contributions based on the plan document. Has anything surrounding this topic changed in the last few years? Thanks!"
0 replies   |    34 views   |    Add Reply
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austin3515 created a topic in 401(k) Plans

Discontinuing Safe Harbor Contributions

"So one of the requirements to disconitnue Safe Harbor contributions is that the safe harbor notice had to say 'the employer reserves the right to discontinue the safe harbor contribution.' Then comes the SECURE Act and says 'you don't need to send the safe harbor notice for 3% SHNEC plans.' If we take that advice, do we still get the flexibility of discontinunng the safe harbor? Apparently there is an exception to this notice requirement if they are operating at an 'economic loss' but I'm just wondering if they tricked us into eliminating an available option. Note: I have already discovered that this rule is essentially meaningless because we almost always include a discretionary ACP Safe Harbor Match even if we never use it. And in this scenario a SH Notice is still required."

2 replies   |    69 views   |    Add Reply

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

Freezing a Plan During 2020 After Some Participants Having Become Eligible for an Accrual -- 401(a)(26) Problem?

"Calendar year DB plan with approx. 50 participants. Covers all employees, 21 & 1 eligibility. 1000 hours required for accrual. Plan sponsor is considering freezing for 2020 but it may be that 3 or 4 participants will have worked 1000 hours by the freeze date. How will that work for 401(a)(26)? Does the fact that a few participants accrue nullify the frozen plan exemption? Note that the plan is slightly underfunded on a plan termination basis."

1 reply   |    35 views   |    Add Reply

Mark Whitelaw created a topic in 409A Issues

Effect of COVID-19 Lay-offs on 409A Participants

"Many companies are laying off their workers temporarily to get them off their payroll and onto unemployment benefits. This will trigger lump-sum termination distributions to a lot of participants, especially at companies that extended 409A plans to lower and middle management HCEs. Anything those employers can do?"

0 replies   |    26 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

Eligible for Distribution if Put on a 30-Day Furlough?

"So an employer furloughs half its work force for 30 days. They are scheduled to come back in 30 days. They are still active, correct? And cannot take a distribution? Similarly, they would be considered to be on a leave with respect to their loans, yes?"

2 replies   |    71 views   |    Add Reply

PFranckowiak created a topic in 401(k) Plans

Top Heavy Safe Harbor Match

"Not sure if we will ever get any relief legislation in time to make any difference.

Scenario 1: Stop a top heavy safe harbor match. Give 30 days' notice, amend plan, subject to ADP/ACP, fund to date of amendment, subject to minimum top heavy contributions that may be more than the match requirement.

Scenario 2: Terminate the plan. Stop the match as of the date of plan termination, not subject to additional testing."

2 replies   |    46 views   |    Add Reply

Catch22PGM created a topic in Mergers and Acquisitions

One Sponsor Acquires All of Another Sponsor's Stock -- Aligning HCE Definition Between Two Retirement Plans

"Straightforward stock acquisition -- Company A acquired Company B on 2/1/2020 and they each maintain their own 401(k) plans. Company A 401(k) uses the top-paid group election for the HCE definition while the Company B 401(k) does not. I know plans within a control group must have the same HCE definition, but does the 410(b)(6)(c) transition period apply to making the HCE definitions identical? These plans use compliance services from a mutual fund company. The mutual fund company is telling them they must align the HCE definition in 2020 and amend one of the two plans. I disagree and have always been very conservative when it comes to the 'no significant change in the plan' part of 410(b)(6)(c). Is there something that states the HCE definition must align immediately and am I being too conservative in my hesitation to amend plans during the transition period?"

2 replies   |    18 views   |    Add Reply
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