Message Boards Digest

March 25, 2020

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

Jakyasar created a topic in Retirement Plans in General

Profit Sharing Plan -- Excess Contributions Made During the Plan Year

"Takeover case. One-lifer PS plan. Makes over $280k in W-2. Client makes max PS contribution for 2018 and deposited $10k extra during 2018 and paid the excise tax penalty. Did the same for 2019 (same as 2019) and now trying find a way not to pay the penalty but I don't see any way out of it. [1] $10k deposited from 2018, so does it apply towards 2019 limit or just becomes an asset of the plan? [2] $10k deposited from 2019, so does it apply towards 2020 limit or just becomes an asset of the plan? (There is no mistake of fact here.)"

3 replies   |    56 views   |    Add Reply

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thepensionmaven created a topic in 401(k) Plans

Contribution Deadline Extended to July 15 for PLLC?

"My client has already filed the 2019 tax return and wants to know if he can make the contribution by July 15. I believe he's out of luck since the return has already been filed."

4 replies   |    57 views   |    Add Reply

401 Chaos created a topic in 401(k) Plans

Amending or Suspending Fixed Nonelective Profit Sharing Contributions Mid-Year

"[1] If a non-safe harbor 401(k) / profit sharing plan document provides for "fixed" or "required" nonelective contributions but has a last day of the plan year requirement in order for a participant to accrue the benefit, can the plan be amended mid-year to either (1) change the "fixed" nonelective contribution provision to a "discretionary" contribution provision or (2) to reduce the fixed contribution rate requirement to a lower rate? (We assume exceptions may need to be provided for any participants who retired, died, or became disabled prior to the adoption of the amendment if the plan provides for a waiver of the last day requirement in each of those situations.)

[2] Assuming the answer to 1 is yes, I assume the same result if the plan had a 1,000 hour requirement rather than a last day requirement provided the amendment was adopted prior to anyone satisfying the 1,000 hour requirement?

[3] Assuming the answer to 1 is yes, I assume the same result would apply to plans with "fixed" matching contributions with a last day or other allocation requirement provided the amendment is adopted prior to a participant satisfying the allocation requirement? (While we rarely see fixed nonelective contributions in non-safe harbor plans these days, we also rarely see fixed matching contributions with last day or similar requirements so both of these situations seem like fairly rare occurrences.)

[4] General question: why would a plan sponsor elect to include a fixed nonelective contribution if not required to do so in connection with a collective bargaining agreement or similar arrangement? Again, we don't see these often but it's always puzzled me why someone would do this. Maybe more as a general participant communication thing?

3 replies   |    42 views   |    Add Reply

ERISAlaw created a topic in 401(k) Plans

Pending Divorce; Form Standing Order, No QDRO

"Can a Plan Administrator or TPA refuse to process a rollover request from a plan participant where the participant is a party to a pending divorce and an automatic standing order is in place?


1. The participant wife is in a pending divorce that has been going on for some time. As is the case for all divorces in this jurisdiction, a standard form “Automatic Domestic Standing Order” went into effect when the divorce was filed. The Standing Order, by its terms, is binding only on the parties to the divorce. The Standing Order is not a QDRO, does not direct the plan fiduciaries to do or refrain from doing any act, and does not specifically mention the Plan. The closest thing that the Standing Order addresses regarding the 401(k) Plan is that it prohibits certain transfers or trading of property located in the county if such transactions are not in the ordinary course of business.

2. Husband and wife were previously employed by the same family business and are participants in 401(k) Plan. Husband is trustee of the Plan and sole owner of the Company that is the Plan administrator. Wife previously rolled over a portion of assets in Plan from prior employer and is 100% vested in her 401(k) account. As wife is no longer employed by Company, she filled out the proper forms with the TPA to initiate a direct rollover of 100% of her account to another 401(k) account set up at another institution. The TPA notified (but did not formally forward the rollover request to) the husband/trustee/administrator who objected.

3. The TPA stated that the distribution request cannot be honored citing the following:

a. If the Plan Administrator is on notice (verbal or written) regarding a pending domestic relations action (e.g., a divorce) and has a reasonable belief that the participant’s account may become subject to a QDRO, the Plan Administrator may suspend processing the participant’s distribution or loan requests pending resolution.

b. The Standing Order puts The Retirement Plan Company (TRPC) on notice that a divorce is pending and prevents both parties from trading any of the assets, which arguably is what would be done in a rollover distribution from the Plan.

c. It appears the retirement assets of both parties are marital assets subject to equitable division by an adjudicating judge in a divorce proceeding. It is quite possible that either parties’ retirement assets could become subject to a QDRO. As such, no distributions should be made to either party until there is a modification to the standing order, or other such direction by the relevant court (e.g., a QDRO), which should specifically address allowing distributions and rollovers from the retirement plan accounts.

Is the TPA taking on a fiduciary role in refusing to forward the rollover request to the Plan Administrator?"

6 replies   |    70 views   |    Add Reply

Vlad401k created a topic in Distributions and Loans, Other than QDROs

Must Take an In-Service Withdrawal Before Becoming Eligible for a Hardship Distribution?

"With the recent change in provisions for Hardship distributions for 2019, I understand that you now don't have to take a loan before taking a hardship. However, my understanding is that you still have to take an in-service distribution (if it's available) before a hardship. Is that correct? Let's say a plan allows the participant to take an in-service distribution only from the Rollover source. And the hardship is allowed only from the deferral source. Let's say the participant has $10,000 in Rollover source and $50,000 in Deferral source. He would like to take out a hardship distribution for $50,000. Which option do you think would be correct: [1] Process an in-service request for $10,000 and a hardship request for the remaining $40,000; or [2] Process the hardship request for the entire $50,000? So, if the participant wants to take out more than what's allowed under the in-service conditions, can he just take out the entire amount as a hardship (assuming he has the documentation for a hardship)?"

2 replies   |    29 views   |    Add Reply

Chippy created a topic in Form 5500

Get an Extension for Filing a Final 5500?

"Can I file for an extension on a Final 5500?"

1 reply   |    17 views   |    Add Reply

Peter Gulia created a topic in Retirement Plans in General

Is Anyone Using Force Majeure to Excuse Not Performing a Contract?

"Is anyone aware of a retirement-services provider using impossibility or a contract’s force majeure clause as a reason not to do something that otherwise would be a service obligation?"

4 replies   |    36 views   |    Add Reply

rocknrolls2 created a topic in Retirement Plans in General

Legislative Language on Final Stimulus Package

"Does anyone have access to legislative language on the final stimulus package? If you do, could you please post a link to it?"

8 replies   |    64 views   |    Add Reply, Inc.
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