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Message Boards Digest

March 27, 2020

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

JOH created a topic in IRAs and Roth IRAs

Form 5498 Reporting Due Date Extended?

"With the tax filing extension from 4/15 to 7/15, does anyone know if IRS has extended Form 5498 delivery date from 5/31 to something else?"

1 reply   |    24 views   |    Add Reply
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mariemonroe created a topic in Distributions and Loans, Other than QDROs

Interim Valuation Used to Measure Distribution Amount

"I have a client who requested a distribution due to severance from employment. She received paperwork earlier this year stating she is entitled to $X as a distribution. She turned her paperwork in in early March. The Plan administrator is now telling her they are going to do an interim valuation on 3/31 to value her account and she will get whatever she is entitled to after that date. The Plan includes the following language:

"It is contemplated that the Trust Fund will be valued by the Trustee and allocations made only on a Valuation Date. At any time that the Plan's valuations are not performed on a daily basis, should it be necessary to make distributions under the provisions hereof and the Plan Administrator in good faith determines that, because of (a) an extraordinary change in general economic conditions, (b) the occurrence of some casualty materially affecting the value of the Trust Fund or a substantial part thereof, or (c) a significant fluctuation in the value of the Trust Fund has occurred since the immediately preceding Valuation Date, the Plan Administrator may, in his sole discretion, exercised in a nondiscriminatory manner, prevent the payee from receiving a substantially greater or lesser amount than what he would be entitled to, based on current values, and cause a re-valuation of the Trust Fund to be made and a reallocation of the interests therein as of the date the payee's right of distribution becomes fixed. The Plan Administrator's determination to make such special valuation and the valuation of the Trust Fund as determined by the Trustee shall be conclusive and binding on all persons ever interested hereunder. Such interim valuation shall not discriminate in favor of Highly Compensated Employees."

Is anyone aware of any case law or statute/regulation that interprets the language in bold? I am trying to determine when my client's right to a distribution became fixed."

1 reply   |    39 views   |    Add Reply

msmith created a topic in Retirement Plans in General

Plan Loans Amid COVID-19

"Are new plan loans permissible if the participant has been furloughed/laid off; and the Loan Agreement states that Payroll Deduction of the Loan Payment is required? How is everyone handling this?"

5 replies   |    100 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

Another Suspend Safe Harbor Question -- Sorry

"Plan provides for a safe harbor match, allocated at the end of the plan year (not each payroll). Calendar year plan, calendar year tax year for the plan sponsor. Assuming notice requirement is met, the plan is amended to remove the safe harbor effective May 1, 2020. Here comes the probably dumb question, but... Am I correct that the timing for depositing the 2020 match accrued through May 1, 2020 is still the tax filing deadline for the 2020 tax year to be deductible for 2020, or 12/31/2021 if the year of deduction is not an issue for the plan sponsor? I haven't seen anything that says the deposit deadline is accelerated, but that doesn't mean I didn't miss it somewhere."

2 replies   |    43 views   |    Add Reply

Cynchbeast created a topic in 401(k) Plans

Participant Missed Opportunity to Make 401(k) Deferrals

"Sponsor initially reported EE as hired in 07/2018, but turns out actual hire date was 06/13/18. This means she entered plan 07/01/19 rather than 01/01/20, so we have lost opportunity to defer for 07/01/19 through 12/31/19.

Plan has only owner and this new EE, so there is no ADP for NHCEs other than her. She probably won't be deferring, but I know that doesn't erase the lost opportunity when she might have deferred. Plan has Deferrals and SH match.

Since we have no average deferral rate for NHCEs, it seems it would be best to assume 5% deferrals (minimum rate to get maximum SH Match), and 4% SH match.

Does this sound right? What should QNEC be? 50% of deferrals plus all of SH match missed (total 6.5%), 50% of all contributions (total 4.5%), or what?"

1 reply   |    38 views   |    Add Reply

ConnieStorer created a topic in Retirement Plans in General

Need WAN License for Relius Only Until COVID-19 Crisis Subsides

"This is somewhat of a comment and question. Like most of you out there in the pension community our firm has had to change our way of operating due to COVID-19. We are a TPA Firm of 7 individuals. Currently 5 individuals are trying to work remotely. Our IT person set us up so that we can log in at home and access our work computer and our network. We use the in-house FIS/Relius system for our pension and document software. Trying to get run Relius remotely was not working and we reached out to Relius about the issue. They indicated that we would need to purchase a 12 month WAN license in order to run the pension system remotely. I explained that working remotely was a temporary situation and that we only needed access for one or two months.

The Relius salesman reached back out to me and said that they could offer a 10% discount on their full 12 month license. This would drop the annual fee from $3,000 to $2,700. He also added that they could apply the $2,700 fee to the cost of the ASP service if we signed a new contract by May 31st. Maybe other individuals out there feel that this is reasonable but to me this is a horrible response on the part of FIS/Relius. We have been a client of theirs from the point that they bought out FDP. I am seriously considering looking into other software systems once life returns to normal.

Does anyone have suggestions for a workaround for the WAN license? We cannot justify spending $2,700 for a one to two month fix. Thanks for any comments or suggestions."

5 replies   |    61 views   |    Add Reply

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

412 Minimum Funding Problem Solved by Plan Disqualification?

"I have a Owner-Only Cash Balance Pension Plan. Plan was set up 12/28/2018 with effective date 1/1/2018. 2018 required funding was $80,486. However contribution (made 9/13/2019) was $60,000. So we have a minimum funding issue out of the gate. Excise tax filed and paid (I believe). 2019 there is zero cash flow to fund benefit and will result in another minimum funding deficiency for 2019 (this was known as of September, 2019 so is not COVID-19 related). Have already reduced the benefit for 1/1/2020. This Plan never should have been set up. It completely fails the permanency requirement. So my question here is, do 412 funding requirements apply to a disqualified plan? Can I get the plan disqualified on permanency, terminate it and avoid a 2019 minimum funding excise tax on top of all the other tax?"

0 replies   |    23 views   |    Add Reply
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