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Message Boards Digest

April 29, 2020

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

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

Calculating Minimum Legal Interest Rate on 401(k) Loans

"I've seen various methods used for the calculation of interest rate on 401(k) loans, but am not sure what Internal Revenue Code section addresses this. I've seen rates in plans such as 'WSJ Prime plus X%', or even using the rate of G funds for a TSP. I'm looking to set a rate that is legal but as low as possible."

3 replies   |    36 views   |    Add Reply

52626 created a topic in 403(b) Plans, Accounts or Annuities

Ability of a 403(b) Plan to Be Sponsored by Fewer Than All Employers in a Controlled Group

"Employer A sponsors a 403(b). Immediate eligibility. Also makes a fixed match contribution. Employer A will fully own a new entity, Employer B, which will provide the same benefits as are provided to Employer A employees, with the exception of a 403(b) plan. Whether the employees are paid under Employer A's EIN or the Employer B's EIN, can this group be excluded? Doesn't the universal availability preclude the exclusion of a class of employees (in this case the employees of the new entity)? When there is a controlled group, can the employer sponsoring a 403(b) plan exclude one of the controlled group members? Or does the universal availability supersede the ability to exclude a group of employees?"

2 replies   |    52 views   |    Add Reply

BG5150 created a topic in Retirement Plans in General

Only a Single Form 5330 Needed for Late Deposits Made During Multiple Plan Years?

"If a plan made interest payments for late deferrals from 2017, 2018 and 2019 (in 2020), do I need to file a Form 5330 for each of those years, or just for 2020?"

1 reply   |    28 views   |    Add Reply

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

Suspension of Loan Repayments Pursuant to CARES Act Provisions -- Participant's Spouse Loses Job

"I believe I have this correct with regard to the COVID loan repay suspensions. Participant works for a dental office. The majority of the office is closed but said participant is, at least at this time, getting full pay. Participant's spouse had hours reduced and now the spouse's employer has shut down and let everyone go. Participant wants to defer loan repayments because the spouse is out of work. Is it correct to say that this participant would NOT be a qualified participant under the COVID rules for purposes of being entitled to defer a plan loan repayment?"

1 reply   |    50 views   |    Add Reply

waid10 created a topic in Retirement Plans in General

Effect of CARES Act on Employee Who Retired During 2019

"[1] Is the CARES Act RMD waiver an optional or required provision for plan sponsors? [2] Does the plan sponsor need to amend the plan document to allow the waivers? [3] We have an 80-year-old employee who retired on 12/31/2019. She was exempt from the RMD under the 'still working' exception until she retired, I believe. Her first RMD would have been due by 4/1/2020. If she had been working on 1/1/2020, her first RMD wouldn't have been required until 4/1/2021 (notwithstanding the CARES Act). So we're late in processing this RMD, correct? Does she have rollover options as part of the CARES Act?"

10 replies   |    100 views   |    Add Reply

Stash026 created a topic in 401(k) Plans

Death of Participant's Father Is Sufficient for a COVID-19 Loan?

"W're trying to determine whether someone qualifies for a loan. Participant's father passed away due to COVID. The participant is seeking a loan to pay for the funeral. We know the participant and spouse have not lost any pay due to the pandemic (and may actually be making increased salary due to hazard pay). Would these funeral expenses qualify the participant for a loan?"

12 replies   |    62 views   |    Add Reply

Pammie57 created a topic in 401(k) Plans

Two-Tiered Formula for Differing Levels of Matching Contributions

"S corp has one owner and two other employees. Employee 1 - $44,000 in wages (owner). Employee 2: $53,540 in wages. Employee 3: $31,250 in wages. My goal is to give Employee 2 the benefit of a 401k with a company match while giving as little as possible to Employee 3. I'm thinking we can use a discretionary match with tiers. Full-time salaried employees would get 100% up to 3% (this would cover Employees 1 and 2). Full-time hourly employees would get 100% up to 1% (this would cover employee 3). Copacetic?"

11 replies   |    67 views   |    Add Reply

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

CARES Act Distributions Can Be Limited to Former Employees?

"Can a plan sponsor adopt the special distribution under the CARES Act and offer the benefit only to terminated employees? The plan sponsor wants to avoid having a host of active employees taking advantage of the benefit. And what about employees who have taken pre-59-1/2 distributions --are they going to avoid the 10% penalty if the plan sponsor does not amend the plan for CARES Act benefits?"

8 replies   |    48 views   |    Add Reply
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