Message Boards Digest

May 6, 2020

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

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

Loans Under the CARES Act

"A plan currently permits loans for hardship necessity only (safe harbor standards). If they are going to permit loans under the CARES Act, will they have to amend their loan program to permit loans for any reason (possibly for the CARES Act duration)?"

11 replies   |    77 views   |    Add Reply

Peter Gulia created a topic in Retirement Plans in General

Does the Plan Need to Provide a Coronavirus-Related Distribution?

"Several writers in BenefitsLink discussions have mentioned an idea that a plan provision for a coronavirus-related distribution might be unnecessary if the participant who would take it is severed from employment or otherwise entitled to a distribution. But here's one further reason why a classification might matter. Some recordkeepers are waiving a processing fee for a coronavirus-related distribution, but not for a normal distribution."

2 replies   |    49 views   |    Add Reply

Jess C created a topic in 401(k) Plans

Last Day Rule When Adopting Profit Sharing Plan Late (SECURE Act)

"If an employer wishes to adopt a profit sharing plan in 2021 effective 12/31/2020, can it apply a last day rule for the 2020 profit sharing allocation?"

3 replies   |    43 views   |    Add Reply

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

Coronavirus-Related Distribution in Form of Annuity from a DB or Money Purchase Plan

"The CARES Act allows special tax relief for 2020 distributions up to $100,000 by a 'qualified individual' from a defined benefit plan, as long as the distribution is not made earlier than an otherwise-permitted distribution event. But the special tax relief implies that a lump sum will be taken. How would the $100,000 limit and special tax relief apply to an in-service annuity payment from a DB plan (or even a money purchase pension plan)?"

3 replies   |    59 views   |    Add Reply

5500Nerd created a topic in Form 5500

Mid-Year Change for Collectively-Bargained Plan

"For a health and welfare Form 5500, I have a group that was under a collectively-bargained agreement at the beginning of the year. However by the end of the plan year, they were not. Is the collectively-bargained box on the 5500 still to be checked?"

0 replies   |    13 views   |    Add Reply

DDB BN created a topic in 401(k) Plans

Employee Begins Participating in 401(k) Plan Before Technically Eligible

"We were presented with a plan to takeover that was effective in 2016 and only employed the 2 owners. The owners set up a Fidelity prototype and opened accounts. Each owner made employee deferral contributions. Eligibility is age 21 and 1 year, entering the plan on 01/01 or 07/01 following. Employee is hired in 09/2017 and enters the plan on his date of employment and starts making employee deferral contributions. The employee should have entered 01/01/19 but made employee deferrals for 2017 and 2018 and then terminated in December 2018. It's a bit late for an 11g amendment, so should an application be filed via VCP? Can the employee's deferrals be refunded to him because he was not eligible? Would we be able to exclude the employee as otherwise ineligible in ADP testing for 2017 and 2018 but there would be a TH issue? (This is a deferrals-only plan.) They never filed a Form 5500 for the years that the employee was in the plan, by the way. Would the best course of action be to submit via VCP for the early entry, determine the TH amount for each year, and prepare and submit the 5500 filing for 2017 and 2018 via the DFVCP?"

0 replies   |    22 views   |    Add Reply

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