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Message Boards Digest

May 13, 2020

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

KdGal created a topic in IRAs and Roth IRAs

1099R Code for distribution from an Inherited IRA

"My client received a 1099R for a distribution taken during 2019 from an Inherited IRA account. My client was the non-spouse beneficiary of this IRA and inherited it several years ago. The funds are held in an inherited IRA. My client is over age 59 1/2 (actually 61 yrs old). The 1099R is coded with a "1" in box 7. That seems wrong to me. If she is over 59 1/2, shouldn't it be a code "7" normal distribution so that the 10% early w/d penalty doesn't apply? Any guidance or advice is much appreciated. Thank you."
3 replies   |    42 views   |    Add Reply

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

Defined Benefit Plan Termination and 411(d)(3)

"How do you interpret and apply IRS Code 411(d)(3) in Defined Benefit Plan termination? If the plan terminating in May 2020 and if there were participants terminated in 2019. Do you make those terminated participants in 2019 100% vested when the plan terminate? How about anyone terminated in earlier years with accrued benefit in the plan (2018, 2017, 2016, 2015)? How about anyone terminated in earlier years whose accrued benefit entirely distributed to them (2019, 2018, 2017, 2016, 2015)?"
4 replies   |    49 views   |    Add Reply

DBnme created a topic in Plan Terminations

Notice of Annuity Information

"Doing a DB plan termination. Of the 40 participants with a lump sum greater than $5000, two selected an annuity. We had everything set for June 1 lump sum distributions but the plan sponsor is only now dealing with the annuity purchase. Am I correct that because the Notice of Annuity Information is just now going to be provided they cannot pay the lump sums until the 45 day advance notice requirement is met?"
0 replies   |    23 views   |    Add Reply

DDB BN created a topic in 401(k) Plans

Terminated participant 2018 RMD required or not

"The 2018 census indicated that an employee was on leave as of 01/01/2018 (given the nature of the client's business, this is common). The 2019 census indicates that the employee is retired as of 01/01/2018. Participant's DOB is 10/20/1948. Should this participant be required to take an RMD now for 2018 which would have been due by 04/01/19 prior to distribution of her remaining benefit in the plan which will be rolled over to an IRA?"
3 replies   |    54 views   |    Add Reply

pensionlaf created a topic in Plan Document Amendments

Individually designed CB plan without a FDL

"We have recently taken over an individually designed cash balance plan effective 11/1/2007. The prior TPA argues that because it was an individually designed plan, it was not required to be restated for EGTRRA. The plan was, however, amended for 436 and HEART. In addition, I find it concerning that the original plan document does not come with a favorable determination letter. Is it correct that this individually designed plan does not require a FDL or any restatements? Would appreciate any guidance you can provide."
2 replies   |    32 views   |    Add Reply

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

Notice of Annuity Information

"Doing a DB plan termination. Of the 40 participants with a lump sum greater than $5000, two selected an annuity. We had everything set for June 1 lump sum distributions but the plan sponsor is only now dealing with the annuity purchase. Am I correct that because the Notice of Annuity Information is just now going to be provided they cannot pay the lump sums until the 45 day advance notice requirement is met?"
1 reply   |    27 views   |    Add Reply

Peter Gulia created a topic in Correction of Plan Defects

How do we correct discrimination about the availability of a kind of distribution?

"Imagine a group of commonly controlled business organizations. All have a 401(k) plan. None is a safe-harbor plan. The group has no troubles with coverage, ADP, or ACP tests. Some plans allow hardship distributions; some don't. Imagine that resulted in 401(a)(4) discrimination in favor of highly-compensated employees. For a year that ended, what may the employers do to cleanse the discrimination defect? If it can't be done by self-correction, what would the IRS ask for?"
2 replies   |    40 views   |    Add Reply

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

Notice 2020-23: all loan repayments on hold?

"Does this really give everyone a blanket suspension on loan repayments until July 15? I didn't read it that way, but the latest ERISApedia webinar with Derrin Watson said that's what it meant (though the loan has to be caught up by 12/31/20). So... since you don't have to be a "qualified individual" like for the coronavirus suspension, are all loan repayments for everyone suspended until then? Or just if requested? I assume this is mainly a mechanism to postpone defaults. And of course the Notice doesn't say anything about accruing interest or reamortizing... I don't see the recordkeepers just giving everyone a few months off."
3 replies   |    38 views   |    Add Reply

AlbanyConsultant created a topic in 401(k) Plans

deferrals not being taken on "FFCRA sick" wages

"This is the first question I've gotten on this, so I'm hoping it's an outlier and not the beginning of a trend... The plan uses W-2 definition of compensation. The sponsor noticed that their payroll company was not applying the deferral election for those who elected a percentage of compensation to be deferred against what was being coded as "FFCRA EE Sick" pay on their paychecks (so it was being calculated from "regular wages" only). The plan sponsor asked the payroll company, and the response was to double-check the plan because "by default" FFCRA wages aren't included. I admit that I haven't paid much attention to FFCRA from a consulting standpoint, since I figured that it wouldn't matter - taxable wages are taxable wages, so we'd count them. But this deferral thing is concerning. I don't know what payroll company they're using, but what can they be thinking?"
4 replies   |    38 views   |    Add Reply

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