Message Boards Digest

May 18, 2020

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

justanotheradmin created a topic in 401(k) Plans

Whee! Proposed Self-Directed Investment Account Free-for-All

"Owner wants to allow all legal investments under the 401(k) plan, for all participants. The plan is fairly plan vanilla uses a popular custodian/recordkeeper. The owner wants to invest in some small startup LLCs and wants to use his plan money. Plan has about 40 participants. For a whole host of reasons I can think of why this is a bad idea, but I'm not great at articulating them, and don't want to look up citations if I don't have to. Does anyone have suggestions for articles, threads, publications that explain why this is such a bad idea? There are practical ones -- like I don't know if the existing advisor will want to deal with outside accounts. Nor do I know if the pricing at the custodian will change if a large chunk of the assets are moved out. But I'm more interested in things that articulate the risk from a fiduciary and prudence standpoint."

4 replies   |    82 views   |    Add Reply

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

Loan Repayment Delay

"Unclear as to whether the Suspended Loan Repayment Provision would apply to a new loan taken out currently."

1 reply   |    33 views   |    Add Reply

jmartinrps created a topic in 401(k) Plans

Match True Up Is Required Here? Which Comp to Use?

"We have a new plan. Safe Harbor Match. Calendar year plan. 2019 is the first year. Effective date 1/1/19. Effective Date for 401k and SH Match is 5/1/19. Plan does not exclude pre-participation wages (so full year). Adoption Agreement indicates match is allocated at end of plan year. The underlying plan document seems to talk about match true up being 'optional.'

Does this plan need a match true up? Is it optional and the client can choose not to make it if they wish. If they do, or if it is required, what wages do we base the true up on? Do we use wages for the entire year or wages only since 5/1?

Below is the wording from our plan doc on match true ups.


(a) Amount of Matching Contributions. Subject to the limitations described in Article 5, the Company shall contribute to the Plan an amount specified in the Adoption Agreement on behalf of each Participant who made a Matched Employee Contribution and who has completed any service requirements specified in the Adoption Agreement. Notwithstanding the foregoing, a Participant shall be eligible to receive an allocation of Matching Contributions only to the extent such contributions are permitted in the Adoption Agreement.

(b) Contribution and Allocation of Matching Contributions. Matching Contributions shall be made to the Plan and promptly allocated to the Matching Contribution Accounts of Participants who meet the requirements of Subsection (a) and in the amount determined pursuant to Subsection (a) as soon as administratively feasible after the end of the periods described in the Adoption Agreement.

(1) The Company may make an additional Matching Contribution ('true up') on behalf of each Participant in the amount of the positive difference, if any, between the Matching Contributions that would have been allocated to his Account had such contributions been determined on the basis of Compensation for the entire Plan Year and the Matching Contributions previously allocated to such Participant's Account."

0 replies   |    49 views   |    Add Reply

david rigby created a topic in Defined Benefit Plans, Including Cash Balance

AFTAP Certifications in the Age of COVID

"Wondering, anyone seeing (or acting on) situations where the 1/1/2020 funded ratio is 'high' (90% or above) and the plan sponsor is instructing the actuary not to issue the 2020 AFTAP certification, thus letting the default percentages apply? Could be useful when [1] the plan allows lump sums greater than $5,000 and [2] the sponsor is trying to save cash in the plan very soon after the assets have taken a dive. Any other thoughts on the process? The communication (etc.)?"

1 reply   |    56 views   |    Add Reply

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

Excess Asset from Suspense Account Allocation in QRP

"Does a sole proprietor need to have current year income to have the Excess Asset from QRP Suspense Account Allocated to him over seven years? There is some mention of the 415 applicability to limit the amount allocated. But I didn't find anything that tells me if a sole proprietor needs to have current year income to receive allocation as the case would be if it was not from QRP."

3 replies   |    63 views   |    Add Reply

Pension Admin in Ohio created a topic in Defined Benefit Plans, Including Cash Balance

Spousal Consent if Married, But Are You Really Married?

"Opinions please on this unusual fact pattern. Participant leaves employment with a vested benefit in a defined benefit pension plan in 2017. Plan provisions permit him to elect an immediate lump sum distribution upon completing the appropriate forms and submitting certain documentation. One item included in the application package is a Spousal Consent that must be completed by his spouse. Note: he covered his spouse under various health and welfare benefit plans during his period of employment.

When he received his pension application, he indicated that his marital status is 'single-never married'. We pointed out that he presented himself as being married during his employment. He stated that he lied about his marital status and that he was not never married. We prepared affidavits for him and the person who is not his spouse (PNHS) to complete. He completed and submitted his own affidavit stating that he was never married to PNHS. He indicated that he did not have a current address for PNHS. We performed a search and sent the affidavit to PNHS via regular and certified mail. PNHS never submitted the affidavit, and did not sign for the certified mailing. The affidavit sent by regular U.S. mail was not returned as being undeliverable.

Participant, of course, is super anxious to receive his distribution. We suggested that he submit an official copy/transcript of his federal tax return from the IRS for the final year of his employ with the company. Our thought was that it would agree with his true marital status and along with his completed affidavit would permit us to distribute his pension. Initially he stated he would request and send the tax return, then he stated that he did not file a return for that year/any year. Recently, he is claiming that we have no authority to request copies of his tax return. Any suggestions?"

7 replies   |    92 views   |    Add Reply

waid10 created a topic in Retirement Plans in General

Controlled Group Gives Rise to Affiliated Service Group Here?

"P sponsors a QRP. R and P are related employers. R's employees participate in P's plan. C and R are brother-sister companies. Just by the nature of C and R being brother-sister, does that by default pull C into the ASG with R and P? Or would C be part of the ASG only if it satisfies the ASG rules on its own?"

3 replies   |    62 views   |    Add Reply

panther created a topic in Cafeteria Plans

Does Employer Payment of President's Health Insurance Violate IRC 125?

"Corporate employer pays its president's family coverage under group health insurance plan per an employment agreement. For other employees, employer only pays for employee-only coverage (employees pay for any more on their own). This clearly is discriminatory under IRC 105(h). But does it violate the IRC 125 cafeteria plan rule against discrimination as to contributions and benefits?"

3 replies   |    43 views   |    Add Reply

JustMe created a topic in 401(k) Plans

Immediate Funding of Contributions for Terminated Participants

"Is anyone being asked if a plan can fund a contribution to their terminated participants now (because there are so many people being terminated/severed, etc.)? It may be a BRF issue that some are benefiting from receiving a contribution now, versus later, but what if it impacts only NHCEs? Is it even a possibility to fund some but not all participants?"

1 reply   |    51 views   |    Add Reply

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

QDRO Gone Wrong, Funds Distributed Incorrectly

"In my divorce decree, my wife was awarded 50 percent of my 401k from the time that we were married which was 12 years. Fidelity gave her 50 percent of my entire 401k for 21 years. How do I recoup my funds for the 9 years before we were married?"

4 replies   |    93 views   |    Add Reply

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