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Message Boards Digest

June 8, 2020

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

Vlad401k created a topic in Distributions and Loans, Other than QDROs

How to Code a Roth Distribution Due to Disability?

"How would you process a Roth direct distribution due to disability? My original thought was that it should be code 'B' and '3', but the 1099-R instructions state that code 3 can only be used with one other code ('D')."

0 replies   |    62 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

Plan Sponsor Withheld Too Much in Salary Deferrals

"Participant elected to contribute 10% of pay. Whoops, typo -- the employer-client then enters 12% contribution on payroll. Very, very strict recordkeeper says "OK, the correction here is to pay the extra 2% of pay out to the participant as a taxable distribution, Code 8, no excise tax, etc." That's probably more strict than I would be in this situation but I certainly cannot disagree with them. As far as I know, ECPRS has nothing on this kind of an error. Has anyone heard of a correction that would allow the participant to leave the money in the plan? I have already suggested that the participant can just contribute more in future pay dates to put the money back into the plan, but curious to know whether there's a way to just leave the money in the plan."

6 replies   |    121 views   |    Add Reply

bmore1147 created a topic in 401(k) Plans

Mid-Year EACA Amendment to ACA

"Client is looking to do a QDIA reset/ACA reenrollment mid-year. The plan currently uses EACA and it can't be amended to the new reset deferral percentage mid-year. Anyone ever opt out of EACA mid-year? Is it a problem to drop the EACA protections mid-year and use a standard ACA/auto escalation for a mid-year reenrollment? Plan is not safe harbor."

0 replies   |    28 views   |    Add Reply

jas55 created a topic in 401(k) Plans

Former Safe Harbor Plan Vesting Change

"Plan has made only safe harbor contributions prior to amending plan 1/1/2019 off of safe harbor matching and instituting a 3 year cliff vesting schedule for matching and all other employer contributions. The only employer contributions prior to the amendment were safe harbor matching contributions. Prior to amendment all employer contribution sources were listed as 100% vested, though the employer never made any other than safe harbor matching. Employee is rehired who previously worked from Feb. 2017 to Nov. 2018. Participant maintained account balances and has been rehired Feb. 2020. Would new cliff vesting apply because no prior employer contributions were made, or would they fall under 100% vesting because that was the schedule for all contributions at the time even though no contributions were ever made other than those under the safe harbor matching provision?"

0 replies   |    23 views   |    Add Reply

JOH created a topic in Church Plans

Housing Allowance and 1099-R Reporting

"We have a church plan where the previous custodian, when distributions were made for housing allowance, would put $0 in box 2a and mark 'Taxable Amount Not Determined'. Is that correct or should the taxable amount match the gross distribution and we should mark 'Taxable Amount not Determined'? Wondering how other custodians prepare the 1099-R."

0 replies   |    17 views   |    Add Reply
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