Message Boards Digest

June 11, 2020

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

Ian created a topic in Retirement Plans in General

Remote Notarization for 'Participant Elections'

"I'm aware that the IRS recently allowed remote notarizations and witnessing by plan representatives. I'm also aware that witnessing is required for spousal consent of non-QJSA distributions and loans from plans subject to the QJSA rules. What's confusing to me is that the IRS Notice refers to the relief being available to 'participant elections, including spousal consent.' Are any participant elections subject to the witnessing rule?"

3 replies   |    55 views   |    Add Reply

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

Waiting Period Required Between Termination of Old Plan and Establishment of New Plan

"DC plans: [1] have to wait at least 12 months to open a new plan to avoid successor plan issues, or is it only applicable to 401k plans? [2] Does the 12-months count from plan year end or plan termination date? DB plans: no waiting period in between but rumor says a client has to wait at least two years to open a new DB after terminating the old DB. [3] Any special rules or regulations regarding that?"

6 replies   |    57 views   |    Add Reply

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

CARES Act $100,000 Distribution Limit

"Let's say a $50 distribution fee is charged to participants. What's the limit -- can a participant take out $100,000 (taxable distribution of $99,950 after the distribution fee) or $100,050 (taxable distribution of $100,000 after the fee)?"

1 reply   |    36 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

Off-Calendar Plan Year -- Catchup and ADP Refunds

"Plan has a 4/30 year end. For the plan year ending 4/30/2019 the ADP test fails, and a catchup eligible participant has a $3,000 refund recharacterized as catch (for the 2019 plan year). The participant had deferred $8,600 from 1/1/2019 to 4/30/2019. The participant then defers the full $16,400 from 5/1/2019 to 12/31/2019. Thus they have deferred the full catchup, and also had ADP refunds recharacterized as catchup.

Am I correct that the $3,000 ADP recharacterization is now an excess deferral for 2019? If so, is the correction to distribute the excess with gain/loss adjustment? The participant does have an inservice distribution option available under the terms of plan. Are there any further ramifications since the excess was not distributed by April 15, 2020?"

4 replies   |    46 views   |    Add Reply

Peter Gulia created a topic in Operating a TPA or Consulting Firm

How Many Disclosure Items in a Typical Year?

"Does anyone have a count of how many notices, statements, reports, and other disclosure items an individual account retirement plan furnishes (or ought to have furnished) in a typical year?"

4 replies   |    30 views   |    Add Reply

AlbanyConsultant created a topic in 401(k) Plans

Requiring Prior Year of Service in a Startup Plan -- Records Sketchy

"A new plan is starting up 7/1, and all employees will be eligible only if they have met the plan's service requirement of 1 YOS. This requires the plan sponsor to review their records and see who actually worked 1,000 hours or more in a year for all employees... back to each of their hire dates, right? There's no 'only go back seven years' kind of cut-off? The response I got was that they switched payroll vendors several years ago and purged records after seven years.

I'd normally try to remove the YOS requirement, but it's needed here because they're large enough with a relatively sizable ~10-15 hour per week staff such that if they included them all, it would put them over the audit threshold (yes, there are ways around that like multiple plans). It seems like the best they can do is to take the records that they have, make notes that these are representative for the ones that they are consistent for, make notes for why they are including anyone who they think would have made 1,000 hours in any year, and keep the notes in their files."

0 replies   |    23 views   |    Add Reply

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