Message Boards Digest

June 26, 2020

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

Belgarath created a topic in Retirement Plans in General

Coverage/Nondiscrimination Testing

"Suppose an employer has a Money Purchase plan with standard last day/1,000 hour requirement. Employer is terminating a group of employees, many of who are HCEs. Employer wants to amend the plan to waive the 1,000 hour/last day requirement for THIS GROUP OF EMPLOYEES ONLY. Contribution level will be the same as for everyone else. This shouldn't inherently cause a coverage testing problem, right? They will just all be included in the coverage test, and the plan will pass or fail as usual. But it'll have to be tested for nondiscrimination, right? Something is bothering me here, but I can't put my finger on the correct citation. Maybe what's bothering me is Treas. Reg. 1.401(a)(4)-2(b)(4)(iii). This amendment would take you out of design-based safe harbor status, and then you'd have to general test?"

2 replies   |    65 views   |    Add Reply

SPARK/DCIIA Summer Policy Series

Sponsored by SPARK and DCIIA
Live virtual event, every Wednesday, July 15 to August 19. Domestic and global topics; general and breakout sessions (live broadcast), exhibitor hall and virtual networking happy hours. Replay on demand. Free to SPARK and DCIIA members. Learn more!

TPAnnie created a topic in Relius Administration

Relius Admin Electronic Participant Statements

"I want to email participant statements for a small plan. I've checked boxes allowing electronic statements in plan specs and census data. I've entered the correct (I think) smtp info in the email under system admin. I've got a valid email for the participant. When I print the statement to email the participant, I get a timeout notice. (When I used another SMTP, I'd get a "server can't be found" error, which is what makes me think I've got that portion set up correctly.) It's like I'm missing an execute step, or perhaps I need to authorize my mail client to send the email on Relius' behalf?"

1 reply   |    32 views   |    Add Reply

perplexedbypensions created a topic in Retirement Plans in General

W-2 Compensation -- Effect of Child Support Deductions

"I'm working on a PSP that uses W-2 compensation with no exclusions. I have the payroll report and W-2s for all employees. One employee had child support payments deducted from payroll. The payroll report shows his gross compensation of $5,000 and child support payments of $1,000. His W-2 reports $4,000 taxable income in Box 1. I thought it should be $5,000 because the garnishment is post-tax, not pre-tax. Do you agree?"

2 replies   |    54 views   |    Add Reply

Snicker created a topic in Qualified Domestic Relations Orders (QDROs)

Retirement Payments Held Up Because No QDRO Received Yet

"Now it's time to receive my retirement starting in April 2020. I have not received any payments yet due to divorce settlement decree with no QDRO on file with the courts. How long can the plan administrator hold my retirement just because the ex did not provide a QDRO?"

2 replies   |    46 views   |    Add Reply

JustMe created a topic in Investment Issues (Including Self-Directed)

Prohibited Transaction Scenario

"I want to make sure I'm understanding the Prohibited transaction/disqualified person plan rules correctly. If I have a client where the ownership is as follows: A - 40%; B - 40%; C - 20%. A and B are siblings and not related to C. A and B own interest in property (the same property) in their individual 401(k) SDB accounts. They want to sell the property. Because they aren't related and neither own more than 50% of the company, are they disqualified persons? Assuming not, can they personally buy the property from the plan to remove the investment?"

1 reply   |    30 views   |    Add Reply

Carol V. Calhoun created a topic in Correction of Plan Defects

Employee Contributions Made to Wrong Plan

"Employer has two plans. HCEs are supposed to participate in the 403(b) plan. NHCEs are supposed to participate in the 401(k) plan. Each year, HCE or NHCE status is determined for the following year, and the person is supposed to be put into the correct plan accordingly. However, errors have been made in some instances, in both directions. Thus, for example, HCEs have contributed to the 401(k) plan, and NHCEs have contributed to the 403(b) plan. Obviously, this violates the terms of both plans.

Does anyone have any experience as to the corrections IRS might be willing to accept in these circumstances? What we'd like to do is to treat this as a mistake of fact, withdraw the incorrectly contributed amounts from each plan and contribute it to the other plan.

However, by the literal terms of the IRS Fix It Guides, the HCEs have been impermissibly denied the right to make contributions to the 403(b), and the NHCEs have been impermissibly denied the right to make contributions to the 401(k), which would require QNECs in both cases. And then the HCEs have made impermissible contributions to the 401(k) and the NHCEs have made impermissible contributions to the 403(b), all of which would have to be disgorged.

All of that just seems to be excessive, given that no one has been denied the right to make contributions. And the investments of the two plans are the same, so no one has lost out in that area, either.

What has been your experience? Will the IRS allow for a reasonable correction, or does it insist on following the technical terms of the Fix It Guides in this situation?"

3 replies   |    42 views   |    Add Reply

Peter Gulia created a topic in 403(b) Plans, Accounts or Annuities

Should a 403(b) Plan's Sponsor/Administrator Make Its Own Hardship Form?

"A university maintains an ERISA-governed Section 403(b) plan, and is the plan's administrator. The plan allows a choice of three investment vendors -- TIAA-CREF, Fidelity, and Vanguard. The plan has no common recordkeeper; each vendor keeps records to the extent a participant uses the vendor's annuity contract or custodial account. The plan provides hardship distributions, using only the Treasury rule's deemed needs. The university asked me to write a form on which a participant would specify which of the deemed needs is the claimant's reason for the requested hardship distribution. The university knows a vendor has its forms, yet asks for this form besides the vendors' forms. Completing this form would not relieve a participant from completing her vendor's form. Is a plan-level hardship form a good idea or a bad idea?"

2 replies   |    16 views   |    Add Reply

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

Mandatory Cash Out Amount -- Determination of $1,000 Limit

"The plan document specifies that the $1,000 limit for mandatory cash-outs and $5,000 limit for mandatory rollovers. What if the participant has about $1,020 in the account and the distribution processing fee is $50 (so the amount after the fee is $970). Would a direct distribution or a rollover be processed?"

3 replies   |    39 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

HCE Determination Based on Indexed Salary

"Looking into a new plan. The first plan year will be from 7/1/19 to 6/30/20, same as corporate fiscal year. One employee is in question with the following salaries: 7/1/18 to 7/1/19: $109k. Calendar 2018: $105k. Calendar 2019: $126k. 7/1/19 to 6/30/20: $125k+ or 130k+.

Using lookback, looks like non-HCE for plan year beginning 7/1/19, agree? Is there anyway I can make the employee HCE for plan year beginning 7/1/19.

Also, to determine the HCE status for plan year beginning 7/1/2020, his salary has to be at least $125k+ as of 6/30/2020, agree? Or had to be as 12/31/19?"

1 reply   |    15 views   |    Add Reply

Here are the most recently posted jobs on, a service of BenefitsLink:

View job as Defined Contribution Plan Administrator

Defined Contribution Plan Administrator  View details

Phoenix AZ

View job as Compliance Consultant

Compliance Consultant  View details

Cincinnati OH

►View More Jobs

►Post a Job

►Get Instant Job Alerts, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright 2020, Inc. All materials contained in this mailing are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

Links to web sites other than and are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Unsubscribe | Privacy Policy