Message Boards Digest

July 10, 2020

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

Cynchbeast created a topic in Correction of Plan Defects

In-Service Withdrawals

"I know in-service withdrawals of deferrals may not be made prior to age 59 1/2, but is there any requirement that they must be allowed after age 59 1/2? We have a PS 401(k) plan that allows in-service withdrawals from all accounts only after NRA - NRA being age 65 and 5 years of eligibility service. So I was wondering if participants would have to wait until NRA or if there was a rule regarding deferrals that would supersede that."
2 replies   |    46 views   |    Add Reply

cdavis25 created a topic in 401(k) Plans

prevailing wage

"Can a plan amend their document during the plan year to exclude HCEs from PW? This is not a SH plan."
2 replies   |    38 views   |    Add Reply

BG5150 created a topic in Retirement Plans in General

Plan has no Designated Investmetn Alternatives, now what?

"In the Q&A on the Disclosure rules back in 2012, the DOL said that if a plan had only a brokerage window and no DIAs to avoid the fee disclosure rules, the the trustees may not be living up to their fiduciary responsibilities. (Q 39) Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty. Is there anything else that talks about NOT having any DIAs in the plan and why that's a bad idea? I seem to remember something like "having too many investments is as bad as having too few" but I cannot locate anything. Especially about the prudence (or lac thereof) of the former."
4 replies   |    73 views   |    Add Reply

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

Help on Target Benefit Plan Calculation

"I'm seeking some help on Target Benefit Plan, important plan provisions and preliminary calculations are provided in the tables below. Would you please check my calculation? Target Benefit = ((Average Annual Compensation *0.45 + (( Average Annual Compensation –Covered Compensation)*0.0052*6))/12)*(6/20) VBRA = (Change TB) *(APR), the APR is 130.8344 Individual Level Premium = PMT(7%,5,0,-1*VBRA,1), for number of years I used 5 because the expected total year of service is 6 years and the participant waited one year to enter the plan. I'll be reducing the number of year each year by one. Eligibility Requirements: upon reaching age 21 and being credited with 1 Year of Eligibility Service. Normal Retirement Age: The term Normal Retirement Age means age 65. There is no mandatory retirement age under the terms of the Plan. Calculation of Level Funding Amount of Target Benefit: The Level Funding Amount for each Participant as of his effective date of participation in the Plan shall be determined using the cost produced by the Individual Level Premium funding method. The Level Funding Amount shall remain constant unless there has been a change in a Participant's Target Benefit. Target Benefit: Each Participant's stated benefit under the Plan will be equal to the Participant's Target Benefit (as described in Section 3.1(c). Each Plan Year prior to the time required by law for filing the Employer's federal income tax return (including extensions), the Employer shall make contributions to the Employer Account of each Participant who has a Year of Service for Accrual of Benefits for that Plan Year, which, when added to the Forfeitures occurring during the Plan Year, shall be an amount equal to the Level Funding Amount as calculated under Section. 3.1(c) Benefit Formula: The Target Benefit payable at Normal Retirement Date for each Participant shall be equal to the sum of 45.00% of such Participant's Average Annual Compensation; plus.52% multiplied by the Participant's total number of Years of Service, multiplied times the Participant's excess Covered Compensation, computed to the nearest dollar. The Target Benefit is reduced one-twentieth (1/20) for each Year of Service less than Twenty."
0 replies   |    25 views   |    Add Reply

Scuba 401 created a topic in 401(k) Plans

Life insurance in 401(k)

"I never deal with this issue. can the plan purchase life insurance with Roth 401(k) deferrals? everything i read says premiums are purchased with pre-tax dollars and PS 58 costs are taxable each year. what would happen if you used Roth? would you still have to pay PS 58 costs?"
5 replies   |    47 views   |    Add Reply

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

CARES Act Delayed Contributions - Credit Balance Elections, Schedule SB, and PBGC filing

"These questions are in regards to the CARES act delaying the due date for all required payments during the 2020 calendar year to January 1, 2021. Are credit balance election due dates also delayed until January 1, 2021? My understanding is that the credit balance election must be made by the contribution due date. Since the contribution due date has been delayed then the ability to elect to use credit balances would be delayed as well. Also, If a client decides to delay their 2019 residual contribution to January 1, 2021, then how does this affect Schedule SB and PBGC filings? Would one file the forms without the residual contribution, possibly showing an unpaid minimum on the Schedule SB, and then revise the forms later once the final payment has been made? An extra attachment to the SB stating that it will be revised after the final contribution has been made could be added as well. I believe there is not yet much guidance on this, but would like to know if others agree with those statements or are taking a different approach."
1 reply   |    30 views   |    Add Reply

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