Message Boards Digest

July 14, 2020

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

tsrl01 created a topic in Communication and Disclosure to Participants

Electronic Disclosure and Burden of Proof

"Once a Plan Administrator has obtained consent to distribute documents electronically - where does the burden of proof lie? Say the plan administrator emails to the address on file, but does not request a return receipt, but the email does not kick back as invalid, if the participant then claims to have not received the document, who has the burden? I've been looking for cases, guidance, etc., but the only thing I've found is the Thomas case wherein the employer posted on a website, but did not inform the individuals that it was posted. Any further information/guidance/cases, etc. is greatly appreciated!"
0 replies   |    20 views   |    Add Reply

bzorc created a topic in SEP, SARSEP and SIMPLE Plans

Exceeding 100 employees

"A new client to our firm is in receipt of an IRS compliance check regarding their SIMPLE IRA for the year ended 12/31/2017. The compliance check is saying that the client has sponsored a SIMPLE IRA and, for the last 2 years, reported more than 100 W-2's for employees with wages of $5,000 or more for at least two consecutive years. The client has now informed us that this a true statement for years 2015 through 2019. No union employees in the company. The compliance check simply asks 1) did you sponsor a SIMPLE IRA (yes), 2) did you exceed the 100 employee limitation (yes) and 3) did you exceed the two year grace period (yes). What ramifications might the company face from the IRS for sponsoring and maintaining a SIMPLE IRA in violation of the requirements. I do not deal with SIMPLE's often, so I was wondering if anyone had experience with this. Thanks for any replies."
1 reply   |    32 views   |    Add Reply

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

Incarcerated Beneficiaries

"I have a situation in which a participant died and 2 of her beneficiaries are in jail. Does the state in which the beneficiary is incarcerated dictate how the money is handled? Would you refer this situation to outside counsel? Not sure how to handle and am not finding a lot of information on the topic."
9 replies   |    82 views   |    Add Reply

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

RMD information was not provided

"Hi Just took over a db plan with 9/30 year end. For the 9/30/18 year end, the participant (owner's spouse and 75 years old) was 20% vested with a very small AB. Prior TPA did not alert them of the RMD requirements for 2018 and also for 2019. The amounts are very small possibly between a total of $100 to $500 range for each year, may be a bit more for 2019 - did not do the math yet. What is the recommended course of action, send a letter to the IRS and say sorry and forgive me? Is there a threshold on the minimum 50% penalty? Thank you"
2 replies   |    38 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Deduction split between 2 entities

"Having a discussion with a CPA for 2019 deduction. Owner has a corp and also a partnership sponsoring the plan, it is a controlled group. Salary from corp was 180k and the K-1 income was 500k plus. DB deduction is 200k and DC deduction is 50k. Neither deduction can be achieved just by 180k salary. The so called salary total for 2018 is 280k (thankfully, the k-1 income high enough) and I suggested to split the deductions by using the fraction of 180/280 for the corporation and 100/280 for the LLC. CPA is reluctant to do so and wants the full deduction on the corp books which I do not agree but not my decision. IRS, if I recall correctly, does not have a set rule on this (may be misremembering) but consistency is important i.e. once you start one way, you continue that way. I am aware that there are required contribution requirement/lack of income for the LLC, but this purpose, let's ignore it. Any comments? Thank you"
4 replies   |    49 views   |    Add Reply

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

Directed Trustee for Defined Benefit Plan

"Does anyone know if custodians offer directed trustee services for defined benefit plans? What about TPAs? Does anyone else offer these services? What type of insurance do you carry for such offering?"
1 reply   |    28 views   |    Add Reply

JustMe created a topic in 401(k) Plans

Open MEP Form 5500 Filing Requirements

"Am I understanding correctly that basically any MEP may file 1 Form 5500 and just provide the attachment regarding the participating employers, the contributions, etc.? Or do Open MEPs need to file separate Form 5500s for their participating employers? Did that change for 2019 or has it always been that way?"
2 replies   |    30 views   |    Add Reply

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

Life Insurance for participant that is taking in service distributions

"Hi, May everyone be well and safe. Based on the incidental death benefit rules, a life insurance policy cannot be held beyond retirement of the employee. If an employee is still active, yet is beyond 62 and is taking in service distributions, must the policy on this employee be distributed/converted to cash value etc. as well? In addition is there a difference if the one taking the in service distributions is an owner as opposed to an employee? Thank you for any insights on this matter."
0 replies   |    22 views   |    Add Reply

frank1971 created a topic in 401(k) Plans

Missing Signed PPA Restatements Documents - How to handle?

"If an employer can't find signed versions of its PPA restatement documents and the recordkeeper does not maintain signed copies, are there any suggestions of what to do? Surely the documents were signed within the 2014-2016 required time period but they can't be found. The employer has the unsigned versions. Could we just sign and date on the day they were likely signed in 2015 and put those in the file?"
4 replies   |    63 views   |    Add Reply

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