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Message Boards Digest

July 23, 2020

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

Santo Gold created a topic in Correction of Plan Defects

ADP Test Failed, Was Corrected, Then Failed Again....

"I am looking at a non-safe harbor 401k plan that failed the ADP test (passed ACP) in 2017 and 2018. Only 1 of the 3 HCEs were required to take money back and that was done each year. About 15 total participants are shown in each year's ADP test. However in reviewing that plan now, it seems that from 5-10 non-contributing eligible NHCEs were left out of the tests. Adding them back in will make the test fail even worse. Can we have the employer make a QNEC for these past years even through we already made a distribution of the excess to the one HCE? Or do we have make an additional payout to the HCE since we already made what would be a partial refund?"

3 replies   |    56 views   |    Add Reply
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Brian Haynes created a topic in Multiemployer Plans

Asset Sale Limitation -- Withdrawal Liability -- Section 4225(a)

"I have a client that is a closely held business that sold all of its business assets related to its union business and was assessed withdrawal liability by a pension fund. We argued that the asset sale limitation under Section 4225(a) limited the assessment to 30% of the company's liquidation or dissolution value.

The fund is taking the position that the company is not entitled to this limitation because it did not sell 'all or substantially all of its assets' as required by Section 4225(a). Of course, the company did not sell its cash and A/R but also did not sell its minority stock ownership in a different closely held company (it would be very difficult to sell this minority interest to anyone).

Based on this, the Fund is saying that since Section 4225(a) on its face requires a sale of 'all or substantially all of the assets,' the limitation does not apply. If the company had sold its minority stock interest in the other company it would have sold more than 85% of all its assets. Even without this stock sale, the company did sell 100% of its operating business assets.

I have researched this and could only find one older arbitration case where the arbitrator held that non-operating business assets should be excluded in determining whether all or substantially all of the company's assets have been sold. Does anyone have any experience with this?"

0 replies   |    21 views   |    Add Reply

AmyETPA created a topic in Plan Terminations

Mid-Year Safe Harbor Plan Termination Due to Business Closing

"Owner is thinking about retiring and shutting down his business, not selling it. Because business would be terminating, would the plan still be considered safe harbor even if terminated mid-year? It's not a sale or merger so I'm having doubts."

0 replies   |    28 views   |    Add Reply

austin3515 created a topic in 403(b) Plans, Accounts or Annuities

Correction Program for 403(b) Non-Amenders?

"Has anyone heard if the IRS is going to come out with any non-amender program as a means of allowing these non-profits to correct the fact that they did not restate by June 30? Already have one in that situation (not a client, I should point out!). It occurred to me that they did away with all the $325 VCP options so I do wonder if there will be anything."

3 replies   |    37 views   |    Add Reply

khn created a topic in Form 5500

Final Form 5500 Due to Mid-Year Merger Into Another Plan -- How to Answer Unclear Question?

"We are filing a final short form 5500 for a plan that merged into another plan effective 3/31/20. In Section VII, question 3a asks 'has a resolution to terminate the plan been adopted?' Should this be a YES or NO since the assets merged with another plan, and did not technically terminate?"

3 replies   |    41 views   |    Add Reply

BG5150 created a topic in Retirement Plans in General

Mid-Year Plan Termination -- How Do I Determine Sole Proprietor's 'Compensation'?

"Sole prop plan. Plan terminated 6/30/20. Profit Sharing only. Owner wants to make a contribution for the year. How do I determine the owner's comp? Sched C won't be ready until next year. What if it's not PS only, but a 3% SH, or a plan with a fixed match? Do I have to wait until late-winter or spring?"

2 replies   |    39 views   |    Add Reply
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