Message Boards Digest

July 30, 2020

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

Pammie57 created a topic in 401(k) Plans

Starting and Stopping Deferrals in a 401(k) Plan

"Client's plan document has entry dates of 1/1 and 7/1. It says that changes to deferrals can be made on entry dates. Several participants stopped their deferrals during this COVID pandemic, and now want to restart them before 1/1/2021. Can they start again next payroll? I don't see anything in their document that says they can restart at any time, but is that a given?"

4 replies   |    69 views   |    Add Reply

Bri created a topic in Governmental Plans

Governmental DB Plan Includes Spousal Consent Requirements -- OK to Remove?

"I know governmental plans don't have the typical spousal consent requirement. But if there's a plan that had it, is it considered a cutback to eliminate it? Someone's prior TPA used an ERISA document when they shouldn't have. Anyway it's a closed-to-newbies defined benefit plan with a handful of actives left. The plan offers various term certain annuities as well as SLA, which in ERISA-land would require spousal consent. The sponsor is now getting a governmental-entity-specific adoption agreement and I'm wondering if leaving 'spousal consent still applies' blank nevertheless requires me to grandfather it as any sort of protected benefit to the spouse."

2 replies   |    28 views   |    Add Reply

AATPA created a topic in Form 5500

Due Date for 2019 Calendar Year 5500 -- Extension in the Works?

"Is anyone hearing anything as to whether the October 15 extended deadline will be extended to 1/1/2021 due to COVID-19?"

3 replies   |    51 views   |    Add Reply

MAS created a topic in 401(k) Plans

Owner Wants to Disown an Adult Child -- Affects HCE Aggregation Rules?

"If a business owner legally disowns and/or disinherits his adult son, would his son still be considered a Highly Compensated Employee? The son has no direct ownership of the company and is well under the compensation threshold."

3 replies   |    76 views   |    Add Reply

Will Smith created a topic in 401(k) Plans

How Do I Know If My Plan Invests a Part or All of Its Assets in a Master Trust?

"I work for a single employer who has a a 401k plan with Nationwide Trust Company. How do I know if our plan invests in a master trust agreement and needs to comply with FASB ASU 20116?

Reading a description from Nationwide, it looks like our plan has its own trust which then invests in assets. Here is the description they provide:

'How unit value reporting works. Individual mutual fund investors purchase shares. To obtain their market value, they take the number of shares they own and multiply them by the net asset value (NAV) of the mutual fund. It works differently with a trust program (like your company’s retirement plan). The trust is created as part of the quali?ed retirement plan to own and manage the plan’s assets. Plan participants do not own individual mutual fund shares, rather they own units as a proportionate interest of the plan's assets.'

Any input is appreciated."

2 replies   |    51 views   |    Add Reply

legort69 created a topic in 401(k) Plans

Matching Contribution Formula Changes Mid-Year

"How is the match allocation limit determined for mid-year match changes with respect to the compensation limit? For example:

Match is funded per pay period.

Match formula changes July 1 from 100% of 10% to 100% of 4%.

Pt earns 30k/month and contributes 10% for 1st 6 months and 4% for last 6 mo.

Jan - June - match allocation = 18,000 (180,000 x 10% )

July - Dec - match allocation = 4,200 (105,000 x 4%)

Total match allocation = 22,200.

Option 1 - The per pay period match total of 22,200.

Option 2 - Is the match limited to (10+4)/ 2 = 7% x 285,000 = 19950

Option 3 - Something else?"

1 reply   |    37 views   |    Add Reply

NYHeel created a topic in 401(k) Plans

Safe Harbor Plan Wants to Use Different Definitions of Compensation for Different Purposes

"Someone is asking if a traditional match safe harbor plan can have different definitions of compensation for employee deferrals and employer match. Specifically, they want to know if the definition of compensation for employee deferrals can include bonus but exclude bonus for match eligible compensation. In addition, the plan pays match on a payroll period basis and does not provide a true-up.

I'm leaning strongly towards no on this but haven't found anything that specifically excludes this design. I'm worried that the match for an NHCE could be lower than the match for an HCE when compared to deferral eligible compensation. The only way I could see this as allowable is if you only look at match eligible compensation when determining match percentage and you completely ignore deferral compensation. But administratively this would be difficult with a payroll period match and no true-up. There would need to be some kind of mid-year true-up after the bonus was paid to make sure those deferrals were taken into account for purposes of match. Any thoughts on this?"

1 reply   |    35 views   |    Add Reply

TPApril created a topic in Health Plans (Including ACA, COBRA, HIPAA)

When Does a Program of Medical Stipends for Terminees Become Subject to ERISA?

"Terminated employees who meet certain requirements are given a stipend to be used to purchase their own medical coverage from one of several designated insurance providers. (If one provider is more expensive, the employee covers the difference.) Then they're treated as being within the same group by the provider. At what point is this considered a group plan subject to ERISA?"

2 replies   |    27 views   |    Add Reply

Ian created a topic in 401(k) Plans

CARES Act to Result in More Deemed Distributions?

"With the CARES Act's increase in the plan loan limits, it seems more likely that a deemed distribution (rather than a loan offset) will be necessary when someone terminates employment with an outstanding loan and can't pay it off. That's because, if someone borrows 100% of their account balance, there will be little or no funds in their account to offset the loan balance against. Do you agree? If a plan that adopts the CARES Act loan repayment delay provision, can (or must) the plan extend the cure period when a deemed distribution arises on an outstanding loan?"

5 replies   |    51 views   |    Add Reply

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