Message Boards Digest

August 6, 2020

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

Belgarath created a topic in Communication and Disclosure to Participants

DOL eDisclosure Regs -- Opening Up a Cyber Security Can of Worms?

"So I'm just curious, not being even remotely tech-savvy by today's standards. Let's say you (plan sponsor, and/or recordkeeper/TPA in conjunction with plan sponsor) decide to avail yourself of these new regs. Does it open up big potential holes for a breach of security, when a gazillion participants are receiving e-mails stating that their statements are available, and providing a hyperlink or instructions, etc. on how to access them? A lot of participants have internet access that isn't as secure as perhaps what they have at work, and it may be easier for passwords to get stolen, ghosted, whatever? It just seems like in a general way, the more things are done via internet-based applications, the more potential security breaches come into play. Just wondering what folks think about this aspect, entirely aside from whether the process is better/worse/indifferent from an administration viewpoint."

1 reply   |    21 views   |    Add Reply

Ian created a topic in 401(k) Plans

401(k) Loan Deemed Distributions Count as CRDs?

"Is it clear that a plan loan 'deemed distribution' (as opposed to a 'loan offset') cannot be treated as a CRD by a CARES Act qualified individual?"

0 replies   |    20 views   |    Add Reply

emmetttrudy created a topic in 401(k) Plans

Voluntary After-Tax Employee Contributions Are Subject to Section 415?

"Employee participates in Plan A for part of 2020 and contributes the maximum of $19,500 employee Roth Contributions. Employee terminates service and moves to a different company where he/she is immediately eligible to participant in Plan B (there is NO controlled group between the two entities). Plan B permits after-tax voluntary employee contributions. No employer contributions are allocated in Plan B. Can the employee deposit a maximum of $57,000 as an after-tax voluntary contribution? I believe the employee contribution is a calendar year limit (maximum of 19,500), but is the after-tax voluntary contributions subject to the 415 limit which is a Plan limit?"

5 replies   |    57 views   |    Add Reply

Shuo created a topic in 401(k) Plans

Do Left-Behind 401(k) Accounts Cause a Problem for Plan Sponsors?

"I heard that when people leave a company, they tend to leave their 401k's behind. Is it a big problem for the employer to keep all those orphaned 401k's? If so, how should we encourage people to rollover their 401k when they leave?"

13 replies   |    96 views   |    Add Reply

JustMe created a topic in Retirement Plans in General

Attribution Rules for Family Limited Partnerships

"How is a Family Limited Partnership (FLP) considered for controlled group rules? Specifically, when multiple companies are involved and individuals own portions of some of the companies (perhaps constituting a brother-sister controlled group or combined via ASG rules) and then the same individuals own other companies but only through an FLP."
0 replies   |    14 views   |    Add Reply

B21 created a topic in Distributions and Loans, Other than QDROs

2020 RMDs As Applied on a State Income Tax Level

"Are individual states required to comply with the relief enacted under the CARES Act with regards to waived 2020 RMDs, Aug 31st due date for rollovers, and one IRA rollover per year exemption? I was told NY state is not following the CARES Act and was asked how to handle RMDs that were taken during 2020 and then rolled over into IRAs after 60-days for state tax purposes. Wouldn't it be based on how the states define eligible rollovers and whether they cite the federal code and regulations?"

2 replies   |    36 views   |    Add Reply

MGOAdmin created a topic in Retirement Plans in General

Controlled Group Determination Involving an Irrevocable Trust

"I have a potential client with the following facts: Person A owns 73.33% Person B owns 16.66% The remaining 10% is owned by a trust. The Trust is an irrevocable trust where Person A is the grantor and Person A's children (ages 25 & 27) are the beneficiaries. Person A's brother is the trustee of the trust. The children are set to receive 1/3 of the benefit at age 30, 1/2 at age 35 and the rest at age 40. I am trying to figure out if the children's benefit in the trust should be attributed to Person A, creating a controlled group with a separate company person A owns 100%."

0 replies   |    23 views   |    Add Reply

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

QDRO and the Child Support

"My situation is like this. My ex cannot afford the child support and alimony. And the judge had a tentative decision as below.
SITUATION AS BELOW ==============
In light of Defendant’s current financial circumstances, Plaintiff shall receive and thereafter retain 100% of the 401K/retirement assets in Plaintiff’s name, which total approximately $100,000. Plaintiff shall utilize Defendant’s 50% share of the account for the alimony and child support obligations from the effective date of the obligations, per Paragraphs 2 and 3 of this Order, until no more funds remain in Defendant’s 50% share of the assets to cover the support obligations. When no more funds remain in Defendant’s 50% share of the retirement accounts to cover the support obligation, then Plaintiff or Defendant may file the appropriate motion with the Court at that time to address support. Within 30 days of the date of the execution of this Settlement Term Sheet, Defendant shall timely sign all documentation necessary to transfer 100% of his retirement accounts to Plaintiff. Plaintiff’s attorney shall provide Defendant with the documentation for the company that will prepare the Qualified Domestic Relations Order to transfer the retirement accounts to Plaintiff and Defendant shall cooperate and timely sign the documentation.
I got confused and my questions are these:
1. He /Defendant will use his portion of 401k to pay the child support and alimony, say total $2,000 each month. The tentative settlement is that all funds will be transferred to my/Plaintiff 's account, but when I withdraw the money to use as the child support and alimony, it will trigger tax liability for me, but actually child support and alimony are non-taxable.  What I mean is paying tax is ok, but that is his liability. If I pay the tax for the withdrawal, the tax should be included in his portion of 401K, which means his portion will cover fewer years for Child Support and Alimony.  Can I receive the distribution from the provider each month which is grossed up with the tax that I am supposed to pay on the tax return in the future? That's to say the monthly distribution should be $2000+ tax.  Is this workable?
2. Actually  defendant's 50% of 401k / his portion is not sufficient to cover 10 years'  child support and alimony, how can I track the remaining amount of his portion ( $50K) if 100% ($100K) of the 401k is transferred into my account ( my own 401k or ira etc) and mixed together?
Is there any way that can work all these out?"

1 reply   |    41 views   |    Add Reply

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

Able to Change Plan Options When Electing COBRA?

"An employee expects to be laid off in the next couple of months. The employer is closing a local office and the employee does not intend to move to the new location. Can she change her health plan election when electing COBRA? She is still employed and they are currently in their open enrollment period. She is currently in Plan A and would normally continue in this plan. However Plan B is less expensive. If she cannot change she may choose Plan B now. If she can change she will stay on A for now and then decide between A and B when the COBRA decision must be made later. The info I've found seems contradictory. It says generally that one cannot make such a change, but then it says there are exceptions that allow the change for HIPAA qualifying events. And losing group coverage eligibility is a qualifying event. I'm a pension guy, just trying to help out a friend and want to make sure I'm getting it right."

3 replies   |    24 views   |    Add Reply

Belgarath created a topic in Retirement Plans in General

TPA Engagement Agreement Authorizes Deduction of Fees Directly from Participants' Accounts

"I was just looking at an engagement agreement, and I saw something that I don't recall seeing (or perhaps never noticed, because I don't necessarily review a prior TPA's engagement agreement) before. It states that the TPA will bill the Plan Sponsor for services, then goes on to state that the TPA may deduct the service fees for the services directly from the participants' accounts upon non-payment of fees by the plan sponsor after 60 days. Is there any problem with this from a legal standpoint? It feels funny, but maybe it is fine as long as the plan sponsor/fiduciary has authorized it. Is this a common provision?"

2 replies   |    32 views   |    Add Reply

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