Message Boards Digest

August 7, 2020

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

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

Church Wants to Use Tax Credit

"This falls under the 'please don't shoot the messenger' heading. A prospect for a non-ERISA 403(b) plan, which is a church, is asking whether they can take advantage of the 'tax credit under the SECURE Act'. We don't see how this could benefit an entity that does not pay any taxes in the first place, but we were still asked to research the question. Maybe we are missing something."

2 replies   |    34 views   |    Add Reply

Bug on my window created a topic in Form 5500

DB Plan with Post-10/15 Contributions - Auditor Thoughts?

"I'm looking for some input from folks smarter than me. How will auditors look at plans with post-10/15 contributions for the 2019 plan year? Specifically, I'm assuming that these contributions are not reported on the 2019 SB (since they haven't been made yet) as of the time of filing. Will they be left off of the audit report? Included as a footnote? If the plan sponsor amends the filing post-10/15 to include the contributions on the SB, will the H/audit also require amendment?"

0 replies   |    21 views   |    Add Reply

DJL created a topic in Retirement Plans in General

Changing the Time at Which Forfeitures Occur

"I seem to recall that there is an issue to address when a plan wants to change the timing a forfeiture occurs. Currently, the profit sharing plan provides that forfeitures occur after 5 consecutive breaks-in-service. The client wants to change that provision to the earlier of distribution of the vested interest or 5 consecutive breaks-in-service. Forfeitures have always been used to reduce the profit sharing contribution. There will be a large amount of forfeitures this year as a result of the change because most of the unvested amounts are attributable to terminated participants who have already taken distribution of their entire vested interests. Is there is something I should be looking at before telling the client that it can be done?"

1 reply   |    49 views   |    Add Reply

pmacduff created a topic in Form 5500

IRS Assesses $87,000 Penalty for Late Filing of Form 5500-SF

"Small plan (less than 100 participants) client filed the 2018 5500-SF this year. It was discovered that the 2018 form had not been filed. All previous filings since plan inception (1992) have been timely. Client received a letter from the IRS with regard to the 2018 late filing and a penalty assessment of $87,000! The IRS letter references the new penalty amount of $250 per day 'effective for forms required to be filed after December 31, 2019.' The size of the assessed penalty aside (!), any idea why they would use the new penalty amount for the 2018 filing? As referenced in other posts, the client has filed under DFVC with the DOL and paid the $750. Copies of same will be forwarded to the IRS and hopefully penalty will be abated. Needelss to say $87,000 would be a great financial hardship for this small client."

2 replies   |    37 views   |    Add Reply

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

CARES Act IRS Notice 2020-61 for DBs: PSA

"Hello! I happen to be familiar with IRS Notice 2020-61, which came out today, covering the deferral of 2020 contributions to 1/1/2021 under the CARES Act. I found the Notice to be very confusing, so I thought I would start this thread as a PSA, to give pension actuaries a leg up on understanding this. This post will explain how & what interest rates are to be used in connection with DB contributions originally due during calendar 2020 under Notice 2020-61.

Under 2020-61, the CARES Act EIR rule (i.e., contributions are adjusted at the EIR of the plan year containing payment date) applies for payments actually made from January 1, 2020 through midnight on January 1, 2021 (or January 4, 2021 if the provision in the current Senate stimulus bill passes). For contributions that were originally due during calendar 2020 not yet paid by midnight, January 1, 2021, the CARES Act EIR rule expires. What replaces the CARES Act EIR rule (for unpaid amounts from 2020) is a modified version of 430(j); the modifications are that the quarterly & catch-up due dates are moved from calendar 2020 to 1/1/2021, and the quarterly contribution amounts are increased (with the EIR from the plan year they pertain to) to 1/1/2021.

So, for example (which is unfortunately not included as a Notice 2020-61 example), say you have a calendar year plan, with a 1/1 valuation date, not subject to quarterly contributions in 2019. Say the 2019 contribution is made on 1/1/2021. To determine whether the 2019 MRC has been met, you must discount the contribution back to 1/1/2019 at the 2021 EIR. If instead, the contribution was made on 12/31/2020, you must discount the contribution back to 1/1/2019 at the 2020 EIR.

The following chart is intended to help you walk through examples provided in Q&A 2 through 6:

Notice Example

Topic: Discounted contributions @ val date

Topic: Adjusting QRC with interest to 1/1/21

PY contribution is for

EIR used: orig due date to 1/1/21


Payment dates used







CARES Act EIR rule








CARES Act EIR rule








CARES Act EIR rule

12/31/20, 6/1/20

A-6 Ex 1a






Expiration of CARES Act EIR rule; modified 430(j)

Not paid by 1/1/21

A-6 Ex 1b





2020, then 2020+5%

Modified 430(j)


A-6 Ex 2a






Expiration of CARES Act EIR rule; modified 430(j)

Not paid by 1/1/21

A-6 Ex 2b





2020 for 12/15/20 payment; 2019 for unpaid at 1/1/21

CARES Act EIR rule; Expiration of CARES Act EIR rule; modified 430(j)

12/15/20, nothing else paid by 1/1/21

0 replies   |    34 views   |    Add Reply

chibenefits created a topic in Nonqualified Deferred Compensation

Acceleration of Vesting of ISO = Modification?

"I am trying to reconcile the rule under 424(h)(3)(C) with the accounting rules for share-based compensation. 424(h)(1) provides that if an ISO is modified, then it is a new grant. 424(h)(3)(C) provides that 'the term 'modification' means any change in the terms of the option which gives the employee additional benefits under the option, but such term shall not include a change in the terms of the option in the case of an option not immediately exercisable in full, to accelerate the time at which the option may be exercised.' So far so good. But the accounting rules say that acceleration of vesting is a modification that leads to a new grant. Are both things true in that one refers to status as an ISO and the other refers to accounting treatment?"

0 replies   |    15 views   |    Add Reply

Christina created a topic in 401(k) Plans

Two Companies/Plans - Shared Employee as Plan Administrator on Both

"We have a client who is splitting off one location as a separate entity/company. We'll now have Company A and Company B. Each will sponsor its own 401(k) Plan. There is no common ownership for controlled group purposes, but may be as an affiliated service group due to management functions and/or as the 65% owner of Company B is the father of of the 50% of the owner of Company A. This will be passed by the company's attorney. The intent of the companies/plans is to have zero liability to/for one another.

Question -- An employee of Company A (non owner) acts as the Plan Administrator/Employer Sponsor for Company A's 401(k) plan. The plan uses a turnkey provider as Trustee, but names two individuals as Administrator/Sponsor in the Plan's documents. This person signs off on plan resolutions/amendments, approves distribution requests, handles payroll and contribution deposits to the plan, etc. If new Company B uses the same individual in the same capacity, acting as Plan Administrator/Sponsor named in the docs, performing all of the same functions, wouldn't there be liability or a common tie there? I have concerns for this person that would be named as Administrator on both plans."

0 replies   |    16 views   |    Add Reply

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