Message Boards Digest

August 14, 2020

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

DJL created a topic in 401(k) Plans

SH Nonelective Contributions -- Suspend and Then Reinstate in Same Plan Year?

"Is it possible to amend a plan to stop the safe-harbor nonelective contribution in accordance with Section IV of Notice 2020-52, but then amend the plan 30 days before the end of the same plan year to reinstate the safe-harbor nonelective contribution?

Our client maintains a safe-harbor 401(k) plan into which the safe-harbor nonelective contribution is made. The safe-harbor nonelective contribution is funded on a payroll-period basis. The plan year is the calendar year. The client is concerned about its ability to continue to fund this contribution for the rest of this year because COVID-19 has started to affect its business.

Under Notice 2020-52, the plan would be amended to suspend the safe-harbor nonelective contribution for payroll periods after August 31, 2020. The amendment would be signed by August 31, 2020 and the notice to participants given no later than August 31, 2020. If this client is able to find the funds to make the safe-harbor nonelective contribution for payroll periods after August 31, 2020, is there anything that would prevent the Plan from being amended by December 1, 2020 to provide for the safe-harbor nonelective contribution?

The participants would receive notice by December 1, 2020 of the safe-harbor nonelective contribution. (This plan has a discretionary matching contribution which might need the safe-harbor nonelective contribution to satisfy the ACP test, so the notice would be needed.) I don't see any provision in Section 103 of the SECURE Act that would prevent this subsequent amendment. Am I missing anything?"

2 replies   |    66 views   |    Add Reply

Cynchbeast created a topic in Retirement Plans in General

Late Profit Sharing Contribution

"We did a 2018 valuation and now, when we get data for 2019, we find out that the sponsor did not actually deposit the full Profit Sharing contribution/deduction. We could amend 5500 filing and tell the client to amend his tax return, but the plan is aggregated with a DB plan so that would cause serious problems. If he makes up the money now (it was due by 09/15/19), how do we make that work?"

6 replies   |    53 views   |    Add Reply

Suellen Howard created a topic in Distributions and Loans, Other than QDROs

1099-R Distribution Code for COVID-Related Distributions

"If an IRA or qualified plan participant is under 59-1/2 and takes a COVID-related distribution, should the trustee report it using Code 1 on Form 1099-R? Or Code 2?"

0 replies   |    20 views   |    Add Reply

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