Message Boards Digest

October 9, 2020

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

BG5150 created a topic in Form 5500

How to Report Transfer of Excess Assets from DB Plan Into Profit Sharing Plan?

"We have a plan that is receiving excess DB plan assets in the Profit Sharing plan. How do I show that on the 5500? Other contribution? Transfer in?"

1 reply   |    31 views   |    Add Reply

cathyw created a topic in Correction of Plan Defects

Solving 410(b) Using Short-Service Employees

"A safe harbor 401(k) plan has a 30-day wait (with entry first of the month coinciding with or next following) for full-time employees, and one year of service for part-time employees. For 2019 the plan fails 410(b) ratio test even with disaggregation of statutory excludables. The employer does not want to bring any part-time employees into the plan who would not otherwise satisfy the one-year eligibility. They could bring in those full-time employees hired after November 1, 2019 through an 11(g) amendment and make a QNEC to cover the auto enroll deferral percentage of 4% plus the safe harbor match of 4%.

I'm concerned about using these short service employees to satisfy 410(b) because the 8% QNEC will be such a small amount. I know the IRS issued guidance many years ago restricting the use of short service employees to satisfy 401(a)(4). Would the same prohibition apply for 410(b) purposes? BTW, we're also checking out average benefits testing for coverage, but it looks like it will be very expensive."

4 replies   |    46 views   |    Add Reply

stphnyok created a topic in Form 5500

Filing Final 5500 for an Abandoned Plan

"We have a plan that has no assets. The proceeds were distributed in 2019. The company dissolved and the prior signer is claiming there is no one to sign the final 5500. How this should be handled?"

2 replies   |    37 views   |    Add Reply

Bill Reskin created a topic in 401(k) Plans

401(k) Profit Sharing Deposit Rejected by Bank, Causing Deadline to Be Missed

"We initiated a large profit sharing deposit into the 401k accounts via our bank, as we have in the past. It was in limbo for a couple of days then rejected -- thereby missing the September 15 deadline for corporate income tax filing. I have looked to see whether the IRS allows for such errors but I have not found anything that would allow us to put the money into the account after the 9/15 failed attempt. Anyone have any ideas?"

0 replies   |    23 views   |    Add Reply

alexa created a topic in 401(k) Plans

Lump Sum Payout of Vacation Pay -- Considered as Compensation for 401(k) Plan Purposes?

"Is a final lump sum payment of vacation pay eligible for 401(k) deferrals and a matching contribution? We match each paycheck. Our plan excludes pay after termination. We allowed this particular employee to defer but no matching contribution was made due to an issue in our HRIS system."

0 replies   |    18 views   |    Add Reply

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