Message Boards Digest

October 22, 2020

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

Tom created a topic in 401(k) Plans

Safe Harbor Maybe Notice and Amendment 2020

"For our plans that have the "maybe" safe harbor, we have always provided the client wanting safe harbor treatment the notice saying they will fund the 3%, the maybe notice for next year and the amendment 30-90 days prior to the end of the year. I assume that process does not change with all the new Safe harbor rules. I know there are new rules about declaring safe harbor treatment into the next year. I'm concerned about what needs to be done this year for these "maybe" safe harbor plans. Can it be simplified such as - ignore this year end and provide a notice next year up to Nov 30 for 2020?"
1 reply   |    30 views   |    Add Reply created a topic in 401(k) Plans

Left My Employer; How to Get My 401(k)?

"I was employed at a government contracting agency. I'm wondering how I gain access to my 401k account -- specifically, whether I can withdraw the money."

1 reply   |    33 views   |    Add Reply

ConnieStorer created a topic in Cross-Tested Plans

Issue re Minimum Gateway

"I have a Cash Balance Plan that provides a substantial benefit for most of the NHCEs. The Average DB Allocation Rate for the NHCEs is 3.5%. At least one of my HCEs has an Allocation Rate in the Profit Sharing Plan of 15%. The Average Benefit Test and Rate Group Tests pass with no problem when I provide a Profit Sharing Allocation of 4.5% to the NHCEs.

Is the minimum gateway for the Profit Sharing Plan still 5% based on my one HCE at 15% in the PSP? I understand that the DB/DC gateway minimum increases from 5% to 7.5%, but can my DB offset drop what would have been a 5% Profit Sharing Gateway to a 4.5%?"

2 replies   |    26 views   |    Add Reply

SSRRS created a topic in 401(k) Plans

Showing a Single Account Balance Despite Three Sources (Deferrals, SH, and PS)

"A Takeover 401k Plan. The plan has deferrals, safe harbor, and PS contributions. The deferrals and safe harbor are of course 100% immediately vested. The PS contributions are 100% immediately vested as well (they are used to offset the DB Plan and only the vested PS balance can be used to offset the DB).

Each participant has one total balance at year end and each participant's balance is not allocated between the three money types (deferrals, safe harbor, and PS contributions). Hardship distributions are not allowed under this plan and in-service distributions after retirement age are allowed for all three money types. Distributions are made after a terminated participant requests payment for all three money types.

Because all three money types have 100% immediate vesting and all share the same specs listed above, is it OK for each participant's balance to be shown as one total balance rather than broken down per money type?"

5 replies   |    82 views   |    Add Reply

TPApril created a topic in Plan Document Amendments

Merging a 401(k) Plan with a Money Purchase Plan to Save Costs

"As we approach the time for restatement of plan documents, I'm curious as to whether there are thoughts about merging existing 401(k) and separate Money Purchase plans by the same sponsor. My initial reaction for longstanding plans is to keep them separate. Certain fees would be larger with two plans rather than one, but merging them might be  complicated and risk prone."

2 replies   |    25 views   |    Add Reply

rwhiles created a topic in 401(k) Plans

How Much Did You Charge for a PPA Restatement? What About Cycle 3?

"What did your firm charge for the PPA restatement and what do you plan on charging for the Cycle 3 restatement?"

4 replies   |    59 views   |    Add Reply

cwallace created a topic in Communication and Disclosure to Participants

Participant Wants to Review Financial Documents in Administrator's Office

"We had a participant request to come and review the financial reports of the qualified plans (i.e., essentially the 5500s). The participant does not want to pay copy costs and just wants to come to the office. We are limiting access to our office due to COVID and do not want participants coming in to the office. So, the two options I can think of are (1) let the participant come but limit his time, place him in an unused office, and require a mask the whole time; or (2) waive the copy costs and send him the documents. Does anyone see any issues with these options?"

4 replies   |    30 views   |    Add Reply

Belgarath created a topic in Plan Document Amendments

IRS Form 5307 to Be Revised Any Time Soon?

"Starting restatements almost immediately. There exists an option to to do a 'minor modification' and submit to the IRS on a Form 5307, if necessary.

Question for any of you who might have a contact at the IRS -- is this form and/or instructions going to be revised any time soon? Current version is, I believe, 2014. If no revision contemplated, then I guess we use the current one! (Not that I'm planning to anyway, if it can be avoided....)"

0 replies   |    12 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

Nonstatutory Stock Options and 415 Comp

"I had a couple of question regarding nonstatutory stock options. A nonstatutory stock option is includable income in the year granted if it is includable in the employee's taxable income. But what exactly are the circumstances that would cause the option grant to be includable or not includable in income, and how is that income generally reported?

I know that it would be on the employee's W-2 at the end of the year, but is it reported as part of their paycheck, for example, when the option is granted? So if they had a deferral election for a 401(k), the compensation related to the grant would be included in that deferral election, unless the compensation was excluded? If a plan were to switch from using the W-2 compensation definition to a definition that excludes stock options, would the safe harbor 415 compensation be the better option, since that excludes not only compensation from exercising an option, but also when an option is granted?"

1 reply   |    27 views   |    Add Reply

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