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Message Boards Digest

October 26, 2020

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

Catch22PGM created a topic in 457 Plans

Non-Governmental 457(b) Distribution

"Non-profit has a 457(b) plan and 401(k) plan. They want to terminate the 457(b) plan and have the assets distributed to the participants (2 executives). One of the executives would like to contribute pre-tax salary deferrals to the 401(k) plan from the 457(b) distribution. The definition of compensation in the 401(k) plan is W-2 plus pre-tax deferrals. The executive is arguing that the 457(b) distribution is reported as W-2 wages and I can't find anything that says it can't be done - it just feels wrong. Does anyone out there have something that either supports or opposes the executive's position?"
1 reply   |    33 views   |    Add Reply

BG5150 created a topic in Correction of Plan Defects

VFCP Calculator -- Does This Add Up?

"In September, I did a lost earnings calc on the VFCP site with these figures (among several other entries):

Principal: 12,132.67

Loss Date: 4/29/2019

Recovery Date: 5/2/2019

Final Payment: 9/28/20

Amount Due: $6.40

But, they never made the correction, so I'm re-calcing the interest with a Final Payment of 10/28/20 this time. I entered:

Principal: 12,132.67

Loss Date: 4/29/2019

Recovery Date: 5/5/2019

Final Payment: 9/28/20

Amount Due: $12.83

Notice I made a small mistake. The Recovery Date is 3 days later. And the amount due is MORE THAN TWICE AS MUCH! When I run the original figures again with 10/28/2020 Final, it gives me the $6.40 again. Does it make sense that a Recover Date merely 3 days later would result in a 100% higher result?"

1 reply   |    48 views   |    Add Reply

Ponderer33 created a topic in Health Savings Accounts (HSAs)

Retiree HRA and HSA Interaction

"If one spouse is eligible for a Retiree HRA and the other spouse for herself or both of them has access to a HDHP with a HSA, if one or both of them uses the HDHP/HSA, must participation in the Retiree HRA be suspended for one of both until such time as neither is participating in the HDHP/HSA or in any HDHP plan year only until such time as the deductible and all required first dollar payments for the HDHP are made through the HSA or other resources? Retiree HRA document is being drafted and the drafters are not clear on what is required so your thoughts are eagerly solicited."

1 reply   |    15 views   |    Add Reply

justatester created a topic in 401(k) Plans

More Questions on MEP to SEP

"Scenario #1: MEP adopter terminates services with MEP effective 1/1/2020. Per agreement, once termination occurs, they immediately are no longer eligible to contribute to MEP. New plan is not effective until 5/1/2020. It is established as a new plan with a short plan year in the document. Can the employer withhold contributions from 1/1/-5/1/2020? I am assuming no since there was not a 'plan' in place. If the answer is no, if the employer withheld contributions, what should the ER do with them? Since there is a gap in the time from leaving the MEP to the new SEP, how does this impact testing? Would HCE determination be from 5/1/18-4/30/20? What about prorating the compensation limit? For top heavy, would the 12/31/20 balance be used for 20 & 21?

Scenario #2: MEP adopter leaves the plan effective 4/30/2020, New Plan is established 5/1/2020. Document indicates it is a short plan year for the first year. How does impact testing? HCE determination. Do we test contributions from 1/1-4/30 under the MEP and only test contributions from 5/1/2020 through 12/31/20?"

1 reply   |    18 views   |    Add Reply

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