Message Boards Digest

November 4, 2020

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

WhiteWolf17 created a topic in 401(k) Plans

Irrevocable Election Not to Participate

"The plan is a SHNE 3% plan and Profit Sharing is each participant is it's own group. The participant signed an Irrevocable Election Not To Participate on 6/17/2016, her date of Hire was 11/7/2014 and eligibility was one year and dual entry, so her eligibility date would have been 1/1/2016. The plan is a service term and the new advisor is questioning that she should be included in coverage testing( in the 410B group shes in an excluded group) How should she have been listed in the 410 b group? Also, should she have received a SHNE 3% contribution for plan years 2016-2019? Thanks!"
3 replies   |    55 views   |    Add Reply

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AndrewZ created a topic in Retirement Plans in General

Participants never vest due to nature of jobs

"A small company's industry is that of leasing its employees to other companies for their specific projects, so its employees typically don't work for it more than 18 months, and aren't typically re-hired. My understanding is that the employees understand this when they're hired. Therefore, even though employees become eligible for profit sharing contributions due to satisfying initial eligibility requirements, most of them terminate with 0-20% vesting under the 2/20 schedule. There are around 30-50 NHCE participants and a few HCEs. It seems to me that there could be BRF "effective availability" issues, partial plan terminations (though that's "facts and circumstances" and it could be argued that the terminations are voluntary), and the Form 5500 reporting of large #s of partially-vested terminees could be an audit flag. And just the general design seems clear that it's intended to circumvent nondiscrimination rules to only benefit the owners, and the government would view it that way in an audit even if there's not a black-and-white violation. The "safe harbor" plan option for Leasing Organizations (100%-vested MP plan, that allows a recipient organization to exclude such Leased Employees) may indicate that the IRS wants to avoid this type of scenario. Maybe an ERISA's attorney's opinion that this specific employer's employee terminations are voluntary and don't create annual partial plan terminations, with a caveat to the employer by the TPA that it can't ensure that the government may not approve if the plan were to be audited, would help? Also, I'm wondering if a vesting schedule was chosen where most participants at least partially-vest, or if they're receiving a 3% Nonelective Safe Harbor contribution, would give them a meaningful benefit that may help. I'd appreciate any input on this. Thanks."
0 replies   |    28 views   |    Add Reply

Ed S. created a topic in Retirement Plans in General

Bonding Nonqualifying Assets

"I am researching Insurers that issue Bonds for Non qualifying assets. Colonial Surety and Surety One, I have used in the past, but both are relatively expensive. Any other out there that might be recommended?"
0 replies   |    30 views   |    Add Reply

Belgarath created a topic in Correction of Plan Defects

VFCP Calculator

"Anyone have a pipeline to the DOL? The calculator is great, but it would be GREAT if they could allow you to input the final payment date just once. Frequently there are a gazillion entries that have the same final payment date, and having to enter it each time is a PIA. Or is there some way to do it already that I don't know about? If so, I'd greatly appreciate someone instructing me in the error of my ways!"
7 replies   |    52 views   |    Add Reply

Dagwood created a topic in 401(k) Plans

Reasonable Segregation

"We have a prospect who wants to implement a 401(k) plan as soon as possible and we are coming into the discussion late. The investment vehicle will be a major daily valued platform and this provider cannot implement the platform before January 2021. The provider has advised the client to go ahead and start deferring and keep the deferrals in their checking account until the platform is ready to receive contributions. I assume they are playing on the reasonable segregation language but I am not terribly sure what they are thinking. I don't see how this possibly would not be a prohibited transaction, not only is it outside the Safe Harbor, any deferrals in November would be outside the standard even if reasonable segregation/admin feasibility is applied. I can't find this situation anywhere, but surely it has occurred before. I just want to make sure I'm not missing something here."
1 reply   |    41 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

Non-Profit and For Profit

"Non-Profit organization is not part of a controlled group with a For Profit company (I don't think its even possible?). But there is some very strong connection between the two, probably donation driven, maybe the for-profit handles the accounting work, I don;t really know. Any reason they both cant participate in the SAME 401(k) plan?"
4 replies   |    47 views   |    Add Reply

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