Message Boards Digest

November 18, 2020

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

Catch22PGM created a topic in Mergers and Acquisitions

Merger of 401(k) Plans Having Different Vesting Schedules Raises Compliance Issues

"Company A acquired Company B and each have 401(k) plans. Plans will be merging 12/31/2020. Company A 401(k) Plan (surviving plan) has immediate vesting for all sources. Company B 401(k) Plan (merging plan) has a 6-year graded vesting schedule for match and profit sharing. [1] Can the surviving plan continue the 6-year graded vesting schedule for all of the merging match and profit sharing money (active and terminated participants)? I think this is yes but value opinions. [2] Can the surviving plan continue the 6-year graded vesting schedule for the merging terminated participant accounts while providing 100% immediate vesting for merging active participant accounts? [3] Can the surviving plan provide immediate 100% vesting for all of the merging match and profit sharing money (active and terminated participants)? I'm not sure why they would, but need to cover all options."

2 replies   |    34 views   |    Add Reply

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austin3515 created a topic in 401(k) Plans

Various Scenarios in Applying the Rule of Parity

"In the case of a former employee who, under the terms of the plan, does not have a vested right to any interest in the plan from employer contributions, has anyone found a good article from a good source on what that means? I would love to see a table with entries for the following:

  • Eligible for 401(k) but never made any contributions
  • Eligible for 401(k) but took a distriubtion shortly after termination
  • Eligible for 401k and never took a distriubtion
  • Eligible for profit sharing but never received an allocation
  • Eligible for profit sharing and took a distribution shortly after termination

You get the point. There is a different logic for each of these scenairos. Anyone ever see anything that really go through this in detail?"

3 replies   |    55 views   |    Add Reply

arthurkagan created a topic in 403(b) Plans, Accounts or Annuities

Converting 403(b) Plan to 401(k) Plan -- What Are the Issues?

"Plan sponsor has 403(b) plan which complies with ERISA, and each participant has individual account. Plan sponsor makes matching contributions each payroll. Wants to convert plan to 401k administered by Paychex. Plan sponsor does not have HR director, and feels it would be easier to have the same payroll company and TPA. Assume 403(b) plan termination occurs as of 6/30/2021, and want to start new 401k 7/1/2021. Are there any special legal issues in terminating the existing plan or starting the new plan, considering that participants are not terminating employment? Is there a required 12-month wait between the termination date and the new plan starting date? How must the individual accounts of the 403(b) be handled? Do participants have a choice of taxable distribution, rollover to IRA, or rollover to new 401k plan, or a combination of choices?"

2 replies   |    35 views   |    Add Reply

Chris123 created a topic in 401(k) Plans

Rollover from U.S. Qualified Retirement Plan to TSP for Federal Employee in Puerto Rico

"I'm writing with a question regarding rollovers from US plans to TSP plans for federal employees in Puerto Rico. There are two federal employees (doctors) who recently relocated to Puerto Rico and work at the VA Hospital in San Juan. They both have stateside qualified plans (one in Michigan and one in Florida). I know they wouldn't be able to rollover from a USA plan to a PR plan unless it is dual-qualified but I'm unsure what the rules are when as to federal employees. Can they roll over from a stateside 401(k) or 403(b) into their TSP here in Puerto Rico?"

0 replies   |    19 views   |    Add Reply

AlbanyConsultant created a topic in Retirement Plans in General

Legal Fees for Analysis of Affiliated Service Group Issues: Part of 'Start-Up Costs' for Purposes of Tax Credit?

"I've got a new plan where the potential ASG issues are complicated enough that I felt that they should go to an ERISA attorney to make sure which side of the line they fell on, and they are in the process of doing so. Are those attorney fees includable in the start-up costs for purposes of the new plan credit? Seems like they should be."

0 replies   |    12 views   |    Add Reply

dcadenhead created a topic in Qualified Domestic Relations Orders (QDROs)

My Ex-Spouse's Previous Spouse Gets a Pension Benefit But I Do Not

"My ex retired on purpose after coming into $62,000.00. He retired in order to reduce his support obligation to me because we have a 10-year-old daughter together. He was married before me; they had 2 children who are grown adults. One is married. His attorney is claiming that his former spouse is entitled to $347 per month of his pension payment because of a QDRO. I don't understand this. I didn't receive a QDRO in my divorce and I was married to him longer than his first spouse. (They were married 5 years and we were married 8.) How can this woman be entitled to anything when the children are grown and gone, and how can the amount that he has to pay her have anything to do with the calculation of his child support obligation? I don't feel she should get anything. But if that's the law, then at the very least the $347 she receives should not reduce his monthly income for calculation of support for his daughter with me."

0 replies   |    15 views   |    Add Reply

Plan Doc created a topic in 401(k) Plans

HCE-Only Discretionary Match with NHCE-Only Safe Harbor

"I'm looking at a plan that provides for a safe harbor match of 100% of deferrals up to 4% of compensation, available only to NHCEs. The plan also has a discretionary match, which excludes NHCEs. Consistent with the otherwise applicable requirements for safe harbor status, the plan states that matching contributions will only apply with respect to deferrals that do not exceed 6% of plan compensation and to the extent that any matching contribution formula is discretionary, the total amount of discretionary matching contributions will not exceed 4% of plan compensation. I am concerned about the exclusion of NHCEs from the discretionary match. This plan design might negate any reliance on the safe harbor. Any thoughts? Does the exclusion of HCEs from the safe harbor contribution make any difference insofar as upholding the plan's safe harbor status?"

0 replies   |    26 views   |    Add Reply

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