Message Boards Digest

December 4, 2020

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

runningabizness created a topic in 401(k) Plans

Merging Two Plans of Controlled Group Members

"Controlled group of 2 entities. Both entities have an existing basic solo 401k plan with a brokerage firm. The goal is to restate those plans into one custom solo 401k plan that either entity can contribute to as part of the controlled group.

The new plan document lists the original effective dates for both plans, specifies that it is restating a previously-adopted plan and creates a new trust for the plan effective in 2020. The plan administrator/sponsor is the 1st entity. The plan also states that members of a controlled group can contribute to it.

I know the new plan will need to file a 5500-EZ for 2020 because the assets will be over $250k. I believe that both entities need to sign a resolution to adopt the plan. Is there anything else that needs to be done? Particularly for the 2nd entity because its own plan is basically going away and merging into the new plan under the name of the 1st entity?"

6 replies   |    89 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Is This a Partial Termination?

"CB plan with 0/0/100 vesting. This is the second year. Plan year is 7/1/2020 to 6/30/2021. Currently 5 eligible employees: 1 owner, 1 non-owner HCE and 3 non-HCEs. Two of the non-HCEs are leaving (or maybe they've been fired - not sure). The only new hire is from beginning of plan year; he's the spouse of the owner. Does not look like additional new employees to be hired for the next 6 to 12 months. Do I have a partial termination issue? Does it matter if the employees are terminating before or after 1000 hour accrual?"

0 replies   |    20 views   |    Add Reply

Jakyasar created a topic in Distributions and Loans, Other than QDROs

RMDs to Beneficiaries After Death of the Participant

"I was asked the following (not sure if it's a DC plan or a 403(b) plan). Not sure if the deceased was already receiving RMD and do not know the ages of the beneficiaries. Assume that the sisters get the amounts this year and roll over into their IRAs.

[1] I don't think they need to get an RMD for 2020, correct?

[2] Do they need to distribute the IRAs and taxed on within 5 or 10 years?

[3] When will year 1 start?"

6 replies   |    44 views   |    Add Reply

Gilmore created a topic in Retirement Plans in General

Effect of Coronavirus-Related Distributions on Top Heavy Determination

"I was wondering if anyone would mind sharing their thoughts on how to handle CRDs with respect to top heavy determinations. I'm assuming that a CRD for an active employee would be considered as an in-service distribution for top heavy determination.

If that is correct, what happens if the employee rolls the CRD back into the plan? Is the original distribution still considered an in-service distribution, and the rollover treated as an unrelated rollover? I wouldn't think you would treat it as both an in-service distribution and a related rollover. Or is the in-service distribution replaced by the rollover for top heavy determination?

What if the employee took a $100,000 CRD? Without a rollover back to the plan I would think that would be an in-service distribution for 5 plan years. That is a static amount for a limited period of time. If instead the rollover replaces the in-service as a related rollover, that then becomes a fluctuating amount for an indefinite period of time.

One step further, what if the employee only rolls $50,000 of the $100,000 back to the plan. Is there than a $50,000 in-service distribution for 5 years, and a $50,000 related rollover?"

1 reply   |    26 views   |    Add Reply

Tedterrific created a topic in Retirement Plans in General

Combo Testing for Plans with Different NRAs

"We have a cash balance plan with NRA of 62+5 and a 401k plan with NRA of 65+5. For 401(a)(4) testing, what NRA do you use? Note that software seems to only allow one NRA assumption. I am inclined to use 62+5 because that would be the least advantageous for NHCEs in the 401k plan. But technically should you test under both NRAs? Or somehow test using different NRAs for each plan?"

3 replies   |    30 views   |    Add Reply

arthurkagan created a topic in Miscellaneous Kinds of Benefits

DOL Accepts a Signed Fax Page for Form 5500?

"Plan sponsor communicates by fax but not email. Signs 1st page of Form 5500 sent by fax. Will the DOL accept a Form 5500 signed by plan sponsor on a faxed page?"

2 replies   |    23 views   |    Add Reply

Robin Wilson created a topic in 401(k) Plans

Switching from Elapsed Time to Actual Hours: Anti-cutback Problem?

"I have an amendment for the following:

[1] Change service crediting method for eligibility from Elapsed Time to Actual Hours

[2] Change service crediting period for eligibility from Anniversary to Anniversary switching to Plan Year

[3] Change service requirement from 1 year period of service to 1 year (1000 hours) of service

[4] Change plan entry dates from 'the first day of the month on/after meeting eligibility requirements' to 'the first day of each calendar year quarter on/after meeting eligibility requirements'

[5] All requested changes effective 01/01/2021.

The Plan currently has SHNE provisions.

Can this amendment be applied to all employees who have not yet entered the plan? Are there any cut-back issues that come into play?"

1 reply   |    21 views   |    Add Reply

Pensions2020 created a topic in 401(k) Plans

Charging Participant Accounts for TPA Fees

"What sort of notice may be required to pay our TPA fees from Plan Assets? We still have not been paid for 2019 services because the client's business has been heavily affected by COVID, so a thought about paying our services from Plan Assets came up. Our document allows for this. It seems like an allowable fee to charge to participant accounts but I am wondering if I am missing anything about having to let participants know about this. We would likely do the same for 2020 services as well."

3 replies   |    42 views   |    Add Reply

NW529 created a topic in 401(k) Plans

415 Limit Affected by Recharacterized Catch-up?

"A participant is catch-up eligible and 415 compensation is $16,500. The participant deferred $8,750 and received a match of $8,750. Does the 415 test pass because $1,000 is re-characterized as catch-up?"

1 reply   |    26 views   |    Add Reply

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