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Message Boards Digest

December 9, 2020

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

thepensionmaven created a topic in 401(k) Plans

401(k) with Voluntary After-Tax Contributions

"I have a 401K safe harbor with voluntary, after-tax contributions. One of the owners mistakenly over contributed a portion of the voluntary such that he's over 415. Since voluntary is not deductible anyway, could the excess be transferred to a rollover account?"

9 replies   |    82 views   |    Add Reply

JARichardson created a topic in 401(k) Plans

Fee Disclosure Didn't Include All Fees

"The fee disclosure that was provided to participants didn't include all the TPA fees being deducted from participant accounts. I can't find anything that addresses what the correction procedure is. Can anyone offer direction?"

3 replies   |    48 views   |    Add Reply

draper1 created a topic in Defined Benefit Plans, Including Cash Balance

Unpaid Minimum Excise Tax -- What Happens in Year 2?

"Suppose a 5500 shows an unpaid minimum for one year (2018). If the unpaid minimum is not corrected by the time the of the next 5500 filing (2019) and thus is reflected on the schedule SB line 40 and on the 5500SF line 11a, will the 10% excise tax be experienced again on the yet unpaid amount? I know in theory a 100% tax can be imposed but can the initial tax be imposed more than once similar say to prohibited transactions?"

1 reply   |    33 views   |    Add Reply

tsrl01 created a topic in Distributions and Loans, Other than QDROs

Require Letter of Testamentary for Distribution on Death?

"We have a situation where a participant in a plan has died. His brother has provided a POA naming him. He doesn't have any letters of testamentary because he's saying he doesn't need one -- he's the POA. Our process is to require letters testamentary, to see who was appointed the executor. Are we OK distributing to the estate without the letters testamentary -- just distribute to the estate -- paid to the estate, etc.? I think we still need one because I think we need something to show that this person has the authority to sign on behalf of the estate."

3 replies   |    38 views   |    Add Reply

mming created a topic in 401(k) Plans

Employer with SIMPLE IRA Wants to Add New 401(k) Plan

"Although contributing to both a 401(k) and a SIMPLE IRA in the same year is not allowed, can an employer keep the SIMPLE account open if the only contributions made going forward are to the 401(k), or must they close the SIMPLE account before the 401(k) plan is started?"

1 reply   |    23 views   |    Add Reply

Billypilgrim created a topic in Defined Benefit Plans, Including Cash Balance

Individual CB/DB Plan for Partnership Members with No Employees

"This is for a medical group partnership with no employees and all HCE's, common in emergency medicine. Each member is a separate entity but the group is an affiliated service group. Are individual cash balance plans allowed? I believe some members may have them already."

2 replies   |    29 views   |    Add Reply

Robin Wilson created a topic in 401(k) Plans

Switching to More Restrictive Vesting Schedule

"Client is wanting to change their vesting schedule from 100% immediate to 4-year graded (25/80/75/100). My understanding is that vesting is a protected benefit which cannot be reduced or eliminated. The more restrictive schedule must be applied to all future contributions received on or after the effective date of the change... unless you make all current participants 100% immediately vested in all future contributions as well and apply the more restrictive schedule to new participants. Are there recent or newer regulations addressing this that may have a different application than the one I've described? Is this how more restrictive vesting should be applied?"

2 replies   |    27 views   |    Add Reply

coleboy created a topic in Operating a TPA or Consulting Firm

What's the Typical Workload (Number of Plans) for a TPA/Administrator?

"I work within a payroll company where the main objective is sell as many plans as possible to meet sales goals. Right now we have over 300 plans and more coming in every day.. Including myself there is only 1 other person that knows how to administer the plans. I have only other employee that unfortunately doesn't understand the concepts so his role is minimal. Also, being a payroll company our area uploads the contributions for our payroll clients which is more than a full-time job by itself. How big is a typical caseload for 1 administrator?

I am seriously considering resigning after 7 years because I do not feel I can give the quality service that needs to be given to clients. I'm tired of working many long hours and cringe that our busiest season is right around the corner. The stress is beginning to affect my physical and mental well-being but I find myself wondering if I should just suck it up and continue in this situation. I've never resigned from a company before. The only perk is that I can work from home."

4 replies   |    52 views   |    Add Reply

jmartinrps created a topic in Form 5500

Delinquent 5500-EZ Coupled with Excess Contributions (Over the 415 Limit)

"Taking on a new client (solo - EZ). They never filed 5500EZ for 2016-2019 so we are working to clean up. While working on these 5500s, I discovered they deposited $500 too much in 2016 ($500 past 415 limit), and $35K too much for 2017. There were no contributions made in 2018 or 2019. What would you recommend as the best way to fix the excess contributions? I am thinking that he needs to remove this money from the plan along with earnings."

1 reply   |    19 views   |    Add Reply

Bird created a topic in Retirement Plans in General

Controlled Group, But Only for Part of Year

"Two companies, one a partnership 67/33% owned, and one an S corp, 75/25% owned respectively until May 1, then 100% owned by the majority owner. As of May 1, 2020, the partnership effectively dissolves in an asset sale. The S corp has lots of profits for this year and probably a couple of years going forward. Any thoughts on how to set up a DB for the (one-person) S corp? Can we 'just' make it effective May 1? I think a primary concern is the 'effective' dissolution of the partnership; it's probably in existence thru December 31. But no discrimination problems since the only other person potentially in is an owner."

1 reply   |    17 views   |    Add Reply

msmith created a topic in Plan Document Amendments

Cycle 3 Document Restatements -- Using the 'Collapsible Version'

"The Document Provider we will be utilizing for the Cycle 3 restatements has a notation at the top of the first page, on the Adoption Agreement--

'[Collapsible Version -- Elections that are not selected by the Employer and provisions that are not integral to the Plan are not included in the Adoption Agreement. A complete version of the Adoption Agreement has been made available for review to the Employer. The Employer certifies all provisions and elections appearing in this Adoption Agreement were taken from the complete version of the Adoption Agreement.]'

We are utilizing the Collapsed Version and do not wish to supply the Plan Sponsor with the Adoption Agreement with all unselected provisions. We can see where the Client might just use this to 'amend' their Plan, without informing us of the change. Obviously, we could add a watermark--but as you know, this will not stop some Clients from using it anyway. How are other people handing this?"

1 reply   |    22 views   |    Add Reply

legort69 created a topic in 401(k) Plans

Top Paid Group Election -- Effect of 'Rounding Down'

"During 2019 there were 2 employees and one earned more than the HCE limit. If we elect the TPG in 2020, then there should be no HCEs in 2020 because we round down (2 x 20%). Just want to confirm that there's no issue here because we are consistent with our rounding policy, and that there's no rule we have overlooked."

4 replies   |    41 views   |    Add Reply

Chipwood 24 created a topic in 401(k) Plans

Solo (k) Plan -- Whether and When Form 5500s Are Required

"A business has 3 unrelated owners who each own one-third of the business. The business has no other employees. Can this business sponsor a single plan that is considered an owner-only/'solo plan' which is exempt from nondiscrimination tests and 5500 filing? The business is structured as an LLC and taxed as an S-Corp."

5 replies   |    43 views   |    Add Reply

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