Message Boards Digest

December 21, 2020

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

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

Interest Due on Non-RASD Delayed Payments?

"Does anyone have any insight on whether interest is required on delayed (non-RASD) payments? I've read Stephens v. U.S. Air, which suggests the courts (or at least the D.C. Court of Appeals) will require plans to pay interest on delayed payments. However, I cannot find anything in the regulations that require it."

3 replies   |    42 views   |    Add Reply

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

Participant Didn't Follow Terms of QDRO

"Which rules govern, and why? [1] QDRO stating alternate payee (former spouse) gets 50 percent. Was signed in 2000. [2] Participant in 2005 retires, choosing payment that has no survivor benefits. If QDRO was legal and in place by 2000, then the participant can't waive survivor benefits, can he? Plan manager overlooked the QDRO. Note: in the order, any changes must be reported to the judge. The plan never reported this change."

4 replies   |    51 views   |    Add Reply

EBECatty created a topic in 401(k) Plans

Moving from Eligible Class to Ineligible Class During Year -- How to Treat Under a Safe Harbor Plan?

"If a 401(k) uses a nonelective safe harbor, and an employee who is employed all year moves from an eligible to ineligible class during the year, is it permissible to say their SHNEC will only be based on their compensation earned while in the eligible category? For example, the participant starts off the year in an eligible class (Division A). They can defer, etc. Then on September 30 they move to an ineligible class (Division B). They are no longer eligible to defer as of moving to Division B on September 30. The plan says the SHNEC will only use their compensation while in an eligible class (Division A). Participant earned $100,000 total, $75,000 through September 30 and $25,000 from October 1 through December 31. Can the SHNEC be based on $75,000?"

2 replies   |    36 views   |    Add Reply

Stash026 created a topic in 401(k) Plans

Plan-Specific EIN Number Required for Form 5500?

"I had been told a long time ago that we needed to get an EIN# specific to the plan and not use the employers on the Form 5500. Is this no longer the case? One of our clients got a notice and it would appear that we should be using the employer's EIN# to file the Form 5500."

2 replies   |    41 views   |    Add Reply

Bird created a topic in 401(k) Plans

'Maybe' Notices Required for 'Maybe' Safe Harbor Nonelective Plans?

"Most of our SH plans are of the 'maybe' variety. Based on the SECURE Act, I took the position that the end of year 2020 notices did not need the maybe language and just said 'yes it's a SH for 2020.' Then when I was writing a new plan for 2021, I automatically checked that option (maybe), but starting thinking ... hmmmm, maybe I should just be saying 'no' and amending retroactively.

I asked our doc provider, ftwilliam,com, and they said (conservatively I think) that if we check the 'maybe' box then we need to do the 'maybe' notice. But I'm thinking that this is just due to the fact that the docs are not amended yet for SECURE, and when those amendents are done, they will more or less fix everything (by eliminating the maybe option or exactly what, I'm not sure).

Notice 2020-86 says in A-10: 'Accordingly, the retroactive plan amendment rules of Section 1.401(k)-3(f) no longer apply for those plan years.' I think that means the maybe notice is defunct, dead, gone no matter what. I hope this makes sense. I'm not too worried about it but should I be (about not doing the maybe notice which the plan, as currently written, calls for)?"

3 replies   |    68 views   |    Add Reply

cheersmate created a topic in Cross-Tested Plans

New Comparability Plan -- Bifurcate Testing? (Cross-testing for Some, Allocation Rate for Others)

"4-participant plan. 2 HCEs (father, son). 2 NHCEs (1 young, 1 older). Plan provides 401k, 3% SHNEC and discretionary PS by rate group (each participant is in own). The Gateway is 5%.

I would like to restructure for 401(a)(4) testing, like so: 1 HCE (father) and 1 NHCE (younger) based on cross-testing, and 1 HCE (son) and 1 NHCE (older) based on allocation rate testing. Each will pass coverage at 100%.

Provided the cross-tested group passes (and it does) and the the Allocation Rate-based group passes (proposed same percentage for HCE as NHCE), the Plan passes, correct?"

2 replies   |    44 views   |    Add Reply

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

Running the 110% Test on a Cash Balance Plan

"I was asked to perform a 110% test for a cash balance plan and see if an HCE is eligible for lump sum. I was told the client is eager to pay the lump sum. I have done this many times for a defined benefit plan and never needed for a cash balance plan. As I am not 100% sure, would one of the 2 methods be acceptable? [1] Simply use the account balance (no 415 issue) as of distribution date (adjusted for interest credit if required) and compare to the assets as of the same date, or [2] Determine the AB's as of distribution date and convert them to lump sum? PVAB would be based on plan actuarial assumptions, 430 assumptions, 417e assumptions? Any other methods that are acceptable that I am not thinking of?

Also, do you provide the client the method to choose as sometimes one method would allow lumpsum where another would not? I remember this discussion sometime ago and some well known actuaries had no issue to let the client decide between 430 and 417e options (it was for a defined benefit plan), as long as the ramifications were well explained and disclosed to the client."

0 replies   |    32 views   |    Add Reply

Gentleman142 created a topic in Distributions and Loans, Other than QDROs

Trying to Figure Out How Much I Can Withdraw During Retirement

"I have a 401k with $350,000. I am age 61 and want to start withdrawing every month. Is there a calculator to use? What percent of the balance am I able to withdraw every month and still have a balance in 25 years?"

10 replies   |    64 views   |    Add Reply

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

Rescinding a Plan Termination Despite a Distribution

"I recall a couple of users chiming in that it's possible to rescind a plan termination by corporate resolution. If so, would a distribution to a pre-59-1/2 active employee preclude rescission? The employee is an NHCE. I doubt it has any bearing from a qualification standpoint."

2 replies   |    41 views   |    Add Reply

Judge Mental created a topic in Retirement Plans in General

Having Trouble Getting My Retirement Checks to Phillipines from U.S. Company

"I am a retired American living in the Philippines since 2003. I retired from the Federal Reserve Bank which is not government but private enterprise. I need some advice on a very difficult problem. Due to Covid-19 the Philippines government has stopped all deliveries of US mail to customers indefinitely. My pension check is sent to me through the mail and I have not received one since April 2020. Direct deposit is not possible since US banks do not allow direct deposits to foreign banks.

Of course, I have been in contact with the FRB's Office Of Employee Benefits for some time now but the last notice I received from them was negative about any further help changing the way the checks are sent out. I had suggested that the checks be sent out by private courier instead of the mail so that it would come directly to me. I even offered to pay for the service myself but since no provision for that is included in the directive manuals of the FRB, I was told nothing could be done. So I am without my retirement benefits and apparently will be for the foreseeable future.

I am wondering if anyone has any ideas that could help me. I don't know if any rules or regulations exist that govern the sending out of pension checks. In this case I doubt that anyone could have anticipated this problem due to Covid-19. Does ERISA has anything to say about this problem?"

1 reply   |    41 views   |    Add Reply

khr created a topic in 401(k) Plans

Participant in Plan Only for a Few Days at Start of Plan Year

"If a participant terminates in December of 2020 but has small compensation and 401k paid in January of 2021, should they be included in all of the testing for 2021?"

1 reply   |    39 views   |    Add Reply

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