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Message Boards Digest

January 15, 2021

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

Santo Gold created a topic in Distributions and Loans, Other than QDROs

Who's the Beneficiary in This Scenario? First Spouse Predeceases Participant

"Participant enrolls in a 401k plan in 2016 and names his wife as beneficiary and son as contingent beneficiary. Lump Sum-only distribution, no J&S.

The wife passes away, then the participant passes away in 2020. The participant had remarried (not sure when) before he passed away in 2020. A new beneficiary form was not completed.

Is the son still the beneficiary because he was named as the contingent beneficiary on the beneficiary form that is on file? Or is it the new spouse, even though there is no beneficiary form stating her as the beneficiary? I think the new spouse is the beneficiary."

3 replies   |    50 views   |    Add Reply

bito'money created a topic in Defined Benefit Plans, Including Cash Balance

Is 401(a)(9) Late Retirement Actuarial Increase Required to Start at April 1 After 70-1/2 for Vested Participant Who Hasn't Attained NRA by Then?

"Plan's eligibility provision requires one year of service, vesting is 5-year cliff and Plan's normal retirement age is later of age 65 or the fifth anniversary of plan participation. NRD is the first of the month on or after NRA.

Participant is hired at age 65, hits the one year of participation requirement at 66 (in the following year). He attains 5 years of vesting service in the year he hits age 70 so he became fully vested a few months before he hit his NRD (since he won't hit 5 years of participation until the beginning of the next plan year when he hits age 71). He then continues to work beyond NRD--working full time until he retires at a late retirement date, age 73. (Plan provides for suspension of benefits in cases of delayed retirement, but this may not be relevant here since the participant's NRD falls later than 4/1 after the end of the calendar year he attains 70-1/2).

When the participant eventually terminates (at age 73), is the actuarial increase starting date: [1] 4/1 after the end of the calendar year he attained age 70-1/2? or [2] NRD (i.e., the first day of the plan year in which the fifth anniversary of his participation occurred)?"

3 replies   |    42 views   |    Add Reply

SViola created a topic in 401(k) Plans

ACP Test Correction -- Refund of Investment Gains

"If the ACP test fails and the match has not yet been deposited because it's calculated on an annual basis, do gains need to be included in the amount that is refunded?"

1 reply   |    38 views   |    Add Reply

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

What Is Correct Address for Forms 1096/1099-R Hard Copy Filing?

"The general instructions for the 1099-R forms indicate a mailing address for us in NYS as: 'Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301' (same as last year). But I see on the actual 1096 'red' copy this filing address: 'Internal Revenue Service, Austin Submission Processing Center, P.O. Box 149213, Austin TX 78741'. I'm assuming the forms will get there either way, but I'd like to advise my clients accordingly for proper filing. Thoughts?"

0 replies   |    17 views   |    Add Reply

waid10 created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Health Plan - Premiums Paid by Company for Owner But Not for Employees

"Physician practice is wholly-owned by Doctor. The Practice pays for the premium cost for employee-only coverage. If an employee wants to elect family coverage, the employee must pay for the additional cost. The Doctor, however, has family coverage; and the Practice pays for entire cost of his family coverage. Does this create an issue?"

0 replies   |    16 views   |    Add Reply

AlbanyConsultant created a topic in 401(k) Plans

Not Meeting Eligibility Due to COVID Reduction in Hours Worked

"For the many plans that have a YOS requirement (or some other hours.... but mainly YOS, I suspect), there might be an issue where employees who were otherwise expected to be working enough hours to meet eligibility had their hours reduced due to COVID (layoffs, etc.) and now didn't meet that threshold in whatever eligibility computation period you're looking at that covers 2020. These people just.... don't become eligible yet, right? Nowhere in any of the regulations or relief was there anything like they get additional credit for some number of hours for purposes of X, Y, and Z including retirement plan eligibility, was there?

Not that I'm expecting that people who were out of work for months to be putting retirement savings at the forefront of their financial decisions, but this also likely affects eligibility for safe harbor and other employer contributions, so they're going to be a year behind (in the best-case scenario) for those contributions."

1 reply   |    36 views   |    Add Reply

#toomanyrules created a topic in 457 Plans

Make-Up Contributions

Non-governmental 457(b) plan permits make-up contributions within the 3 years prior to Normal Retirement Age (age 65).

Participant is age 64 as of 12/31/2020 and his prior year contributions have been as follows:

  Contribution          Annual             Limit           2X Annual Limit Unused Limit
12/31/2013 10,000.00 17,500.00 35,000.00 7,500.00
12/31/2014 15,000.00 17,500.00 35,000.00 2,500.00
12/31/2015 17,000.00 18,000.00 36,000.00 1,000.00
12/31/2016 17,500.00 18,000.00 36,000.00 500.00
12/31/2017 19,000.00 18,000.00 36,000.00 (1,000.00)
12/31/2018 22,000.00 18,500.00 37,000.00 (3,500.00)
12/31/2019 24,000.00 19,000.00 38,000.00 (5,000.00)

For 2020, the last year in which the participant is eligible for make-up contributions, is his max make-up contribution $2,000 (the sum of the unused limits)? Or, is it $11,500, the sum of unused limits from 2013 - 2016? 

Basically, do I reduce the $11,500 each year in which he made make-up contributions? I think so, but just looking for confirmation.

 

1 reply   |    18 views   |    Add Reply

Ken McDonnell created a topic in Other Kinds of Welfare Benefit Plans

CFPB's 2020 Financial Literacy Annual Report

"The 2020 Financial Literacy Annual Report of the Consumer Financial Protection Bureau is now available, as required under Section 1013 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The report details the Bureau’s financial literacy strategy and activities to improve the financial literacy of consumers. It highlights our work including:

  • Response to the COVID-19 pandemic
  • Pivot to financial resilience
  • Start Small, Save Up campaign
  • Foundational research to understand the pathways to financial well-being
  • Misadventures in Money Management online training program
  • Managing Someone Else’s Money guides
  • Your Money, Your Goals toolkit
  • Paying for College tool
  • Direct to consumer tools, community outreach channels, and areas of research.

Congress specifically charged the Bureau with conducting financial education programs and ensuring that consumers receive timely and understandable information to make responsible decisions about financial transactions. Empowering consumers to help themselves, protect their own interests, and choose the financial products and services that best fit their needs is vital to preventing consumer harm and building financial well-being. The ultimate goal is to improve the financial literacy of all consumers in America and we are committed to bringing together partners from across sectors to develop and execute a strategy to achieve this outcome. We will continue to build on our efforts going forward to prevent consumer harm and ensure that consumers are protected. We look forward to our continued work together on this effort."

https://www.consumerfinance.gov/data-research/research-reports/2020-financial-literacy-annual-report/

0 replies   |    13 views   |    Add Reply

Mike Preston created a topic in How to Use the Message Boards (a.k.a. Forums)

Upgrade for Software That Runs the Message Boards

"Can we set focus to first unread rather than top of topic?"

3 replies   |    50 views   |    Add Reply

mydayjob created a topic in Cafeteria Plans

DCFSA Rollover from 2020 - Does it Require Offset to 2021 DCFSA Limit

"Some publications indicate that the DCFSA limit of $5,000 for 2021 needs to be adjusted for any rollover amounts from 2020 (i.e., if P rolls over $2,000 from 2020 DCFSA, their 2021 DCFSA election cannot exceed $3,000). Does anyone agree with this?"

0 replies   |    8 views   |    Add Reply

Vlad401k created a topic in Distributions and Loans, Other than QDROs

Loan Offset treated as RMD

"We have a participant in a 401k plan who is 74 years of age and was terminated in 2020. He will be subject to the RMD in 2021 and he wants to rollover the entire balance to an IRA. He also has a Loan Balance, which will have to be offset. Can the offset be used to satisfy the RMD requirement? Thanks!"
0 replies   |    16 views   |    Add Reply

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