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Message Boards Digest

January 18, 2021

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

Jakyasar created a topic in Retirement Plans in General

What Fees Can Be Paid from the Assets of This Overfunded DB Plan?

"Dealing with an overfunded defined benefit plan (DBP). Plan covers only the owner and spouse and not covered by PBGC. Client asked me if he can pay the following fees from plans assets:

[1] He has an independent contractor (IC) working for him on a personal level (family related matters) however sometimes helps gathering annual data for the DBP. The IC is always paid from personal funds. Client wants to know if the fees related to the time spent on the plan related issues can be paid from the plan.

[2] The client's CPA for the sponsor also does help with plan related issues and client wants to know if time spent on plan related issues can be paid from the plan's assets to the CPA directly from the plan.

[3] Client, as the trustee, wants to get paid from plan assets for his services to the plan as investment advisor."

4 replies   |    67 views   |    Add Reply

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

Loan Taken from DB Plan Without Participant's Spouse's Consent -- Correction Available?

"Client asked for a loan from the DB plan last December. Sent the paperwork with all instructions. Client signed the form but did not get the spousal consent nor the spousal consent was notarized. Client took the loan out from the DB plan in December. What's the corrective method for this, if any?"

3 replies   |    47 views   |    Add Reply

Era created a topic in IRAs and Roth IRAs

Backdoor Roth Conversion: Is Loan Offset Rollover 'Deductible' or 'Non-Deductible' Contribution?

"I'm seeking to convert a Traditional IRA to Roth IRA (backdoor Roth). All of the contributions to the Traditional IRA were non-deductible due to income limits EXCEPT that it includes a loan offset rollover contribution (401k loan taken out, laid off, did a loan-offset rollover for the loan amount into the IRA). Is the loan offset rollover amount 'deductible' or 'nondeductible' for conversion purposes? Trying to calculate the pro-rata taxable amount since the account now includes investment gains that would be taxable, but don't know how to classify that loan offset contribution."

1 reply   |    40 views   |    Add Reply

JustMe created a topic in Nonqualified Deferred Compensation

Terminate a NQDC without Distribution of All Assets? Freeze It?

"We have a NQDC plan and the Plan Sponsor wants to terminate it because no employees are funding to it any further. There is one participant remaining with contributions invested in an annuity. Participant doesn't want to take a distribution, so there is no request to accelerate the payout. Can the plan be terminated with an account balance remaining in the plan, or must the assets be distributed upon plan termination? If so, would the suggestion be just to freeze the plan rather than terminate it?"

2 replies   |    35 views   |    Add Reply

BG5150 created a topic in Retirement Plans in General

Chart of Different Types of Retirement Plans?

"I used to have a chart that listed a bunch or retirement plans and which could be had in the same year and which couldn't. Anyone have anything like that?"

1 reply   |    45 views   |    Add Reply

C Williams created a topic in Distributions and Loans, Other than QDROs

Tax Reporting on Excess Contribution - 401(k) / IRA Rollover

"What is the tax reporting on an excess pre-tax deferral that happened in a 401(k) for calendar year and plan year 2019, but was distributed in April of 2020 from a rollover IRA account? Plan trustee sends a corrected 2019 1099-R in April 2020 with the lower/corrected amount. For example, $40,000, but excess was $10,000, so the corrected 1099-R shows $30,000 on the corrected 2019 1099-R. The IRA custodian reports a 2020 1099-R with a code 1, so the funds are subject to an early distribution penalty as participant is under 59-1/2? Any help to explain how the plan should have reported and participants should have handled with 2019/2020 individual taxes is much appreciated."

0 replies   |    20 views   |    Add Reply

Robin Wilson created a topic in 401(k) Plans

Safe Harbor QACA Match

"Would this be an acceptable formula for SH QACA Match?

200% on first 1% and 50% on next 5%."

1 reply   |    63 views   |    Add Reply

austin3515 created a topic in Correction of Plan Defects

Extension of Special Rule for Auto Enrollment Plans

"That special rule for missed deferral opportunity in an auto enrollment plan was set to expire 12/31/2020. Does anyone know if the IRS extended it somewhere along the way?"

2 replies   |    22 views   |    Add Reply

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