Message Boards Digest

January 20, 2021

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

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

Amending Cash Balance Contribution Credits Annually -- 'Definitely Determinable' Problem? 402(g) Problem?

"We took over a cash balance plan that is a C-corp but they have a large group of doctor/owners. Historically the doctors review their plan annually and request an amendment to adjust the doctors' contribution credits. Our actuary is concerned that this series or pattern of amendments changing the benefit structure violates the definitely determinable benefit rule. He feels the plan should only be amended every 3-4 years. The other concern is that these desired allocations could be construed as a CODA and will exceed the 402g limit."

9 replies   |    114 views   |    Add Reply

tsrl01 created a topic in Health Plans (Including ACA, COBRA, HIPAA)

HIPAA Responsibilities When Carrier Sent Wrong Participant's Health Information to Us

"One of our carriers inadvertently sent us a file for another client of theirs. We sent an internal email to all those who received the email by mistake notifying them that it was sent to them in error and requested a response back that the email had been deleted. We also notified the carrier and informed them of the same. The carrier is now requesting that we sign a certification that we in fact deleted the email and did not view it. Are we under any sort of an obligation to sign this certification? We notified them of their error and confirmed via email that we deleted the file and did not keep it, but they have said that isn't sufficient, they need a certification signed by us. This just seems a bit overboard."

1 reply   |    19 views   |    Add Reply

mburton4 created a topic in Qualified Domestic Relations Orders (QDROs)

Need to Make an Amendment to My Ex-Spouse's QDRO

"I had an original QDRO filed in Denton County, Texas at the 211th District Court on June 20, 2011. It was for a pension plan distribution to my ex-spouse as part of the divorce settlement. When I turned 65 (I'm now 66), my pension plan administrator required that I start receiving benefits. Due to the wording of the pension documents for my former employer, I now have to amend the original QDRO since I retired and remarried. My benefit payment has also been reduced starting in December 2020 to meet the terms of the original QDRO. I have submiitted the correct form work to my pension plan administrator for review and approval. I now need to know the logistics and forms needed to resubmit the revised QDRO to a judge in the 211th District Court for his/her signature. Because I'm now on a fixed income, I'm unable to hire an attorney to make these changes. Please advise how I can do this myself."

2 replies   |    40 views   |    Add Reply

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

Confused About Source for Payment of Investment Earnings as Part of Correction of Operational Defect

"DB plan covers 2 participants. Employer has a corresponding DC Plan. Both plans were terminated in 2019 and distributions due to be completed in 2020. In the DB, 415 lump sums were paid to the 2 participants. But on July 1, 2020 the custodian of the investments transferred $4,000 from one of the DB accounts to one of the 401(k) accounts. The oversight was discovered January 15 and we are trying to correct it.

The regulations for correcting plan defects say to make a correction that would put the plan(s) in the same situation has the error not occurred. So for the DB Plan, we need to transfer $4,000 from the DC Plan back to the DB Plan. We can also calculate the lost earnings on the $4,000 for the months in was not in the DB trust. So if the earnings rate in the DB plan was 6% for the year of 2020, an amount equal to 6% x 50% x $4,000 = $120 would also have to be deposited back to the DB plan.

What I don't understand is where must the $120 come from? Can the company make a $120 corporate deposit into the DB Plan to complete the correction for the DB Plan?

Then there is the issue of the DC Plan, since it also has an operational defect since it accepted $4,000 it wasn't entitled to receive. Let's say the DC Plan earned 13% for 2020 on the $4,000 deposit so it earned 13% x 50% x $4,000 or $260. Who is the $260 paid to? Can the DC Plan pay the $120 back to the DB Plan and keep the rest?

What if the DC Plan had a loss for 2020 -- would it return $4,000 less the allocable loss and then have the corporation pay the balance?"

1 reply   |    39 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Can a Sole Proprietor Set Up a 401(k) Plan in 2021 for 2020?

"SECURE Act allows pension plans to be set up in 2021 for 2020. If a corporation sets up a 401k/PS plan for 2020 in 2021, the deferral option has to start in 2021 and after the plan is executed. How about for a sole-proprietor and/or partnership where there are no employees?"

3 replies   |    31 views   |    Add Reply

Dave Baker created a topic in Retirement Plans in General

What's the Best 'Integration Level' for a Plain, Integrated Profit-Sharing Plan?

"The free, online 'Inte-Greater' application will determine the integration level that provides the greatest share of the contributions for one or more 'favored' employees. A bit clumsy on the input end, and no way to save the data, but maybe fun to tinker with."

1 reply   |    44 views   |    Add Reply

Muzukii created a topic in 401(k) Plans

COVID Emergency Sick Leave as Considered Compensation

"From what I understand, the Emergency Sick Leave isn't paid as regular pay. Is is accurate that 401K plans should not consider this as income and defer or calculate employer contributions, i.e., reduced from gross wages when submitting income for the 2020 plan year?"

0 replies   |    21 views   |    Add Reply

austinh2591 created a topic in 401(k) Plans

Recordkeeper Won't Let Us Use Forfeitures as Desired

"Our company's plan recently had the forfeitures reallocated automatically due to 'pass through processing' and they were distributed to plan participants (myself excluded). We had intended to use these for plan expenses and told the recordkeeper this back in March, but they did not do so. We've asked the recordkeeper to reverse the transaction, but they will not and are requesting a hold harmless letter and want us to take on the risk. They mentioned there could be a fine or penalty for removing funds from the participant's account, although they incorrectly allocated to them in the first place. My questions are: [1] What the fine would be if this reversal came up in an audit? [2] What's the risk that this reversal would cause an audit for a small plan filer? [3] Would an auditor be understanding since the recordkeeper has even confirmed via email that we had requested the fees be applied to plan expenses back in March?"

2 replies   |    22 views   |    Add Reply

imchipbrown created a topic in Plan Terminations

Amendment of 401(k) Plan After Termination Date to Allow In-Kind Distributions

"Employer was bought in an asset sale. Most participants are to be employed by the purchaser. Plan accounts are held at larger brokerage with self-directed accounts. Plan termination date is 12/31/20. Distribution forms have been distributed with the option to roll the self-directed accounts in large brokerage to self-directed accounts at same or other brokerage, to new company 401(k), or in cash. Looking at the plan's AA now, it says distributions can be made in cash only. Would like to amend (post-termination) to 'cash or in-kind.' Is this OK. Who signs, authorises? No distributions have been finalized. Is current date OK?"

2 replies   |    19 views   |    Add Reply

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