Message Boards Digest

January 22, 2021

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

pmacduff created a topic in Plan Terminations

Plan Termination: Line 7 of Final Form 945 vs. Form 945-A

"Plan termed in 2020 and all payouts completed in 2020 along with the required tax withholding and dpeosits. Plan was a monthly schedule depositor for 2019 (total tax liability was < $50k). Due to the plan termination and the number of distributions during August of 2020, the withholding deposits for August were over $100k. If I'm reading the 945 instructions correctly the plan became a semiweekly depositor because the tax liability in August exceeded $100k. This means the client must complete and attached Form 945-A instead of Line 7 on the 945. Agreed?"

0 replies   |    16 views   |    Add Reply

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

401(k) Loan Went Into Default in 2020 But Why Can't I Reverse by Paying It Off Now?

"I had a 401k loan outstanding when I was laid off at the end of 2019 (I made all required payments in 2019). I was unable to pay it off at that time. The loan went into default in mid-2020. I thought I still had until I file my 2020 taxes before it wuld be treated as taxable income (per the 2017 tax code changes). I repaid the loan in November 2020. I received a Form 1099-R with code 1L on it. Should I be receiving a revised 1099-R? Or can I prove to the IRS that I repaid the loan?"

5 replies   |    64 views   |    Add Reply

PensionPro created a topic in 401(k) Plans

Compensation Definition for 401(k) Deferrals

"If a deferral-only plan wants to use a non-safe harbor definition of compensation for deferral purposes, such as excluding commissions, I believe there is no discrimination issue when the plan passes ADP testing using a definition of compensation that satisfies 414(s). The question is, are there any restrictions in the Code or regs (cites appreciated) for how compensation may be defined for deferral purposes -- with regard to reasonableness or nondiscrimination and so forth?"

1 reply   |    56 views   |    Add Reply

AbsolutelyOkayPossibly created a topic in Retirement Plans in General

Named Fiduciary Wants to Delegate Duty to Collect PEP Contributions

"If it is true that ERISA gives a Named Fiduciary the right to dictate who other fiduciaries of the plan are, then, in a PEP arrangement, can the Named Fiduciary state that a directed trustee is responsible for collecting contributions, and also give this responsibility to another non-trustee? If this is the case, would there have to be some agreement between the directed trustee and the other fiduciary to allow this to happen? Could a directed trustee even delegate this responsibility?"

1 reply   |    24 views   |    Add Reply

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

COBRA and Tolled Special Enrollment Rights

"Scenario: Employee's spouse's employment was terminated. She is eligible for 12 months of fully subsidized COBRA continuation coverage followed by an additional six months of unsubsidized coverage as required by COBRA. The spouse is nearing the end of the 12-month period of subsidized coverage and the employee wants to enroll the spouse in his employer's plan effective at the end of subsidized period.

HIPAA's special enrollment rights would, in general, permit the employee to enroll the spouse in his plan in lieu of her electing COBRA (i.e., 12 months ago) and again at the end of the 18-month COBRA period. But there is, in general, no special enrollment right to add coverage in the middle of COBRA continuation coverage.

In the COVID-19 relief (which in my view was not the previous Administration's best effort), the requirement that a participant inform an employer of a special enrollment right within 30- or 60-days (depending on the event) is tolled until basically the end of the pandemic.

Must the employer permit the employee to enroll his spouse in the plan as he requests because the notification requirement is tolled? Or did the employee's special enrollment right for his spouse go away when she elected subsidized COBRA? Any thoughts are appreciated."

1 reply   |    25 views   |    Add Reply

thepensionmaven created a topic in Retirement Plans in General

Plan Sponsor Being Sold at Date of Termination So Won't Plan Become 'Unsponsored'?

"We have a Professional Association that sponsors a plan. The PA is in the process of being sold, projected to be 1/31/21. Plan termination is set for 1/31/21, with appropriate notices timely given. I know the IRS does not recognize a plan without a plan sponsor, and the IRS gives up to 12 months from the termination date to distribute all funds. Obviously it's impossible to distribute all funds by 1/31/21. Technically, when all assets are distributed, rolled over or cashed out, the plan sponsor will not exist. Maybe I'm being too technical, but how should one handle this situation?"

6 replies   |    38 views   |    Add Reply

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