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Message Boards Digest

February 17, 2021

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

AnnM created a topic in SEP, SARSEP and SIMPLE Plans

Cross Testing via Aggregation of a SEP Arrangement and a 401(k) Plan?

"Can SEP contributions be permissively aggregated for purposes of cross testing (i.e., Average Benefit Percentage Test, Average Benefit Test, and Gateway Minimum)? The plan sponsor has both a SEP arrangement and a profit sharing plan in 2020. The SEP is on an approved individually-designed document."

1 reply   |    26 views   |    Add Reply

JustMe created a topic in SEP, SARSEP and SIMPLE Plans

Multiple SEP Plans for One Employer

"I understand that a SEP may exclude union employees, but may an employer have a SEP plan for non-union employees and another SEP plan for union employees? How about 2 SEP plans for 2 separate union groups with unique collective bargaining agreements?"

3 replies   |    29 views   |    Add Reply

BG5150 created a topic in 401(k) Plans

Effect of Adding Voluntary After-Tax Contributions to a Safe Harbor Plan

"If a plan adds voluntary after tax (VAT) to a plan, I understand it is tested under the ACP test. What if it's a Safe Harbor plan? My question is does the Safe Harbor Match get tested with it? If a SHNEC is treated as an ACP SH, does that get tested under ACP with the VAT?"

1 reply   |    34 views   |    Add Reply

Bumppo23 created a topic in 401(k) Plans

Safe Harbor Coda Plan; Hypothetical Situation Where Safe Harbor Match Stipulated, While Participants Other Than HCE Lack Elective Deferrals; Lack of Other Contributions

"For a safe harbor CODA, if the participants other than HCEs lack deferrals, and the only contributions entail the deferrals of the HCE and the matching contribution, does the plan still proceed as having met ACP/ADP strictures?"

4 replies   |    48 views   |    Add Reply

stephen20 created a topic in 401(k) Plans

Who Must Receive the Minimum Allocation Gateway?

"I'm working on a plan and client wants to max out 1 owner (audit plan). Plan demographics as follows:

Total Employees  210

Participants 110 (who has entry date)

Plan entry requirements: 18 age, 1 year of service, Semi-Annual Entry

Profit Sharing Method: New Comparability/ Grouping

Allocation condition to get Profit Sharing: Last day and 1,000 working hours.

Plan is not TOP HEAVY for 2020 Plan Year.

****Among 110 participants, 30 employees did not meet 1000 hours and few of them terminated before 12/31/2020.

Current Year's contribution 2020: Deferral, Safe Harbor Match, Profit sharing (max owner, minimum% to pass others (no Safe Harbor Non-Elective contributions)

Here, Highest Key% 10.11% (PS and Safe Harbor Match)

Question: Do I need to provide minimum gateway to 30 participates who did not fulfill last day and 1000 hours to pass new comparability test?"

1 reply   |    24 views   |    Add Reply

joel created a topic in 403(b) Plans, Accounts or Annuities

Taxation of 403(b) Distributions by New York State

"Since 1979 the Teachers' Retirement System of the City of New York has administered a supplemental 403(b) plan. In error, the Department of Taxation and Finance treats the TRS 403(b) plan as a pension plan of local government. Pensions of local government are exempt from the state income tax. The 403(b) plan is pre-tax. Making distributions tax free changes the 403(b) contributions from being pre-tax to tax-free. We all know there is no such such thing as a tax-free retirement plan. See: NY State Department of Taxation and Finance publication 36 p.12. What say you?"

2 replies   |    28 views   |    Add Reply

Belgarath created a topic in 401(k) Plans

Retroactive Reinstatement of Safe Harbor Nonelective -- 3% or 4%?

"Say in 2020, a SH Nonelective plan was amendment to remove the SH. Now in 2021, the employer wants to reinstate the SH for 2020. This is OK. But, is the SH now required to be 4% (since it is retroactive to the prior year) or can it be 3%, because it is reinstating the 3% match that already existed but for the prior amendment?"

2 replies   |    26 views   |    Add Reply

pam@bbm created a topic in Retirement Plans in General

Safe Harbor Contribution Not Made But Employer Has Filed for Bankruptcy

"One of our plans has a 3% safe harbor non-elective employer contribution. The employer has yet to make the 2019 contribution. Also the employer filed for bankruptcy in 2019. Is there a penalty or other problem with this? I know it's a failure to follow the plan document, but I'm not sure what the ramifications are."

1 reply   |    21 views   |    Add Reply

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