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Message Boards Digest

February 24, 2021

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

Lou81 created a topic in 401(k) Plans

Don't Count Commissions in Calculating the Match?

"I have a plan -- discretionary match -- Participants are allowed to defer on commissions, however commissions are excluded from match. Is the compensation exclusion test required?"

1 reply   |    37 views   |    Add Reply
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TPA Bob created a topic in Plan Terminations

Plan Terminates, Moving to PEO -- Replacement Plan Rules Will Kick In?

"We have a dental office client who has a qualified retirement plan (401(k)) and has signed up for and is now under a PEO arrangement. The PEO sponsors its own retirement plan and the employees will now be participating in that Plan. Have been asked options for the participants if any resulting from the termination of their Dental Plan. I am concerned about the replacement plan rules associated with going to a PEO and what options are available to the participants (if any). Under 401(k)(10), would the PEO be considered a 'replacement plan'?"

2 replies   |    35 views   |    Add Reply

thepensionmaven created a topic in Form 5500

Stagecoach of 1099s Bound for Austin TX Seems to Be Held Up

"Client mailed 1099R/1096 to IRS via FedEx at the street address given online. The PDS informs me the tracking numbers show they are in Austin, and yet they have not been delivered to the IRS. Anyone else run into this?"

1 reply   |    33 views   |    Add Reply

Draper55 created a topic in Defined Benefit Plans, Including Cash Balance

No Accruals Due to Low Funding -- 401(a)(26) Trouble?

"If a plan is less than 60% funded so that no accruals can take place, would this cause a 401(a)(26) failure? Does it matter if the plan provides for restoration of accruals?"

5 replies   |    62 views   |    Add Reply

Eric Taylor created a topic in 401(k) Plans

Arbitration Clauses Appearing More in Engagement Letters for 401(k) Plan Audits

"I'm curious about possible trends with respect to dispute resolution and similar terms in engagement letters for plan audits.

We recently were asked to review a proposed engagement letter for a 2020 plan audit for a large 401(k) plan sponsor and, in looking over it, noticed that since last year the audit firm had inserted broader indemnification provisions as well as mandatory mediation and binding arbitration clauses. In addition, and particularly disconcerting to my mind, they also have inserted provisions to attempt to contractually limit the statute of limitations to one year and included express express terms prohibiting suit against any employee or partner of the audit firm for any reason. I don't think anybody anticipates any issues with their audit firm and know you would not typically sue individual auditors personally if there was an issue but some of this seems way overbroad in the event some individual goes off track as part of the audit process, etc.

Are these kinds of provisions market and/or a growing trend? I'd really like to tell the client that they should reject the proposed terms and request something along the lines of the letters they've signed for many years in the past. Or look for a new auditor. And less of an increase in the audit fee!"

1 reply   |    38 views   |    Add Reply

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

Git Outta Here! Eliminating Participant Loans from a Plan

"A participant loan program in a 401(k) plan can be eliminated at will, because loans are not considered a protected benefit, correct? Would eliminating the availability of new loans apply to all participants, or just to terminated participants and/or newly eligible participants?"

4 replies   |    37 views   |    Add Reply

John Feldt ERPA CPC QPA created a topic in 401(k) Plans

Retroactive Safe Harbor for 2020 -- Plan Already Was a 3% Safe Harbor

"Suppose a plan had 3% safe harbor nonelective provisions in place for the plan year ending 12-31-2020 and it was a brand new 401(k) plan. Deferrals were allowed right away upon hire, but to be eligible for the 3% safe harbor nonelective, a year of service was required. Assume they only have deferrals and safe harbor in the plan for 2020. Also, they excluded the non-key HCEs from the safe harbor (a lot of people).

Also suppose they are now 'enjoying' the top-heavy surprise since not enough non-key employees deferred in 2020 to keep the plan out of top-heavy status (not even close, even with the eligible NHCEs all getting 3%).

Based on the language under IRC 401(k)(12) after its changes for the SECURE Act, do you believe they could amend the plan now to adopt a 4% safe harbor nonelective for 2020, making its eligibility the same as the deferral eligibility, thus making the plan exempt from top-heavy for 2020?"

3 replies   |    39 views   |    Add Reply

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

Can a Foreign Plan Be a 'Group Health Plan' for COBRA?

"I may not be following the right trail of breadcrumbs, but is there an obligation to offer COBRA in the following situation? Foreign company employs several hundred employees. Say the wholly-owned US subsidiary only has 5 US employees who are offered a group health plan. The COBRA regulations seem clear that the foreign parent and US subsidiary will be aggregated to determine whether the US subsidiary has 20 employees for COBRA purposes (it does). Say the US subsidiary terminates its group health plan altogether, but the foreign parent continues to offer whatever the comparable health insurance is in the foreign parent's country. Are the 5 US employees entitled to COBRA coverage? Or has the 'employer' (which includes the foreign parent) stopped offering any 'group health plan' to 'any employee' such that COBRA coverage ends? In other words, does something exclude the foreign coverage from being a 'group health plan' for COBRA purposes? I have to assume so -- the foreign plan couldn't offer continuation coverage to the US employees -- but am not seeing where that result comes from."

0 replies   |    12 views   |    Add Reply

coleboy created a topic in 401(k) Plans

3% Safe Harbor in 2019 But Eliminated in 2020 -- Top Heavy Minimum Required for 2020?

"I have a plan that had a 3% SHNEC contribution for 2019. For 2020, they chose NOT to have a Safe Harbor provision. They are top heavy for 2020. Do they need to make a 2020 top heavy contribution for 2020, or are they all set because they were a Safe Harbor in 2019."

2 replies   |    26 views   |    Add Reply

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