Message Boards Digest

February 25, 2021

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

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

Any Updates on Non-ERISA Governmental 401(k) Plans?

"I was looking back at some previous posts (some over 10 years old) and I'd like to know whether anyone has any updated information regarding Non-ERISA 401k plans (just high level information). Also, does anyone know the answer and either source or citation for the following:

  • Does a Non-ERISA 401k plan have reporting requirements, if so, I'm assuming filing under 5500?
  • Can Non-ERISA 401k plan have employer contribution element?
  • Contributions to Non-ERISA 401k plan does not limit a participant's ability to contribute to their 457 plan, correct?
  • Does the Non-ERISA 401k plan function like a ERISA 401k plan, same hardship requirements, RMD, etc...
  • Also, does anyone know whether there is a major difference between a Non-ERISA 401k plan and a ERISA 401k plan outside of who is eligible to sponsor one and possible reporting requirements?"
0 replies   |    20 views   |    Add Reply

Susan L. created a topic in Investment Issues (Including Self-Directed)

Ignore Deferred Vested Former Employee Accounts in Allocating Investment Earnings and Losses?

"Can a profit sharing plan not allocate investments earnings and losses to the accounts of deferred vested former employees?"

8 replies   |    71 views   |    Add Reply

Ken McDonnell created a topic in Other Kinds of Welfare Benefit Plans

Resources to Help Avoid Mortgage Relief Scams

"During the COVID pandemic, a lot of people have fallen behind on their mortgages. Unfortunately, scammers are already taking advantage of people through mortgage relief scams. As intermediaries, you can help us spread the word about how to recognize and avoid mortgage relief scams. Here are some examples of messages that you can put into your outreach efforts. For more information on COVID housing protections and important deadlines, visit Resources to help avoid mortgage relief scams.docx"

0 replies   |    18 views   |    Add Reply

EBECAttorney created a topic in Correction of Plan Defects

Payment of DB Plan Benefits from Corporate Assets (Wrong Account)

"A client acquired a small DB plan a few years back (around $1M in assets) in connection with acquisition of the sponsor entity. The plan appears to well over 100 percent funded and the only participants in the plan are terminated and retired employees.

The company would like to terminate the plan but the problem is we recently discovered that since the client's acquisition of the plan, payment of benefits under the plan (affecting all participants) have been made from the corporation's general assets instead of from the plan assets.

This is obviously in violation of the terms of the plan but our question is what correction needs to be made if any?

The client does NOT want to recover the amounts that were mistakenly paid out of corporate assets, so any correction would be for compliance purposes to ensure the plan can be properly terminated and there is no penalty to the participants that were paid out of the wrong account. I am unable to find anything on point in the IRS correction procedures."

4 replies   |    40 views   |    Add Reply

CLE401kGuy created a topic in 401(k) Plans

Profit Sharing Allocation -- Cross Tested Plan -- Separate Group for Each Participant

"Working on a cross tested plan where each participant defines their own group. Is it permissible to satisfy testing by averaging the profit sharing contribution rates of the HCE's and the NHCE's and as long as the NHCE's are at least 70% of the HCE's, testing is satisfied?

Average benefits test is not passing and the allocation isn't passing rate group testing on contributions or benefits. Average for HCE's = 36.929%. Average for NHCE's = 25.858%. So the NHCEs are 70.019% of the HCEs."

3 replies   |    51 views   |    Add Reply

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