Message Boards Digest

February 26, 2021

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

Dawn Marlar created a topic in Defined Benefit Plans, Including Cash Balance

Warrant Exercises in a Cash Balance Plan

"We have an owner only cash balance plan that purchases warrants but the warrants are never valued. The asset statements only show wire transfers out of the plan account for warrant exercises and does not show which warrants) are being purchased by the wire transfer. How do we value the monies that are leaving the plans to purchase warrants if we don't know what was purchased? Is it shown as the value of the monies wired out of the plan or just as a loss on the assets for the year? Does the client have to request that their Financial Advisor provide the current price for each warrant listed as the end of the plan year?"
2 replies   |    48 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

Mid Year HCE Safe Harbor Inclusion?

"Notice 2020-52 made it clear last year that safe harbor contributions for HCEs can be suspended mid-year without effecting the plan's safe harbor status (notice required), as contributions made for HCEs are not included in the definition of safe harbor contributions. Since safe harbor contributions are generally required for the entire plan year, would I be correct that a mid year amendment to include HCEs back in the safe harbor match would not be permitted? For example, HCEs are amended out of the safe harbor in 2020. 2021 the company begins to recover and would like to add the safe harbor back for the HCEs. NHCEs were never affected. Yes, it can be done, retroactive to the beginning of the plan year? Or, no way, need to wait until next year? Thanks very much."
0 replies   |    18 views   |    Add Reply

JulesInCNY created a topic in IRAs and Roth IRAs

default beneficiary on an IRA

"my dad passed a few months ago, somewhat unexpectedly after a brief but serious illness, so my siblings and I are dealing with the aftermath of not having everything wrapped up in a neat little ribbon. he had an IRA that was paying him a small monthly installment to cover his annual RMD. my mom wanted to transfer the IRA to her own and continue getting the monthly installments, but the custodian is telling us there was no beneficiary designation on file (what? hard to believe my dad didn't do this!) and the only default is to an Estate, and taxable. why wouldn't it be to a spouse? I deal mostly with qualified 401k and retirement plan distributions so an IRA is out of my field of expertise. we continue to search for old documents at the house, but in the meantime am looking for some guidance. is this normal for an IRA? it doesn't make sense that mom will have to get an attorney and set up an estate, go thru probate, have to pay taxes (and legal fees!), etc. thanks!"
0 replies   |    34 views   |    Add Reply

JustMe created a topic in SEP, SARSEP and SIMPLE Plans

410(b) Coverage Transition Period and SIMPLE IRA

"I recently discovered our client is a part of a controlled group (newly established in 2019) and one entity maintains a SIMPLE IRA and the other a 401(k) Plan. Good news, we're still within the exclusive plan transition rule under 408(p). Bad news is we're beyond the 410(b) transition rule. What now? In addition, if the SIMPLE remains and those employees are NOW eligible for the 401(k) plan, does the (k) plan need to be amended to exclude the employees benefitting under the SIMPLE IRA plan or are those employees eligible to participate under both plans if they so desire so long as they don't exceed the 402(b) limit? If the employees could be eligible for both plans, is there a coverage test for the 401(k) plan if all employees are "eligible" under the 401(k) plan? Also, just to confirm, I'm right that if the employees previously employed under the entity who sponsored the SIMPLE IRA plan are now working under another entity within the controlled group, such employees must still be eligible for the SIMPLE IRA (contributions coming from an entity who does not sponsor the SIMPLE IRA) as if the plan sponsor of the SIMPLE IRA were still a separate entity, correct?"
0 replies   |    15 views   |    Add Reply

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

Loan repayments in 2021 (not related to CARES Act)

"This post is exclusive of anything related to CARES Act. I feel like I saw some headlines going back to 2019 indicating that loan payment rules were being relaxed, such as longer periods to either pay back to the plan or roll the amount into an IRA, or pay by check once terminated into the plan, but perhaps I dreamed it? Just curious, has anything to that effect been enacted?"
0 replies   |    15 views   |    Add Reply

Belgarath created a topic in Retirement Plans in General

Controlled Group - vesting

"Corporation A and B are a controlled group. They have identical separate plans. Participant is partially vested in Corp A plan, then terminates employment with A and moves to B. Account balance remains in the A plan. Since all service with all members of the CG is counted for Years of Service, then as long as participant works for B with 1,000 hours each year, the vesting under the A plan will continue to increase, even though participant is no longer working there. Is there any dispensation that I'm missing that would allow vesting in A plan to remain frozen?"
3 replies   |    29 views   |    Add Reply

rblum50 created a topic in Retirement Plans in General

Can the Retirement Plans Startup Costs Tax Credit be requested retroactively?

"I just picked up a 401(k) Plan effective January 1, 2018. The Plan Sponsor has never requested the tax credit for startup costs. As of its effective date forward, it met all of the criteria to receive this credit. How far back, if at all, can the plan request and receive this credit?"
0 replies   |    9 views   |    Add Reply

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