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Message Boards Digest

March 26, 2021

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

Purplemandinga created a topic in Retirement Plans in General

Plans Are Merged -- Requires Amendment for Recently Changed Laws?

"When a plan terminates it has to be updated for recent law changes. But what about when a plan merges into another plan? Does the same requirement apply to the plan that will not survive the merger?"

4 replies   |    65 views   |    Add Reply
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Gilmore created a topic in 401(k) Plans

EACA -- Effects of a Midyear Increase

"Client has an existing EACA. Plan is a calendar year plan. The EACA provisions state that all employees who make an affirmative election remain covered under the EACA.

Question 1: <i>Midyear increase.</i> Am I correct that making this change midyear would cause the ACA to no longer qualify as an EACA?

Question 2: <i>Previously defaulted employees.</i> Let's assume for the sake of Question 1 that they will wait until 1/1/2022 to make the change. Assuming the document does not state specifically, is it permissible for the previously defaulted employees to remain at the old default rate? Or, because all employees are still covered under the EACA, would they need to be increased to the new default rate in order to avoid violating the 'Uniformity Requirement'?"

0 replies   |    20 views   |    Add Reply

BTG created a topic in Qualified Domestic Relations Orders (QDROs)

'Completely Severed' Approach in Administering QDROs -- Early Retirement Subsidy Issue Has Arisen

"I have a client who takes a 'completely severed' approach to administering separate interest QDROs, so they do not require a QPSA to be awarded to the AP. Instead, the AP just gets his/her share of the benefit regardless of whether the participant predeceases the AP. The plan also provides a rather generous early retirement subsidy.

A situation has arisen (apparently for the first time) where the participant died before shortly before attaining early retirement age. (The participant would now be past ERA if still alive.) The question becomes whether the AP is entitled to an early retirement subsidy on her portion of the benefit. If this sponsor used a 'standard' (rather than completely severed) approach, the QPSA would clearly include the subsidy, so it would seem fair that the benefit payable to this AP should as well. On the flip side, that result is driven by the QPSA rules, and this isn't a QPSA. Since, the participant can never trigger the subsidy, arguably none would be applicable to the AP's portion. Anyone who regularly works with this completely severed approach care to weigh in on how this is typically handled?"

2 replies   |    49 views   |    Add Reply

Steamboat created a topic in Cafeteria Plans

HFSA, Grace Period, Annual Contribution Limit, and Taxable Amounts

"Does a grace period affect the amount that can be contributed to a HFSA in a year and still not be taxable? For example:

2020 HFSA election: $2,750

In 2020, you incurred and are reimbursed for $2,700 in expenses, so $50 is available for expenses that can be incurred during the grace period in 2021 and reimbursed and not forfeited.

2021 HFSA election: $2,750

In 2021, you incur and are reimbursed for $2,800 in expenses ($50 from 2020 that was used up during the grace period and $2,750 from the 2021 election that was used up during 2021).

Does this mean the $50 is taxable to the employee in 2021 since it exceeds the $2,750 annual limit? I understand this is how it works when the dependent care spending account annual limit ($5,000 -- I'm ignoring the recent increase for this example) is exceeded but not sure about a HFSA. (I also know a HFSA carryover is different and the carryover and annual limit are combined and not taxable to the employee.)"

0 replies   |    20 views   |    Add Reply

DDB BN created a topic in 401(k) Plans

Can Sole Proprietor's DB Plan Invest in Bitcoin? What About a 401(k)?

"Can a one person sole proprietor with DB plan investment in Bitcoin? What about a one person LLC with a 401k?"

4 replies   |    82 views   |    Add Reply
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