Message Boards Digest

April 16, 2021

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

kmhaab created a topic in Health Savings Accounts (HSAs)

Delinquent Remittance of Employee HSA Contributions

"What are the consequences of an employer failing to timely deposit employee contributions into employees' HSAs? According to DOL FAB 2006-02, 'employers who fail to transmit promptly participants' HSA contributions may violate the prohibited transaction provisions of section 4975 of the Code,' but I can find nothing more definitive.

If it's a PT or other fiduciary breach, is the employer able to correct under the DOL VFCP? The regs clearly list delinquent remittance of participant contributions to pension plans, insured welfare plans and welfare plan trusts as eligible transactions under the VFC program, but there's no mention of HSA contributions. So a plain reading of the VFCP regs would suggest no, i.e, that the employer is not be able to correct under the DOL VFCP. Agree?"

0 replies   |    14 views   |    Add Reply

David Olive created a topic in IRAs and Roth IRAs

Guaranteed Payments Qualify as 'Earned Income' for IRA Deductibility Purposes?

"Client owns a 50% membership interest in an LLC being taxed as a partnership. LLC had a loss on the year, but the client received taxable income in the form of guaranteed payments. This amount qualified as 'earned income' and can be contributed to an IRA, correct?"

1 reply   |    31 views   |    Add Reply

Tom created a topic in 401(k) Plans

Excluding a Class of Employees Prospectively

"Plan document has 6-month wait to enter the plan, no hour requirement, just elapsed time. This pulled in several part-time employees who work less than 1000 hours, who have no balance in the plan. The participant count went over 120 as of 1/1/2020 and so will be audited for 2020. The plan was been amended to exclude part-time, seasonal and temporary employees, defined as those scheduled to work less than 1000 hours, effective 1/1/2021. The intent is to exclude these employees prospectively from participation as of 1/1/2021 -- they will no longer be covered under the plan and thus not will not be included in the participant count.

Example: an employee who always worked less than 1000 hours was eligible in 2020 and has no plan balance. The 2021 amendment is intended to exclude that employee from participation in the plan effective 1/1/2021.

I think this works. Comments?"

1 reply   |    37 views   |    Add Reply

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

Adjustment of Section 415 for Participant Who Is 71

"The 415 limit is $19,166. This increases if the particpant is age 71 (provided the participant had enough salary average to cover). Correct?

If this is indeed increased, it's increased from 65 to 71 and not from 62 to 71. Correct?"

2 replies   |    49 views   |    Add Reply

Belgarath created a topic in Retirement Plans in General

Restatements, Trust Documents, and Recordkeeping Platforms

"I want to see if this is just us, or are others encountering similar things, and also to get other perspectives on the issue -- maybe mine is skewed.

This week, we received notifications from a couple of vendors/recordkeeping platforms. To paraphrase succinctly, they say that, due to the fact that Trust Provisions are no longer in the IRS pre-approved documents, we need to notify them (the vendor) and send them a copy of the PROPOSED plan restatement provisions, at LEAST 30 days prior to sending them a copy of the restated plan. This so they can 'review the provisions' to make sure they can handle the plan. For all I know, this is something that many vendors are doing.

And these are plans where the employer is the Trustee, or it's a corporate Trustee.

My feeling: BS on that!

It's hard enough to do these restatements and coordinate with the employer, without getting the VENDOR to approve the choices. As far as I'm concerned, we do the restatements as usual (after getting employer approval of any changes) and send the completed document to the vendor afterward. If they have a problem with it, we can amend the plan, or the employer can find another vendor if the vendor won't handle the employer's desired provisions, if it's important enough to the employer.

I should also state that the changes that employers are making are nearly always basic things -- eligibility, or adding or removing hardship withdrawals, etc. -- normal things that are handled all the time by vendors when plan amendments are completed anyway.

Maybe I'm just grumpy and unreasonable this morning. Have you been seeing anything similar, and if so, any thoughts?"

4 replies   |    36 views   |    Add Reply

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

403(b) and Separate 401(a) Plan

"I work with some tax-exempt employers who offer a 403(b) plan and a separate 401(a) plan that matches the elective deferrals made to the 403(b) plan by some (not all) of the 403(b) plan participants. A question has come up as to whether the matching contributions to the 401(a) plan could be structured as 401(m) safe harbor matching contributions to satisfy ACP testing (assuming it passes 410(b) coverage testing). In other words, the employer would sponsor an elective deferral-only 403(b) plan for all employees and a separate safe harbor match-only 401(a) plan for some of the 403(b) participants. What do you think?"
2 replies   |    13 views   |    Add Reply

bzorc created a topic in Form 5500

Plan Audit Question

"401(k) Plan with over 100 participants was audited by a CPA firm for the period 4-1-19 to 3-31-20. Plan sponsor has changed the year end to September, with a short plan year 4-1-20 to 9-30-20. Question is whether the short year audit can be put off under 29 CFR 2520.104-50, and be included with the audit for the plan year 10-1-20 to 9-30-21? Looks like it can, but I've never seen this or been asked the question before. Thanks for any replies."

1 reply   |    15 views   |    Add Reply

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