Message Boards Digest

April 21, 2021

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

Stash026 created a topic in 401(k) Plans

DOL Notified Employer About Delinquent Contributions

"I have a client that got a notice from the DOL regarding potential prohibitive transactions due to there being delinquent contributions during the Plan Year. I haven't experienced this before, so can someone tell me what the fix/response is and what is involved?"

5 replies   |    41 views   |    Add Reply
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EBECatty created a topic in Retirement Plans in General

Recommend a Firm for Translation Services?

"Does anyone have recommendations for getting plan materials (SPD in particular) translated into Spanish? A quick search doesn't seem to turn up any firms focused on translating or providing ERISA documents in particular, but I thought familiarity with plan concepts would probably help provide a more accurate substantive translation."

9 replies   |    73 views   |    Add Reply

Brenda Wren created a topic in 401(k) Plans

Excessive Roth Contributions to Combination of 401(k) Plans

"Suppose an employee participated in two 401(k) plans during 2020 (unrelated employers) and funded $19,500 in Roth deferrals to both plans. (Yes, this is a true case!) Is there a remedy for this error or should we ALL be trying to do this? The penalty of 'double taxation' doesn't apply, so what does?"

7 replies   |    71 views   |    Add Reply

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

Safe Harbor Hardship Distributions -- Maximum Lookback for Determining Eligible Expenses?

"A plan is using the safe harbor rules for hardship distributions. A participant incurred a medical expense in 2019 and has been paying the bill off over time. There is currently an amount still owed on the original expense. [1] Assuming the document is silent on this specifically, can the participant request a hardship for the amount of the medical expense that is still outstanding even though the original expense occurred two years ago? [2] If so, assuming the plan document allows for additional hardship restrictions, is it acceptable to say (for example) that hardships will only be allowed for an expense that occurred no more than 6 months from the date of the request?"

2 replies   |    43 views   |    Add Reply

Bob the Swimmer created a topic in 401(k) Plans

Company Merger, But More Generous Match Was Not Provided for in the Updated Plan

"Plan A for Company A: At the end of 2019 this plan matched 100% of 3.5% contributed - and was merged into Plan B. This plan had a 2-Year Cliff Vesting program for company match dollars (0/100%). In addition, this plan has the same automatic enrollment features (e.g., start at 3% and increase 1% each year until 6% is achieved) as Plan B.

Plan B for Company B: At the end of 2019 this plan matched 100% of the first 1% and then 50% of the next 5%. This plan had a 2-Year Cliff Vesting program for company match dollars (0/100%). In addition, this plan has the same automatic enrollment features (e.g., start at 3% and increase 1% each year until 6% is achieved) as Plan A.

Effective 1/1/2020, the two companies merged to become Company AB. Effective 1/1/2020, all employee contributions were INTENDED to be matched at 100% of the first 3.5% contributed, the more generous formula. Their intent was to transfer the money from A to B in the first quarter of 2020, but COVID happened and they delayed until the market settled down; that transfer was initiated in the Fall of 2020 and has been completed. Now, Plan B has 100% of the money for Company AB.

However, the new Plan amendments never provided for the more generous standard -- 100% of the first 3.5% match. Nevertheless, all company B employees received the more generous match even though the new plan did not provide for it while it was being contributed.

Question is, can we amend the plan now under SCP to provide retroactively for the more generous match that company A and B employees both got, or must we go under VCP ? Section 4.05 (in the SCP section) in Rev. Proc. 2019-19 says the following:

(click to view in new window)

No employees were disadvantaged. In fact, former B employees benefited by the higher match--the plan just did not properly provide for it at the time. It's also well within the 2-year period for SCP. What do you think?"

1 reply   |    22 views   |    Add Reply

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