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Message Boards Digest

May 12, 2021

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

Chris123 created a topic in 401(k) Plans

Can Employer Give Certain Employees More, and How Much?

"An employer would like to give his employees money when the plan starts (after meeting the eligibility requirements). This is a 401(k) profit sharing plan. It would be money that he's giving them as bonus or profit sharing from prior work they have done. Are there limitations on how much he can give to each employee? The employer would like to give the employees who have been with him the longest a little more."

2 replies   |    51 views   |    Add Reply

thopkins created a topic in Plan Terminations

Government Contract Canceled. Did Partial Plan Termination Occur?

"Has a PPT occurred if a government contract is canceled, resulting in the involuntary termination of employees? We're having discussions about the sale of a division and the result of a PPT. It didn't affect more than 20% of the workforce. Does it matter if more than 20% were let go? We think that would be a 'no brainer' and if more than 20% were let go, we would recommend a PPT. The cancelation of the government contract was not COVID related so we do not believe that the COVID relief applies."

3 replies   |    30 views   |    Add Reply

Miner88 created a topic in Investment Issues (Including Self-Directed)

Can an ERISA Plan Invest in a Medical Marijuana Company?

"What are your thoughts on whether an ERISA plan can participate in a private equity fund that invests in a medical marijuana processing company?"

1 reply   |    22 views   |    Add Reply

Miner88 created a topic in Multiemployer Plans

Reimbursement of COBRA Subsidy When No Payroll Taxes

"It's my understanding that plan sponsors will be reimbursed for the COBRA subsidy through a credit against quarterly payroll taxes. With a multiemployer plan that uses a TPA, there are no payroll taxes against which to take a credit. How does the plan gets reimbursed? Do they need to fill out the tax form and just put $0 for the payroll taxes owed?"

2 replies   |    17 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Testing for Combo Plans - Fiscal Year

"Looking into a CB/DC combo. Both the sponsor and plan years are fiscal years, e.g., 7/1/2020 to 6/30/2021. I've never worked on a fiscal combo before.

DC has 401k + 3% non-elective safe harbor + profit sharing provisions. A theoretical question: The participant defers max for 2020 from 7//1/2020 to 12/31/2020 and max for 2021 from 1/1/2021 to 6/30/2021. So defers $39k within 12 month period. Salary and election to defer maximum from each paycheck - very high number.

Based on above, I should be checking for the following:

  • Full $39k is included in the 410(b) testing
  • Only one catch up? I have no idea on this especially if does catch up twice within one plan year.
  • Because the 415(c) limit is annual and within the plan year, the $58k limit is reduced by $39k of deferrals + 3% safe harbor, leaving very little for profit sharing (assume limitation year is plan year). So more goes to 410(b) and less goes to 401(a)(4).

Am I missing anything? As someone mentioned during Derrin Watson's webinar last month, fiscal plans should be illegal especially with 401k features."

4 replies   |    33 views   |    Add Reply

Spencer created a topic in 401(k) Plans

Solo 401(k) Established But Not Funded

"I have a prospective client who established a Solo 401k for him and his wife last year. He did not fund it. Turns out he has a part-time employee who was eligible. There is no hours or service requirement. Document preparer said that's their default when completing documents. He doesn't mind paying a safe match contribution to the employee, but the issue is that she was not offered the opportunity to defer. But how do we correct for the missed deferral opportunity when nobody deferred? Is it possible to correct the original plan document to align with the client's intention? Retroactive amendment? Can we just pretend the plan never happened since it was funded or filed with the IRS? (Just kidding.)"

8 replies   |    52 views   |    Add Reply

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