Message Boards Digest

May 13, 2021

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

Steamboat created a topic in 401(k) Plans

Sale of Participating Employer Causes Full Vesting?

"A participating employer in a 401(k) plan is being sold via a stock sale (will no longer be in the controlled group). Employer contributions in the 401(k) are subject to a vesting schedule. Will the employees of the participating employer who participate in the 401(k) plan end up forfeiting non-vested amounts? There won't be any partial plan termination."

2 replies   |    31 views   |    Add Reply

ehayden27 created a topic in Defined Benefit Plans, Including Cash Balance

Owner-Only Cash Balance Plan -- Investment in Collectibles

"I have an owner only CBP that invested plan assets in collectibles (art and watches). They are held in a vault, so as I understand it there is no PT for personal use by a disqualified person, however, I believe the rules for self-directed accounts apply in this case and upon the purchase of the items, a deemed distribution occurred. I'd appreciate thoughts and commentary from others."

Investments in Collectibles in Individually Directed Qualified Plan Accounts _ Internal Revenue Service.pdf --

2 replies   |    44 views   |    Add Reply

Carol V. Calhoun created a topic in 401(k) Plans

Employee 401(k) Elections Conflict with Federal Income Tax Withholding Elections

"We have a client with a lot of employees who elect additional income tax withholding. The forms provide that employees are to specify the amount of additional withholding per pay period. However, some employees instead put down a figure that they intend to be their entire year's withholding. The result is that so little is left in each paycheck that 401(k) deferrals are limited by the absence of any paycheck to defer from. And surprisingly, this occurs often enough that it's impractical to manually check and fix the issue, and employees sometimes don't notice and correct the error right away. Does anyone have any experience with whether it will be treated as a plan qualification error if the client does not withhold and defer the percentage of compensation elected by the employee because there is not enough money left after taxes from which to deduct the funds? I've heard rumors that this was a JCEB question (never answered) some time back, but have been unable to find it in the online JCEB materials."

4 replies   |    61 views   |    Add Reply

EBECatty created a topic in 401(k) Plans

QNEC for Missed Deferral and 402(g) Limit

"I see a few prior threads on this, but wanted to see if there have been any changes in opinion. If a plan sponsor makes a corrective QNEC for missed deferrals before the participant starts deferring for the year, does the QNEC count toward the participant's 402(g) limit? For example, the plan sponsor fails to implement a deferral election from January through June and corrects using the 25% QNEC. Say the deferral would have been $8,000, so the QNEC is $2,000. The participant's correct deferrals start in July. Can the participant still contribute to the full 402(g) limit, or the 402(g) limit minus $2,000? EPCRS seems clear that the opposite fact pattern (participant has deferred, then error is caught and QNEC made) requires limiting the corrective contribution to the 402(g) limit. But no rules or examples in EPCRS apply to the QNEC first then deferrals. Would appreciate any thoughts."

2 replies   |    26 views   |    Add Reply

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

Small Balance Force-Outs

"Like most TPAs we have a combination of record keeping platforms and brokerage account clients. Distributions for record keeping platform plans are certainly easier. brokerage accounts and DB plans not so much. Is anyone willing to share some processing tips? The force out process is VERY time intensive - identify, send communication with forms, returned to sender, use locator, send again, and then when no response, send funds to IRA or issue check to last known address, and then deal with uncashed checks. I'd like to get the distribution form and tax notice for all plans into the hands of the client (and online instructions when applicable) so plan sponsor can hand out at last day of employment. Therefore, the notification has gone out and they can be forced out say in 60 days to be safe. Still could be lots of follow up. We do almost all the work here but I'd like to shift as much work to the plan sponsors as possible. Reason -- almost can't charge enough for handling distributions. We also issue distribution checks, deposit taxes and prepare 1099-Rs for those not on record keeping platforms."

0 replies   |    18 views   |    Add Reply

thepensionmaven created a topic in Plan Document Amendments

Cost for PPA Restatements

"Anyone remember the song from the '50s 'Heartaches'? Well, here we go again. Concerning the PPA restatements, a question was asked about fees, specifically: what is the range TPAs are charging for the documents. EBRI published their survey on fees charged for the PPA restatments, broken down by prototype, volume submitter and IDP; with highs and lows for each. I seem to recall the individual who posted the question (and it could have been me), was totally blasted for having the audacity to ask such a question. Comments like this is a conflict of interest to discuss fees, this is unprofessional, this is against our code of conduct, and something about a servicing agreement. All we are looking for is a range. Something like 'we have seen' a range of X-Y. How is that unprofessional, when we are retirement plan professionals asking one another? How is this counter to the Code of Conduct when we are not only speaking among ourselves and not mentioning a particular client? Certainly we are not providing documents to our clients out of the goodness of our hearts, not any of us a re charitable institutions; and I'm sure none of us want to charge a fee so high that a client or prospect will walk away. Just a range -- what's the harm?"

1 reply   |    26 views   |    Add Reply

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