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Message Boards Digest

May 17, 2021

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

RCK13 created a topic in Retirement Plans in General

RMD Taken Too Early

"A participant erroneously took their first RMD in 2020 because they met the old rule's requirement for RMDs rather than the new one. Is she required to continue taking an RMD annually even thought she isn't 72 yet?

For reference: DOB: 4/1/1950, Retired 12/31/2019, Took RMD 2020.

She isn't aged 72 yet (which is her RMD age), so I would think it's not necessary to continue her RMDs this year. Agree?"

2 replies   |    56 views   |    Add Reply

dmwe created a topic in Cafeteria Plans

Setting a Minimum Allowed Rollover of Unspent FSA Amounts

"Our current document provider doesn't have language/options that allows a FSA plan sponsor to set a minimum that they'll allow an employee to rollover from one year to the next in their FSA, but we'd like to add an appendix/amendment to limit rollovers to $25 and anything under $25 will be forfeited. Do you all know if anything in the regs that would prohibit that type of language?"

4 replies   |    59 views   |    Add Reply

DCqanda created a topic in 401(k) Plans

Medical Loss Ratio (MLR) Rebates Counted as 'Compensation'?

"A client is asking whether Medical Loss Ratio (MLR) rebates paid back to employees from a health insurer can be considered retirement plan compensation.

The plan has the following exclusion: All fringe benefits (cash and noncash), reimbursements or other expense allowances, moving expenses, deferred compensation, and welfare benefits are excluded. No other exclusions are chosen. The plan uses 3401(a) as the definition of compensation.

The client's argument is 'yes,' because it's the participant's compensation that's being rebated. This isn't like a flight, hotel, or car rental, but an overpayment that would have otherwise been in their salary.

What I've seen is that these amounts typically are for a prior year's premium payment and I wonder if it wasn't already considered plan compensation during that year. I know the paycheck reduction is pre-tax for the health plan premium but I believe that it is still considered plan compensation under 'Elective deferrals or salary reductions made pursuant to §125,' etc. The payroll code is currently 'no', but no documentation exists for why. Some context:

https://www.irs.gov/newsroom/medical-loss-ratio-mlr-faqs

Scenario D seems the be the relevant scenario. Anyone gone down this trail already?

I'd also be interested in hearing about best practices for taking the numerous contemporary payroll codes and properly assigning them to plan's compensation under the little guidance that the retirement plan regulators and plan documents provide. The IRS used to post a chart online until 2013 or so, but even this only has 20 categories."

0 replies   |    25 views   |    Add Reply

JackS created a topic in Retirement Plans in General

Effect of Additional Medicare Tax for High Earners on Calculation of Earnings from Self-Employment

"Does the additional Medicare tax on high earners gets factored in when calculating the earned income of a self-employed individual? Because that tax is entirely on the employee, my guess is that it can be ignored and does not factor into the SE calculations."

1 reply   |    36 views   |    Add Reply

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