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Message Boards Digest

May 19, 2021

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

BG5150 created a topic in Distributions and Loans, Other than QDROs

Does Default 10% Withholding Apply to RMD?

"Does the default 10% withholding apply to RMDs (unless they opt otherwise on W-4P)? An entry on Investopedia says this: 'Nonperiodic distributions paid directly to an employee are subject to a 10% withholding tax, unless the beneficiary elects to have no taxes withheld. Nonperiodic distributions do not include individual retirement account (IRA), transfers or rollovers, systematic withdrawals, or required minimum distributions (RMDs).[1]' -- But the '[1]' points to the early withdrawal tax, not withholding. Does anyone have a specific cite as to whether the default 10% withholding applies to RMDs? I always thought it did."

2 replies   |    46 views   |    Add Reply

waid10 created a topic in 401(k) Plans

Participants Paid Too Soon, Plan Seeks Repayment Plus Earnings

"Company A is being acquired by Company B (A's 401k plan is merging into B's). Company A mistakenly terminated its employees and distributed the accounts. My understanding is that this is an improper in-service withdrawal and is treated as an overpayment under EPCRS rules. The correction rules (6.06(4)(b)) provide that the affected participants should be notified and asked to return the distributed amounts, plus earnings. My question is related to the earnings. Is it permissible to have the participant return the distributed principal and use the forfeiture account to fund the earnings? My concern is that the participants will already be upset. To add insult to injury, it is possible that the earnings rate on their 401k plan account outpaced their earnings rate on wherever they put the money after distribution; meaning that they may have to come out of pocket to make up the earnings."

2 replies   |    45 views   |    Add Reply

Stash026 created a topic in Health Plans (Including ACA, COBRA, HIPAA)

How Does COBRA Subsidy Apply to a MEWA?

"I work with a MEWA and the association is questioning the 20 employee minimum for the COBRA subsidy. Can someone point me in the direction of the reg that explains how the subsidy works with a MEWA? If an employer that participates in the MEWA has fewer than 20 employees, do they still fall under the COBRA subsidy since they are part of the MEWA?"

0 replies   |    18 views   |    Add Reply

stephen20 created a topic in 401(k) Plans

Need Help with First Year's Participant Count on Form 5500-SF

"What is the exact rules/law for the first year's participant count in a Form 5500-SF submission?"

3 replies   |    35 views   |    Add Reply

coleboy created a topic in Form 5500

ftwilliam Software Wants 5500-EZ Rather Than 5500-SF

"Client has a SIMPLE 401k. New in 2020. 2 employees, neither are owners. My ftwilliam system keeps giving me warnings that I should be filing a 5500-EZ instead of a 5500-SF. When I run the edit checks, I get the error. When I 'lock it' to get ready to notify the clients to sign, I get another pre-validation error. Is anyone else running into this?"

2 replies   |    30 views   |    Add Reply

Christopher Wilson created a topic in 401(k) Plans

Prevailing Wage Plan

"Hello, I hope this post finds everyone happy and healthy. I'm relatively new to prevailing wage plans, so I have a few questions. My understanding is that a prevailing wage contribution is treated as a non-elective contribution, so it's included in the gateway and it counts towards top heavy. In this particular situation, the prevailing wage contribution has no eligibility or allocation requirements and it's immediately and fully vested. The ADP test is failing, so to what extent, if any, can the prevailing wage contribution be treated as a QNEC and be included in the ADP test? Can an immediately fully vested prevailing wage contribution be treated as a safe harbor non-elective contribution and, if so, can this be done operationally or does it need to be stated in the plan document?"
1 reply   |    20 views   |    Add Reply

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