Message Boards Digest

May 31, 2021

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

M Norton created a topic in 401(k) Plans

fixing excess contribution in EZ plan

"401(k) plan, husband and wife only participants - both over age 50, both deferred $25,500 (not $26,000) for 2020; ER contribution is $75,000 (as deducted on 1120S return) plan document (McKay Hochman) says allocate PS pro rata; husband's W-2 wages more than wife's W-2 wages, due to SH health added to his comp When I allocate $75K pro rata between the two of them, then add his regular deferrals of $19,500, he is over $57,000 annual addition limit. Can $500 of his deferrals be recharacterized as catch-up (making his total catch-up $6,500) to reduce the excess? Then reduce his PS allocation by enough to get him down to $57,000 + $6,500 catchup? The wife's original PS contribution plus deferrals, plus the excess from spouse, will still be under the 415 limit. Or do you skip the part where $500 of his deferrals are recharacterized, which makes his excess $500 higher and the give all the excess to her? There is room to do that, also. Which is the preferred or prescribed method? Thanks."
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Christine Roberts created a topic in 409A Issues

Release Required Independent of Payment Schedule

"NQDC Plan provides for payment of benefits in annual installments each March. Termination of employment generally results in a forfeiture of further payments. However, under certain conditions, such as, termination by company other than for cause, payments are to continue when otherwise due under the plan, but conditioned upon the participant signing a release of claims (no deadline specified). Where the release is not a payment trigger (rather, failure to sign a release apparently results in a forfeiture) is it necessary to set a deadline for the release to be returned/and for the revocation period to expire?"
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austin3515 created a topic in 401(k) Plans

Participant Loan Program

"Can someone please explain to me when/if a client needs to provide participants with a copy of a loan program. Is it solely upon request? Relius's 401k documents seem to include all relevant provisions in the SPD BUT for some reason the 403b document does not. Just curious what the rules are concerning this stuff."
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AlbanyConsultant created a topic in Distributions and Loans, Other than QDROs

RMD - 402f notice not needed?

"We always provided the 402f notice with RMD paperwork just to be on the safe side, but I stumbled upon this article that suggests that Notice 2020-62 clarifies that this is not necessary. I can see why it wouldn't be, but I'm just being overly-cautious. Any thoughts? link Relevant section from article: Quote In late 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), allowing individuals to receive a “qualified birth or adoption distribution” of up to $5,000 from an eligible retirement plan. While such distributions may be recontributed to the plan from which they are paid, Notice 2020-62 clarifies that they are not eligible rollover distributions and not subject to the 402(f) notice requirements. The SECURE Act also raised, from age 70 1/2 to age 72, the age by which a qualified plan participant must begin receiving required minimum distributions (RMDs). The recent guidance clarifies that 402(f) notices must continue to be issued for eligible rollover distributions until a participant’s RMDs begin. Of course, the IRS Notice nowhere comes right out and says this - it says that QBAD doesn't need a 402f notice because it can't be rolled over. Is the GF article writer just being a little aggressive? I note that American Funds has removed the 402f notice from it's RMD form, so maybe there really is something here..."
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