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Message Boards Digest

July 9, 2021

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

Belgarath created a topic in 401(k) Plans

FIS Document users - flexible discretionary vs. rigid discretionary

"Just curious as to what other folks have decided. I've decided that for most purposes, the "rigid" discretionary match is useless (or perhaps I should say overly restrictive), and we're using the flexible discretionary match for pretty much everything except where the client wants a fixed match in the document. You just have so many more options. I should hasten to add that we do NOT use the PPD document, so if you are using PPD, then your opinion re the "rigid' match might be very different. Curious as to other thoughts - pros, cons, which are you using? Only downside from my perspective on the flexible match is the notice requirement, and the notice is VERY easy. Edit - as I read the original post, I think I worded something poorly - when I said "useless" I didn't really mean that. I meant "useless" for most of our clients, as they usually want more flexibility than is permissible using the "rigid" discretionary match. But the rest of my question still stands - interested to see what others think. Thanks."
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austin3515 created a topic in 403(b) Plans, Accounts or Annuities

Old Frozen 403b / Individual Contracts / Fiduciary Liability

"Client has an old 403b, pre 1/1/09 contracts. They need to sign off on distributions and she wants to know if she has any fiduciary liability with respect to these old contracts. They are all individual contracts, such that they cannot move them to a new provider without consent and they cannot change the funds available as they would in a 401k because they are essentially IRA's. I gather the answer is "yes" but curious if anyone has an article I can provide that sort of delves into this issue in some amount of detail. Also curious what others are doing about the these "ancient frozen Non-ERISA plans" and the related plan documents. A lot of sponsors don't even know these plans are out there (they only find out about them a participant comes out of the woodwork for a distribution)."
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VirginiaTPA created a topic in 401(k) Plans

5500EZ or SF

"Start-up plan in 2020 expected to be a solo(k) plan covering only owner & possibly spouse (who did not work in 2020). Eligibility is age 21 & 3 months elapsed time, monthly entry dates. Owner actually hired a part-time employee in July 2020 who became eligible in November, and terminated in December. Testing determined no contributions were required for this NHCE employee. So the participant count on 1/1/20 was 1 (owner only) and count on 12/31/20 was 1 (owner only). Assets were under $250k the entire year. Does this plan need to file 5500-SF or can they use 5500-EZ and not file for 2020 due to assets under $250k?"
1 reply so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

Net Operating Loss on Earned Income Calc

"I'm being told that NOL's do NOT reduce SE income. I just wanted to make sure that an NOL does not reduce my earned income amounts in any way. Hopefully someone can confirm!"
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BTG created a topic in Form 5500

Who should files the 5500s when almost everyone is dead?

"Here's a fun one for a Friday morning. A deferred vested 401(k) participant (from a job decades ago) was recently contacted by a service provider who told him that he is responsible for filing the 5500 for the plan. The company no longer exists. He was never in plan administration or an owner of the company, but the service provider says that because all of the owners are now dead and he is the only participant left with an account balance, he is somehow responsible for signing and filing annual returns. It seems to me that that can't possibly be right, and that the responsibility for terminating the plan and filing the final returns more properly falls on the shoulders of the service provider. Any thoughts on this one?"
7 replies so far   |    Click Here to Add a Reply

Stash026 created a topic in 401(k) Plans

Eligibility & Probationary Period

"Good morning! I have a client that hires employees on a 3-month probationary period (though these employees are on payroll). The current document states that an employee becomes eligible on the 1/1 or 7/1 after 1-year of service (1,000 hours). The employer wants to have that 1 year start after the probationary period. For example if someone was hired on 06/20, their probationary period runs from 06/20/21-09/20/21. Can the 1-year wait then start from 09/20, meaning they don't become eligible until 01/01/23 (instead of 07/01/22 if the 1-year started from the original DOH, not the date the probationary period ends). Is that allowed? Thanks in advance!"
2 replies so far   |    Click Here to Add a Reply

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