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Message Boards Digest

August 23, 2021

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

metsfan026 created a topic in 401(k) Plans

Safe Harbor Contribution True-Up Required for Participants Starting Deferrals in Mid-Year?

"For a plan that does their Safe Harbor Match on a payroll-by-payroll basis, it it necessary to do a true-up at the end of the plan year for the participants who started their contribution mid-year (or for those who maxed out prior to year-end)? Or can the document say the plan does not do a year-end true-up?"

5 replies so far   |    Click Here to Add a Reply

AJC created a topic in Plan Terminations

Notice of Plan Termination Required for a Mid-Year SIMPLE-IRA Plan Termination Due to Operational Failure?

"A SIMPLE-IRA plan was adopted by an employer that already had a 401(k) plan, and both plans operated side by side for a number of years. The employer has been notified of the operational failure and agrees to stop contributions to the SIMPLE-IRA plan immediately and terminate it. Is a termination notice required? If so, is the termination notice required in advance of stopping contributions or in advance of an official termination date?"

No replies yet   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Summary of Material Modifications Needed for a Plan Termination?

"Should the PS administrator send in the SMM once the plan has terminated? When should they send it?"

6 replies so far   |    Click Here to Add a Reply

Jakyasar created a topic in 401(k) Plans

Hiring Someone During the Year with Large Salary and Immediate Entry

"New 401k plan, effective 1/1/2021 (no short plan/tax year). They decided to hire a new employee on 9/1/2021 and will pay $350k salary for calendar 2021. This employee will have an immediate entry of 9/1/2021 due to a special entry date amendment (otherwise plan has 21/1 and dual entry for eligibility). For 401k deferrals, profit sharing allocation and testing compensation, what needs to be modified pro rata? Assume no hour requirements for PS and 401k."

5 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Termination of a Plan Requires an Amendment to Plan Document Saying So? Or Just a Board Resolution?

"When a plan is terminating, should there be an amendment to terminate the plan? or will a BOD resolution suffice?"

4 replies so far   |    Click Here to Add a Reply

Gilmore created a topic in Retirement Plans in General

Participant Has Moved to U.S.; Credit Earlier Service with Controlled Group Member While an Otherwise Excluded Non-Resident Alien??

"A Canadian company has a US subsidiary. The US company sponsors a 401(k) plan with a 1 Year of Service eligibility wait, and excludes non-resident aliens. An employee in the Canadian company is moved to the US company. While working for the Canadian company the employee had earned more than 1 year of service as measured under the US plan. Does the Canadian service count under the US plan? I'm thinking it would, just as it would with any other controlled group member?"

1 reply so far   |    Click Here to Add a Reply

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

Checks Not Issued Until Month Following Payroll Date -- What Effect on Default Date for a Participant Loan?

"Say the payroll date is 12/31. Paychecks aren't typically issued until the following week, i.e. in January. Loan repayments were stopped. Would the loan's default day (at the end of the 2nd quarter following the first missed payment) be June 30 or would it be September 30?"

7 replies so far   |    Click Here to Add a Reply

ryan1986 created a topic in 401(k) Plans

Administrator Won't Make Hardship Distribution Now Unless a Pre-Treatment Estimate is Provided

"I recently qpplied for a hardship withdrawal through Vanguard to cover orthodontic expenses for my child. I sent in everything that was requested, but they are still insisting that I send in a pre-treatment estimate. So I contacted my dental insurance provider and asked for one, but they can't provide one to me because her treatment has already begun. Is there anything that I can do or someone I could talk to, to escalate this situation?"

2 replies so far   |    Click Here to Add a Reply

AJC created a topic in SEP, SARSEP and SIMPLE Plans

SIMPLE-IRA Plan Terminating Mid-Year - Is Notice Required

"A SIMPLE-IRA plan was adopted by an employer that already had a 401(k) plan, and both plans operated side by side for a number of years. The employer has been notified of the operational failure and agrees to stop contributions to the SIMPLE-IRA plan immediately and terminate the plan. Is a plan termination notice required before stopping contributions?"
No replies yet   |    Click Here to Add a Reply

HCE created a topic in Miscellaneous Kinds of Benefits

Can Stock Options Be Accelerated After They Expire?

"Stock options were granted and, under the terms of the options, they were scheduled to vest next month or expire if the participant is terminated before vesting. Several employees terminated last month, under the understanding that vesting would accelerate to vest on their termination dates (giving the participants up to 3 months to exercise post-termination), subject to board approval. We have not yet received board approval, but it is soon forthcoming. So now we have a issue that the options technically expired before they were officially accelerated, even though acceleration was anticipated (subject to board approval) prior to them expiring.

Would it be at all advisable for the board to approve the acceleration now? Or have we already blown it with respect to ISO status and 409A compliance (assume the stock price has gone up since grant, so they would not have an exercise price of FMV if treated as a new grant today).

Alternatively, can we treat them as accelerated prior to termination (and, consequently, expiration of the options), and the acceleration was simply retroactively condoned by the Board at a later date?"

No replies yet   |    Click Here to Add a Reply

Peter Gulia created a topic in Retirement Plans in General

Do Recordkeepers Differ in What They Offer for Cybersecurity?

"Plenty of advisors are preaching to retirement plans' fiduciaries (mostly, employers) that they ought to do something about cybersecurity. Imagine an employer takes heed, and tries to follow EBSA's Tips for Hiring a Service Provider with Strong Cybersecurity Practices.

https://www.dol.gov/sites/dolgov/files/ebsa/key-topics/retirement-benefits/cybersecurity/tips-for-hiring-a-service-provider-with-strong-security-practices.pdf

Step 6 is about what a fiduciary should seek to include in (or delete from) a service provider's contract. It includes a list of five or six provisions a fiduciary should seek. But is this realistic? Imagine a plan's size limits its negotiation with a recordkeeper to engaging it (on its standard terms) or not. For the points the EBSA guidance mentions, are there meaningful differences in what recordkeepers offer? Or are recordkeepers' provisions so much in a common mainstream that there's nothing much an employer would compare?"

3 replies so far   |    Click Here to Add a Reply

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