Message Boards Digest

August 26, 2021

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

Centerstage created a topic in Plan Terminations

Terminating Plan Is Surviving Plan of Several Previous Plan Mergers -- How Far Back to Go with Answer to Line 12 on 5310?

"Terminating plan is adopter of pre-approved plan. Prior to provider's pre-approved plan filing for Cycle 2 Determination Letter, the now-terminating plan had 3 plans merge into it, with the now terminating plan as the surviving plan. All are DC plans (and used plans from pre-approved providers), so no 5310-A filed, and no 5310 was filed at the time of the mergers by the surviving plan -- only DL filings so far have been usual filings on cycle by pre-approved plan provider. The terminating plan timely adopted its Adoption Agreement Restatement after the plan mergers, when its pre-approved plan provider sent the Adoption Agreement Restatement, for the Cycle 2 Determination Letter. Pre-approved provider timely filed for Cycle 3, and presumably has received DL, although no Adoption Agreement Restatements sent out to employers yet. For the surviving plan, that is now terminating, when I file its 5310, can I check 'no' on Line 12 of the 5310 as the previous mergers took place before the pre-approved provider's latest DL and before the plan adopted its latest Adoption Agreement Restatement?

Question 12 on Form 5310 reads as follows:

'__ Yes __ No -- Has this plan been involved in a merger, consolidation, spinoff, termination re-establishment, or a transfer of plan, assets or liabilities that was not considered under a previous DL? If 'Yes,' submit the required attachment.'

What does 'considered' mean in context of plan that uses pre-approved provider? Does the pre-approved provider's DL submission 'count' as 'considering' these mergers? Or would only an individual filing 'count' as 'considering' these mergers?"

No replies yet   |    Click Here to Add a Reply

Draper55 created a topic in Defined Benefit Plans, Including Cash Balance

401(a)(26) Passes When All Participants Are Former Employees? Can Plan Still Be Maintained?

"Business closed in 2020. Plan to be terminated in 2021. No employees in 2021. Because there are no nonexcludables, I would think the plan should pass 401(a)(26). However, because the 2 employees minimum goes to one if only one employee, does that imply that one goes to zero if there are no employees? An ancillary question is, can an overfunded plan be maintained in a retiree-only mode if the sponsor remains in existence with no employees?"

1 reply so far   |    Click Here to Add a Reply

Pammie57 created a topic in 401(k) Plans

Eligibility for a 401(k) Plan for 'Employees' Who Have W-7 Numbers

"Can a new 401k plan cover employees who have W-7 numbers rather than a Social Security Number?"

2 replies so far   |    Click Here to Add a Reply

MrsMacias created a topic in 401(k) Plans

At What Point Is a 401(k) Plan Considered 'Active' and So Must to Go Through Plan Termination Process to Close?

"Client purchased a plan with automatic enrollment and safe harbor match, with an effective date of 7/1/2021. The plan went live on our system, census was uploaded, and participants were notified of their eligibility to participate, received all the required notices, and should have been automatically enrolled if they did not opt out.

Client has now reached out (along with their financial advisor) saying that they never wanted automatic enrollment, didn't understand it, and now want to 'cancel' the plan. They have not done any withholding of ANY elective deferrals at this time, so the plan has not been funded.

I am of the opinion that since notices have gone out, accounts have been set up, etc. they have a 401(k) plan, and they cannot just 'cancel' it, i.e., pretend it never happened. I know how to correct the failure to automatically enroll participants so that's not the issue.

Our main point of contention and one I am having difficulty finding any guidance on is; at what point can we say, 'Sorry, you officially have a 401(k) plan so you have to fund any required contributions and go through the normal termination process to close it'?

I believe the plan is active, that they need to go through the correction process for the automatic deferral failure, and they they can then terminate the plan.

We've already told them that they can remove the automatic enrollment provision, so that's not the issue."

3 replies so far   |    Click Here to Add a Reply

JOH created a topic in 401(k) Plans

Anyone Know the Formula Used to Generate the Required Lifetime Income Illustration?

"Does anyone know the actual formula that's used to calculate the Lifetime Income Illustrations that are required in 2022? DOL has the calculator, but I'm wondering if somebody knows the actual formula for both the Single and Joint."

2 replies so far   |    Click Here to Add a Reply

Lou S. created a topic in Form 5500

Warnings Upon Electronic Filing of Form 5500

"I just received 2 e-mails from EFAST that the filing status of 2 plans were updated as 'filing received' but the files were sent in April and June respectively, which both had good ACK files, and the new e-mail has the same ACK file as the old. I did not refile either plan myself. There were 2 warnings -- one is basically 'filed after due date with no cause or amendment' and the other is 'matches another filing in database.' I'm trying to figure out whether it's a general problem with the new electronic filing system for EZ plans or instead is specific to 2 of my plans. Anyone else get one of these?"

5 replies so far   |    Click Here to Add a Reply

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

Delta Is Ready When You Are (for an Extra $200/Month) -- COVID Surcharge Permitted by HIPAA?

"Many news outlets are reporting the decision by Delta Airlines to impose a $200/month surcharge on employees who refuse the COVID vaccine.

My initial reaction is that COVID vaccination status is a 'health factor' under Treas. Reg. 54.9802-1(a)(1)(iv) (Receipt of health care) or (v) (Medical history). One could also argue that refusing the COVID vaccination a health factor because it is analogous to the dangerous activities listed under 'evidence of insurability' in Treas. Reg. 54.9802-1(a)(2)(ii).

It seems to me that the $200/month is a higher premium under 54.9802-1(c) for a similarly situated individual. It's a stretch to argue that COVID vaccinated employees/non-COVID vaccinated employees are not 'similarly situated' because vaccination status is a bona fide employment-based classification under 54.9802-1(d)(1).

That leaves the exception for nondiscriminatory wellness programs in 54.9802-1(f), and specifically the exception for 'activity only' wellness programs in 54.9802-1(f)(1)(iv), because the $200 is related to a health factor. The activity-only wellness program would need to complete with the frequency, size of reward, reasonable design, and uniform availability/reasonable alternative standards requirements of 54.9802-1(f)(3)(iv). It seems that the employee's personal physician can offer an alternative if he/she is willing to say that obtaining the COVID vaccine is not medically appropriate for that individual -- although it's unclear what the alternative would be in this circumstance. 54.9802-1(f)(3)(iv)(C)(4)"

5 replies so far   |    Click Here to Add a Reply

AmyETPA created a topic in Form 5500

Reporting of Coronavirus-Related Distribution on 5500

"Participant takes CRD during 2020 and repays the CRD during 2020. Do we reflect the CRD on the 5500 and then show it going back in? Or because they offset do you not show it?"

1 reply so far   |    Click Here to Add a Reply

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