Message Boards Digest

September 14, 2021

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

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

Distributions from 401(k) Plan for Alternate Payee

"Two situations: (i) the 401(k) plan provides for a segregation of the A/P's entitlement into a separate account; and, (ii) the 401(k) plan does not mention segregation into a separate account but seems to contemplate a direct rollover or distribution to the A/P.

Question: Is there any time period within which the A/P musttake a distribution or rollover? I am looking at 1.409(a)(9)-8 Q/A-6(b)(2) and don't have a clue if it says what I think it says-- that the A/P can leave the funds in a segregated account until the Participant reaches age 70-1/2.

The language is:

'(2) Distribution of the separate account allocated to an alternate payee pursuant to a QDRO will satisfy the requirements of section 401(a)(9)(A)(ii) if such account is to be distributed, beginning not later than the employee's required beginning date, over the life of the alternate payee (or over a period not extending beyond the life expectancy of the alternate payee). Also, if the plan permits the employee to elect whether distribution upon the death of the employee will be made in accordance with the 5-year rule in section 401(a)(9)(B)(ii) or the life expectancy rule in section 401(a)(9)(B)(iii) and (iv) pursuant to A-4(c) of Section 1.401(a)(9)-3, such election is to be made only by the alternate payee for purposes of distributing the separate account allocated to the alternate payee pursuant to the QDRO. If the alternate payee dies after distribution of the separate account allocated to the alternate payee pursuant to a QDRO has begun (determined under A-6 of Section 1.401(a)(9)-2) but before the employee dies, distribution of the remaining portion of that portion of the benefit allocated to the alternate payee must be made in accordance with the rules in Section 1.401(a)(9)-5 or 1.401(a)(9)-6 for distributions during the life of the employee. Only after the death of the employee is the amount of the required minimum distribution determined in accordance with the rules of section 401(a)(9)(B).' "

4 replies so far   |    Click Here to Add a Reply

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metsfan026 created a topic in 401(k) Plans

Cash Basis vs. Accrual Basis for Form 5500

"I've always filed the Form 5500 on an accrual basis, but we've been taking over quite a few plans that have been filing the Form 5500 on a cash basis. Now I'm curious if there's a benefit to utilizing either method, or does it not really matter? In these cases, would it be best to keep moving forward on a cash basis for consistency or would moving to an accrual basis be alright? Thanks in advance (and as always, sorry for all the questions!)"

1 reply so far   |    Click Here to Add a Reply

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

RMD for 1948-Date-of-Birth Owner's New Retroactively Adopted (Or as Yet Unfunded) DB Plan

"So hey, what if there's a first, vested, accrual (in my case, a cash balance credit) as of 12/31/2020 for the owner and no money's been put in the plan by his RBD of 4-1-2021? And does the answer change if the plan was adopted before the RBD, such that 'we knew this would be due....' (I expect the RMD to be paid via an in-service distribution of his entire benefit so that he can use the DC method, too, and roll the rest to his IRA. That's got me thinking about an interest adjustment for the late payment, too.) Any thoughts appreciated. thanks.

Oh wait, am I OK because the 4-1 date would have been the 2020 RMD which was based on $0 accrued benefits, and then at some point in 2021 we adjust for the new 2020 accrual? Getting my DB/DC RMDs swirling in my brain."

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Karen McIver created a topic in Retirement Plans in General

Plan Name Change and TIN

"Years ago we used to send a letter to the IRS when the name of a plan associated to a Trust ID number changes. Is this still required? To what address?"

1 reply so far   |    Click Here to Add a Reply

Becky Schwing created a topic in 401(k) Plans

Controlled Group Question

"Company A is 100% owned by Husband and has a 401k plan. His spouse works there but has no direct ownership, just the required family attribution. The spouse started her own business in 2020 and is doing so well that she would like to do a SEP for 2021. Husband has no interest in her company and does not work there.

Under section 1563 rules = attribution does not apply if all four of the following conditions are satisfied

1. Spouse does not hold direct ownership in the business

2. Spouse is not an employee and does not participate in the management of the business

3. Business income form passive investment does not exceed 50% of the gross income for the year; and

4 Owner's interest is not subject to disposition restrictions in favor of his/her spouse and the couple's minor children

Based on item 2 if she works and is paid by his company they don't meet all the conditions and thus would be considered a controlled group - correct?"

2 replies so far   |    Click Here to Add a Reply

rblum50 created a topic in 401(k) Plans

Where to Put Deemed Distribution Due to Loan Default on 2020 Form 5500 Schedule H?

"Where do you indicate a deemed distribution due to loan default on 2020 Form 5500- Schedule H? Would it appear on line 2e(2) or line 2e(1)?"

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