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Message Boards Digest

September 21, 2021

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

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

Can Make a PPA Credit Balance Election via Email?

"A client has asked me if they can make their PPA credit balance elections via email. Meaning the email itself would contain the election language, and the signature would be their email stationery text at the bottom (e.g., Name, Title, Address, etc.). Would this satisfy the regulations, or would an actual scanned signature in a Word document be required?"

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BG5150 created a topic in Retirement Plans in General

Are Late Deposits of Deferrals Considered an Operational Error?

"Employer has several late remittances of deferrals to the trust. Prohibited transaction. Fix (perhaps) under VFCP. Is it also an operational error? Corrected under SCP? If so, what 'operation' under the plan document did they violate?"

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Patricia Neal Jensen created a topic in 401(k) Plans

Cycle 3: Odd Deadline for Communicating a Discretionary Match

"Everything in this makes sense except for the timing of the notice to participants: '... within 60 days following the date the discretionary match is made to the plan.' Why would the notice come after the match is contributed? Wouldn't it make more sense to have the notice precede the match?"

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

Self-Insured MEWAs

"My understanding is that, for MEWA definition purposes, the DOL follows the common control rules, including an 80% ownership requirement for a subsidiary, although the Form M-1 filing exemptions apply down to 25% ownership. My further understanding is that the DOL will not consider an ASG to create a single-employer plan for MEWA definitional purposes unless they also meet the requisite ownership requirements.

I also understand that several (or many?) states' laws follow this definition to determine when a MEWA exists that may be subject to state regulation.

In other words, a subsidiary owned 70% by a parent would still give rise to a MEWA for DOL and state-law purposes (but would be excused from filing a Form M-1).

I'm interested in others' practical experience with how employers address this issue, particularly as a matter of state law with self-insured group health plans:

  1. Whether intentionally or inadvertently, they ignore the arrangement's status as a MEWA. My guess is this occurs inadvertently somewhat regularly. Are state regulators more lenient on good-faith situations like this (as opposed to the problematic self-insured MEWAs that have made headlines)?
  2. They follow all state law rules governing self-insured MEWAs, including registration, filings, etc. and continue the self-insured MEWA as such.
  3. They don't cover the subsidiary and find another group health plan alternative (e.g., fully insured plan covering the subsidiary's employees)."
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maryflemingphr@yahoo.com created a topic in 401(k) Plans

What's an 'Executive' Cash Balance Plan?

"All of my research and in my experience working in a prior job says cash balance is a qualified plan that has to pass testing. Has anyone ever heard of an executive cash balance plan? Can a plan sponsor designate only HCEs and/or executives for a cash balance plan?"

1 reply so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Investment Issues (Including Self-Directed)

Which Mutual Fund Providers Furnish Prospectuses in Spanish?

"Of the popular mutual fund providers, which furnish prospectuses in Spanish, and which do not?"

5 replies so far   |    Click Here to Add a Reply

perkinsran created a topic in Retirement Plans in General

Full-Timer Already Participating But Then Moves to (Ineligible?) Part-Time Status

"401k Plan currently excludes part-time employees from participating in the 401k plan. If a full time employee moves to part-time, can they be excluded prospectively?"

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FormsRstillmylife created a topic in Form 5500

Plan Has Not Yet Filed Form 5500 for 2019 But Is Ready to File Form 5500 for 2020

"2020 Form 5500 will be ready to timely file because the plan no longer requires an audit, but the 2019 Form 5500 with its required audit will be unavailable. Should we file the 2020 5500 now, or will this make the DOL and IRS more likely to ask about the 2019? Prior years were filed timely; so the DOL has to know the plan is out here."

2 replies so far   |    Click Here to Add a Reply

mming created a topic in Retirement Plans in General

Amendment to Add Last Day Requirement, Effective January 1, 2022

"A plan that currently permits profit sharing allocations to participants with 1,000 hours wants to add a last day requirement effective 1/1/22. I believe that not having a last day requirement is not a protected benefit, so the amendment would be OK? Is this correct?"

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Belgarath created a topic in Qualified Domestic Relations Orders (QDROs)

Account Has Several Different Kinds of Funds But QDRO Is Silent as to Which to Distribute

"Say a QDRO specifies a lump sum of $X. Participant has several sources--deferrals, match, Roth, Pre-tax, etc. QDRO and plan are silent on the issue of which source(s) from which the funds would be distributed.

My answer would be to make the distribution proportionately from each of the sources. But does the participant have the right to tell the plan administrator to use particular sources (for example, all from Roth, or none from Roth, etc.)?"

10 replies so far   |    Click Here to Add a Reply

justatester created a topic in 401(k) Plans

Safe Harbor Plan Allows After-Tax Employee Contributions

"A plan is a SH match plan. However, they decide to allow for after-tax contributions. The plan is now subject to the ACP testing. I believe the test can be conducted with or without the SH match included. My question: The plan is also top heavy. The plan 'loses' the top heavy exemption and is now required to fund the top heavy minimum. Is this still true even if no participants actually make after-tax contributions? My gut says yes, they're required to fund because the plan is not considered 'solely' safe harbor. Thoughts?"

7 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in Form 5500

Use Form 5500-SF to Report Distribution of Deferrals Due to Having Zero Sched C Income?

"Sole prop (with employees) defers. But ends up with zero Schedule C income. Deferrals returned timely. Do you report this on the 5500-SF on line 8(e) for the year of distribution, or another line, or not at all?"

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metsfan026 created a topic in 401(k) Plans

ADP Testing: Count All the HCEs?

"Taking over a case where there are 6 participants, but technically 5 of them are HCE (2 partners, and 3 of the employees who have no ownership stake). Is there an issue from a testing standpoint to use all 5 as HCE or should we test them with just the 2 partners considered HCE? (Only reason I'm asking is because it does make a difference in regards to passing or failing.)"

5 replies so far   |    Click Here to Add a Reply

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