Message Boards Digest

September 23, 2021

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

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

Charging Advisor Fees to Accounts

"Has anyone seen an ERISA 404(c) plan that allows participants to have their own investment advisor's fees paid out of their plan account? I have seen this, but only in the case of self-directed brokerage windows within a plan. I have a client asking if they can allow participants to obtain advice on allocating their accounts between the plan's designated investment alternatives and charge the associated advisory fee against their account. This strikes me as technically permissible, but a huge pain to administer. I've located a couple of similar message board threads which reached a similar conclusions, but they predate the service provider and participant level fee disclosure regs, which seem like they would raise some additional roadblocks. Any thoughts appreciated."
1 reply so far   |    Click Here to Add a Reply

bito'money created a topic in 401(k) Plans

Workday HR software set-up for DC plan - options for 415 limit

"I have 3 questions about Workday all as it relates to monitoring the DC Plan 415(c) Annual Addition limit ($58,000 in 2021.)
  1. Please confirm Workday can actually monitor the 415(c) Annual Addition limit.
  2. Can Workday calculate DC Plan contributions sequentially: for example, determine non-elective contributions first before payroll deductions/matching contributions.
  3. Can Workday also calculate DC Plan contributions concurrently: for example, Basic Pre-Tax, Basic Roth, and Matching Contributions can be calculated concurrently up to the Annual Addition limit. Sequential deductions may lead to Basic Pre-Tax Deductions up to the annual addition limit with no room for matching contributions.
2 replies so far   |    Click Here to Add a Reply

David Olive created a topic in Correction of Plan Defects

Retroactive Amendment to Exclude HCEs

"Plan Administrator wishes to exclude HCEs from participating under the Plan in order to pass minimum coverage tests under 1.410(b)-2(b)(6). In order to avoid minimum coverage failure for 2021 Plan Year, Plan Administrator proposes adopting amendment to exclude HCEs retroactively to 01-01-2021. The Plan does have one HCE currently participating the Plan. If the Plan Administrator adopts the amendment, can the deferrals for 2021 year be refunded to the HCE (and included in gross income of the HCE), since the HCE is no longer eligible, so that no HCE benefits under the Plan for the 2021 plan year and the Plan passes minimum coverage? Any problems or issues with this I am missing?"
1 reply so far   |    Click Here to Add a Reply

HCE created a topic in Employee Stock Ownership Plans (ESOPs)

Change of Corporate Structure

"We have a parent who is owned by an ESOP. The parent owns Company A, and Company A owns Company B. We were told that we had to have this structure because of the ESOP. We would like to change the structure so that the parent owns Company A and Company B (making A and B sister companies). I don't see any problem with doing this, but I am concerned with messing up something in the ESOP based on the previous advice. Is there anything preventing us from making the change?"
3 replies so far   |    Click Here to Add a Reply

rocknrolls2 created a topic in 401(k) Plans

Solo k for Sole Proprietor - Computation of Contributions for Proprietor Based on Earned Income

"The IRS recently issued a TE/GE Issue Snapshot entitled "Calculation of Plan Compensation for Sole Proprietorships." This Issue Snapshot involved the calculation of earned income with respect to nonelective contributions to a defined contribution plan in the situation where the self-employed individual has made no elective deferrals and the nonelective contribution is fully deductible under Section 404. My question is, assuming that the proprietor's net income from self-employment is equal to $100,000 for 2021 and s/he has established a solo 401(k) for 2021, how do you calculate the elective deferrals? I know that for the common law employee, elective deferrals are subject to FICA withholding. By extension to the self-employed individual, I would assume that the elective deferral would also be subject to the self-employment tax on earned income. If that is the case, do you simply multiply the earned income amount by the 0.9235 (which is the amount you would multiply self-employment income to arrive at the amount which is subject to self-employment tax and then multiply that by 15.3%, leaving the balance as potentially available elective deferrals? I would appreciate anyone's thoughts on this issue."
4 replies so far   |    Click Here to Add a Reply

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

Unresponsive beneficiary

"Hypothetical for the moment, but could become real. Participant dies, no named beneficiary. Under the plan default, it goes to the daughter. Daughter is non-responsive, although her location is known. This doesn't really fall under the "can't be located" missing beneficiary. Let's assume after a period of non-response, the plan just cuts her a check. If she doesn't cash it, what then? Does anyone happen to know if Millenium Trust or similar organization will accept a rollover to a beneficiary IRA in these circumstances? (I realize I can contact them - just wondered if anyone already knows). Other options? P.S. - let's assume it is over $5,000, in case it makes any difference in your thoughts."
3 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in Retirement Plans in General

"Mistake of fact"

"This is truly a hypothetical question, but comes to mind since there have been a couple of "mistake of fact" distributions recently. Suppose you have a legitimate mistake of fact contribution. In order to return it to the employer, it is supposed to be returned within 1 year. Now suppose it is past the 1 year, before it is even discovered. I believe it then needs to be allocated as an employer contribution. Other opinions? Other solutions you have used or heard of in "real life" situations? Just curious."
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BG5150 created a topic in Retirement Plans in General

What is TPA exposure for reporting late deferrals on 5500?

"TPA produces annual 5500s. Client constantly indicates on annual data request that no contributions were submitted late per DOL rules. TPA enters zero on the proper line of 5500/5500-SF. Later it is determined that the client has been depositing weekly payrolls only once per month for years. TPA brings this up with client, they say they don't have any money to pay lost earnings or to pay TPA for calculation. They do not want the item listed on the 5500 either. What is the TPA's exposure for producing the 5500 with no late contributions when in fact there were? The TPA is not signing the 5500."
1 reply so far   |    Click Here to Add a Reply

BG5150 created a topic in Retirement Plans in General

Can cost of fidelity bond be assessed to plan?

"Can the cost of the Fidelity bond be assessed to the plan (from forfeiture) and/or participants?"
1 reply so far   |    Click Here to Add a Reply

Chippy created a topic in 401(k) Plans

waving participation

"If a participant waives the right to participate in the Plan, do they also waive the right to receive the top heavy minimum as well? Thank you"
7 replies so far   |    Click Here to Add a Reply

Chippy created a topic in 401(k) Plans

non profit organization

"What is the due date for the deposit of a profit sharing contribution in a non-profit? They are exempt from filing a form 990 or 1120."
1 reply so far   |    Click Here to Add a Reply

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