Message Boards Digest

October 19, 2021

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

Belgarath created a topic in Retirement Plans in General

Date Amendment Must Be Signed on Conversion of Money Purchase Plan to Profit Sharing Plan?

"Assume calendar year MP plan. Client wants to convert to a PS plan mid-year. Let's say July 1. 204(h) notice is done timely. Must the AMENDMENT be signed by July 1, or can it be signed by December 31, as long as the 204(h) notice was provided timely?"

4 replies so far   |    Click Here to Add a Reply

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E.D. Raff created a topic in Correction of Plan Defects

'110% Rule' Failure - Failure to Restrict Distributions or Obtain Secured Repayment Obligation from Restricted Employee

"Ongoing DB plan fails to limit distribution to restricted employee (HCE benefitting under plan) as per 1.401(a)(4)-5(b)(1) and fails to obtain secured repayment obligation per Rev. Rule. 92-76. Occurred during 2019 plan year. As to correcting this, it seems like the choices are either contribute so that assets equal/exceed 110% of current liabilities, and/or obtain a properly secured repayment arrangement. But these would not reach back to when the violation occurred -- they'd be done currently (of course, no harm in last 20 months so no foul?). Any thoughts? Also, probably needs to be VCP."

No replies yet   |    Click Here to Add a Reply

Ananda created a topic in Retirement Plans in General

SPD Provided to Employees 'Eligible to Participate' in Plan

"While I understand that plan participants are required to receive an SPD within 90 days of becoming a plan participant, where is the support under IRS or DOL regulations that says employees eligible to participate must receive the SPD even if they never become plan participants?"

5 replies so far   |    Click Here to Add a Reply

Benguru25 created a topic in 401(k) Plans

Matching on the Incorrect Source Contributions

"Individuals were matched on catch-up contributions when they should not have been. This has happened for a couple of years and was recently discovered when investigating another issue. The good part is that the payroll system has a cap on the match so no one was overmatched. We perform a true up every plan year (early the following the year) and deposit true up amounts early in the following year for the prior plan year.

My concern is that our plan document explicitly states match is not calculated on any catch-up contributions. While no one is getting more match than they are entitled to, what does this mean from a compliance standpoint?

Amounts matched on the catch up should really be included in their true up. These are folks who already maxed out at $19,500 and their match should have stopped (and then that's where the true up comes in to play)... but instead the payroll system started calculating match off of their catch up, which, per our plan documents, is not an eligible source for match. Any ideas on whether we need to correct this, and what that correction might look like?"

No replies yet   |    Click Here to Add a Reply

AlbanyConsultant created a topic in Retirement Plans in General

One Person Plan-- Owner Now Deceased, Final 5500 Never Filed

"We were the TPA on this one person plan, and the owner stopped paying our invoices. We went back and forth a couple of times over it, he rolled his money out, we told him we wouldn't prepare the final 5500 until he paid us per our client service agreement, and then he never responded. Just found out that he recently passed away. So, clearly, we're not getting paid. But.... just wondering.... what is going to happen with the 5500? At some point, they'll figure out that a filing is missing and send a letter to the business that is no longer there. The guy is dead. Does the IRS have the authority to levy any penalties against a spouse, estate, heirs, etc.?"

1 reply so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Date of Plan Termination Can Be Changed Later?

"The plan sponsor terminated a plan as of Sept. 5, 2021. All contribution were stopped. Everyone became 100% vested. Communication was sent out to the participants, asking them to take action on their account balance. A forced distribution is set for December 2021. But now their advisor is asking whether the termination date can be changed to a future date (10/15/2021) because they would want to allow contributions for a few of their employees. Can the termination date be changed now so that such contributions can take place?"

2 replies so far   |    Click Here to Add a Reply

Jakyasar created a topic in Plan Terminations

PBGC Form 501 -- How to Show the Excess Assets in a QRP Situation?

"First time doing a PBGC termination with excess assets being transferred to a qualified replacement plan (QRP). I cannot seem to figure out the following:

All participants: $3,000,000 -- all rolled over to the QRP - existing DC plan -- not relevant whether or not consensual

Excess (overfunded portion): $300,000 -- transferred to the QRP

Total DB distribution: $3,300,000 -- all to QRP

How do I show the $300,000 on Form 501?"

2 replies so far   |    Click Here to Add a Reply

Pammie57 created a topic in 401(k) Plans

Off-Calendar Plan Year -- Effect on 402(g) Limits

"Plan is on an off-calendar plan year (10/1/2020 - 09/30/2021). Participant defers $34,500 during the plan year, divided as follows:

$18,000 from 10/1 through 12/31/2020

$16,500 from 1/1/2021 through 3/31/2021, when he quit.

Does he have a 402(g) issue or is he OK? He wasn't in another plan before this one during 2020. We don't know whehter he was in a plan of any employer later in 2021."

2 replies so far   |    Click Here to Add a Reply

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