Message Boards Digest

October 21, 2021

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

BG5150 created a topic in Retirement Plans in General

Is Vacation Pay Counted as Comp? Also: Is Annual Corp. Resolution Needed for New Comp Contributions?

"Plan has no exclusions to compensation. Employer did vacation day buyback, but did not withhold 401(k) deferrals. Were they required to?

Also, they do a 4% profit sharing each year, and did not remit the PS for the buyback. I am thinking they owe a 50% QNEC on the missed deferrals (plus earnings). No match. The missed PS may be OK. The PS allocation is new comparability, and if it passes testing they are OK.

Also, is it your opinion that the employer must do a profit sharing resolution each year to memorialize the amounts everyone gets because it is new comp and not a stated formula?"

1 reply so far   |    Click Here to Add a Reply

BG5150 created a topic in 401(k) Plans

Summary of New Safe Harbor Notice Rules?

"Does anyone have a quick summary or chart that shows what SH Notices still need to be sent and which ones don't?"

No replies yet   |    Click Here to Add a Reply

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

Overfunded DB Plan Has No Participants After Owner's Death

"One participant, owner-only plan. The owner was taking annual distributions and passed away. He had elected a Joint and Survivor benefit and his spouse passed away years ago, so there is no beneficiary to continue taking his annual distributions. The plan is heavily overfunded. What happens to the plan now? Does the overfunding revert to the estate and the estate will owe the excise tax for he overfunding? Can the estate sell the plan to an underfunded plan (as is done at times to avoid an excise tax on the overfunding)?"

2 replies so far   |    Click Here to Add a Reply

Gilmore created a topic in Correction of Plan Defects

Participant Missed Auto Enrollment; Confusion About Deadline for Beginning Correct Deferrals

"EPCRS says,when a deferral election is not started in an auto enrollment plan, a QNEC can be avoided if:

'(i) Correct deferrals begin no later than the earlier of the first payment of compensation made on or after the last day of the 9 1/2-month period after the end of the plan year in which the failure first occurred for the affected eligible employee or, if the Plan Sponsor was notified of the failure by the affected eligible employee, the first payment of compensation made on or after the end of the month after the month of notification ...'

Say a plan with auto enrollment has payrolls the 15th and the last day of the month. A participant is supposed to be auto enrolled on January 1, 2021, but is not. The participant finally notices and informs the plan sponsor on June 1, 2021. When must the deferrals begin to avoid the QNEC?

The month of notification is June. The month after the month of notification would be July. Since there would be a payroll on 'the end of the month after the month of notification' (July 31, 2021), is that the payroll date that deferrals must start?

What if the last payroll in July was July 25, 2021, would the deferrals need to start with the first payroll in August, which would be the first payroll 'on or AFTER' the end of the month after the month of notification?"

No replies yet   |    Click Here to Add a Reply

Jakyasar created a topic in Retirement Plans in General

Is This Part-Time Employee Counted as a Participant?

"An employee was hired more than 10 years ago and has worked 1000+ hours each year until 2014, when the employee became part-time, meaning only 750 hours/year.

Owner wants to set up combo plans for 2021 and wants to exclude this employee. I think the employee is included in all testing because he never terminated and never had a break-in-service, correct? He would be excluded categorically.

If the employee had worked fewer than 501 hours since 2014, would he still need to be included?"

2 replies so far   |    Click Here to Add a Reply

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

Participant's Ex-Spouse Obtains a QDRO But It's Never Filed with Plan Administrator

"A participant's ex-spouse is awarded half of the participant's retirement account pursuant to a QDRO. The QDRO is never filed with the plan administrator, however. If the participant terminates employement and takes his entire account balance, can the ex-spouse sue the participant to recover the amount due to her under the QDRO?"

4 replies so far   |    Click Here to Add a Reply

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