Message Boards Digest

November 1, 2021

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

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

RMD to Estate on Account of Deceased Participant

"A participant in RMD pay status passed away this year. Her plan beneficiary is her estate, but the estate is not responding to the plan paperwork to have the RMD processed. What can be done? I know there's generally a 50% penalty to the participant if the RMD isn't paid by 12/31/21, but I don't think the participant herself cares at this point! Would the penalty pass through to the estate?"

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5500Nerd created a topic in Form 5500

No Form M-1 Filed by a MEWA

"I have a group that was a MEWA for seven years. They never reported as a Multiple Employer on their 5500, however -- they marked multiemployer by mistake. We will be amending. As a MEWA they should have filed the Form M-1. They are petrified of dealing with penalties. We thought to attach a letter to explain. Has anyone witnessed a group paying hefty fines for not filing the Form M-1? Did they go through an audit for amending the 5500 to be a Multiple Employer?"

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ERISA guy created a topic in 401(k) Plans

Elective Deferrals in Excess of 401(a)(17) -- Interpreting Fidelity's Document

"I understand it's likely permissible for a 401(k) plan participant to make elective deferrals on compensation in excess of the 401(a)(17) limit (assuming all other limits are not exceeded). Most plans I've looked at permit this with fairly obvious and simple language. Fidelity's document reads: 'In lieu of requiring an Active Participant to cease making Deferral Contributions for a Plan Year after his Compensation has reached the annual Compensation limit under Code Section 401(a)(17), the annual Compensation limit shall be applied with respect to Deferral Contributions by limiting the total Deferral Contributions an Active Participant may make for a Plan Year to the product of (i) such Active Participant's Compensation for the Plan Year up to the annual Compensation limit multiplied by (ii) the deferral limit specified in Subsection 1.07(a)(1)(A) of the Adoption Agreement or Subsection 5.03(a), as applicable.'

To me, that's a strange way to say it. The AA has an elective deferral max of 100%, so pursuant to the formula in the above, the max a person's elective deferrals could be is $290,000 in 2021 (for a person whose comp exceeds 401(a)(17) in that year), and 402(g) would bring it back down to $19,500. Why does Fidelity's document make it this complicated?"

2 replies so far   |    Click Here to Add a Reply

Santo Gold created a topic in Correction of Plan Defects

Document Non-Amender Under Audit; Need Attorney for Audit CAP?

"A small profit sharing plan under audit was brought to us because their plan document was not timely amended. It was amended for EGTRRA around 2009 but that was about it. The auditor recommended updating their document, which was done and they now have current document. While the auditor accepts that, the auditor is moving forward with Audit CAP to avoid disqualification because the document had not been timely amended. The plan appears to have been operated properly in all other areas. Just checking on what penalty the IRS would likely impose in this situation. Any ideas? Also, while hiring an ERISA attorney is never a bad option with Audit CAP, would it really make much difference in this case? Is the ERISA attorney mainly there to negotiate a lower penalty?"

1 reply so far   |    Click Here to Add a Reply

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