Message Boards Digest

November 4, 2021

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

J Simmons created a topic in 401(k) Plans

Timing of Deductible Company Contributions by Non-Calendar Year Corporation

"Calendar year plan is sponsored by calendar year company A. An affiliated service group member, Company B, has a fiscal year-end June 30, so tax return is due Sept. 15. My understanding is that Company B may make a contribution to the plan for, say, plan calendar year 2020, as late as Sept. 15, 2021 and deduct it, because part of the plan year (July 1 - Dec. 31, 2020) fell within Company B's fiscal tax year (July 1, 2020 - June 30, 2021). Is that correct? Any IRS ruling to this effect? (Obviously, Company A's contribution for plan calendar year 2020 would have been due by Mar 15, 2021.)"

1 reply so far   |    Click Here to Add a Reply

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Join us for the virtual APC on Feb. 1-3, 2022. ERISA experts will discuss Form 5500 latest update, plan amendment, compensation, plan governance, hardship distribution, keeping current, Washington update, and more. 13 CE credits. Register here.

patriciab created a topic in 401(k) Plans

QSLOB Employer-Wide Testing Requirement (Gateway Test)?

"I'm looking for clarification on whether there is an aggregate employer-wide coverage test that has to be applied in order to qualify as a QSLOB, in addition to passing coverage for each QSLOB separately. Much of what I've read seems to indicate that, referencing a 'gateway' test for coverage. From ASPPA DC-3 Study Guide:

'If the requirements for QSLOB are met, an employer may elect to apply the coverage tests under IRC §410(b), and, as a result, the nondiscrimination tests of IRC §401(a)(4) separately to each QSLOB. In other words, the purpose of making a QSLOB election is to perform certain testing requirements on a QSLOB-basis rather than on an employer-wide basis. In order to perform the coverage (and thereby nondiscrimination testing) separately, the plan must first satisfy the nondiscriminatory classification requirement of the coverage test under IRC §410(b) on an employer-wide basis.'

IF the 'employer-wide' test is needed, would a controlled group be required to do a control-group-wide coverage test in order to have QSLOBs within the controlled group?

The point of confusion is that a reason for having a QSLOB in the first place is to avoid coverage testing on a plan-wide or employer-wide basis. What am I missing?"

4 replies so far   |    Click Here to Add a Reply

BG5150 created a topic in 401(k) Plans

Deferring 100% of Compensation Including Amount of Withheld Taxes

"Plan document says participant can defer up to 100% of compensation, which is defined for plan purposes as 415 compensation. But, as we all know, certain taxes are taken before the 401(k) can be deferred. Assume I make $5,000 this pay period, I want 100% of my pay deferred, $350 will be withheld for various taxes (like FICA), meaning my check is now $4,650. Then the employer deposits $4,650. But my compensation was $5,000, and the SPD says 100% of comp, i.e., 415(c) comp, with no exclusions. Where does it say that $350 cannot be put into the 401(k) plan? I understand the logistics, but cannot reconcile the semantics."

3 replies so far   |    Click Here to Add a Reply

Draper55 created a topic in Defined Benefit Plans, Including Cash Balance

Operation of Sections 401(a)(4) and 401(a)(26) During a Business Scale-Down

"Suppose a small business owner with a DB plan scales back and works his final two or three years without employees. Does this cause any 401(a)(4) or 401(a)(26) issues? Not worried about the partial termination issues. I don't think this is BRF issue for 401(a)(4) (note: no early retirement subsidies). For 401(a)(26), I'm thinking he can't cover employees he doesn't have, so no problem there either. Correct? Anything I'm not considering?"

3 replies so far   |    Click Here to Add a Reply

JOH created a topic in Retirement Plans in General

Contribution Limits for 2022?

"I know that there will probably be an increase to the contribution limits for 2022 but does anyone know if the IRS has officially released the contribution limits for 2022 yet?"

1 reply so far   |    Click Here to Add a Reply

Dan created a topic in 401(k) Plans

Software Vendors for Compliance/5500/Plan Documents

"We're considering a change in systems. I would appreciate any feedback on the software options that other professionals use. Our clients have standard DC plans: 401(k) plans, 403(b) plans, 457 plans and also ESOPs. Some of our ESOPs are very complicated. Please let me know about your experiences with your vendor. How responsive are they about questions? What is the one thing you wish your vendor did better? We're also considering Pension Pro -- what's been your experience, how well does Pension Pro works with each vendor's system?"

2 replies so far   |    Click Here to Add a Reply

Dougsbpc created a topic in Retirement Plans in General

Retirement Plan Assets: Protected from Creditors? What About Rollovers to an IRA?

"My understanding is that assets under a qualified ERISA plan are protected from creditors. I also understand that benefits transferred to an IRA from an ERISA plan retain their asset protection."

3 replies so far   |    Click Here to Add a Reply

Guest121121 created a topic in Form 5500

Form 5500 Not Filed, and Audit Report Not Available

"A client has failed to file Forms 5500 for several years. For all years in question, the client was subject to the audit requirement. Unfortunately, prior to around 2016, information necessary for the auditors to do a complete audit is not available. Therefore, we are unable to get the auditors to sign off on those audit reports. Are there any recommendations on how to proceed? We obviously want to file under DFVCP and pay the late filer penalty, but will not be able to do so without the auditor's report. Any suggestions on whether we should:

  • not file the 5500s at all (seems like a bad idea);
  • file without auditor's report (again, seems like a not so great idea, but better than not filing at all); or
  • file with an incomplete report, with explanation of the situation?"
3 replies so far   |    Click Here to Add a Reply

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