Message Boards Digest

November 16, 2021

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

metsfan026 created a topic in 401(k) Plans

SECURE Act's Removal of Safe Harbor Notice Requirement -- Applies to the 3% and the Basic?

"I know the SECURE Act removed the requirement for Safe Harbor notices for non-elective Safe Harbor contributions. I just wanted to make sure that it applies to both the 3% Safe Harbor and the basic Safe Harbor Match?"

5 replies so far   |    Click Here to Add a Reply
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Belgarath created a topic in 401(k) Plans

Plan Year vs. Fiscal Year Situation

"Looking at a takeover plan here, and something seems so strange that I'm questioning if there really is a problem, or if I'm cracked for thinking there is!

Plan document specifies plan year is calendar year. Fiscal year is 4/1 - 3/31. Compensation period selected in the document is plan year (calendar).

Prior TPA (and probably in conjunction with CPA, I don't know) has been doing things as follows. We'll use the 2020 plan year valuation to illustrate. Same procedure was followed for prior years as well.

2020 valuation was based on PLAN year (calendar) compensation and hours for 2019.

The 2020 valuation was run in December of 2020, (based on 2019 calendar year compensation/census) so client could deduct 2020 plan year valuation on their 3/31/2020 fiscal year tax return.

Ignoring for the moment correcting the past operational violations, what is the best way forward?

The plan year could be amended to coincide with the fiscal year -- run a short plan year for 1/1/2022 - 3/31/2022, then full year thereafter. That seems to me to be the cleanest way forward. They could instead, for example, amend the plan to use the fiscal year ending in the plan year as the compensation period.


2 replies so far   |    Click Here to Add a Reply

msmith created a topic in Form 5500

Electronic Filing of Late Fee Under DFVCP

"Have any TPA's electronically filed the late fee, using the TPA's banking information? If so, or not, what issues have you had. Are you hesitant to do it? It was clearly the fault of our new client's previous TPA, but as a matter of courtesy, we would like to pay the fee."

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AlbanyConsultant created a topic in 403(b) Plans, Accounts or Annuities

Two Non-Profits Merge; Acquired Org Has a 401(k) Plan -- What Happens to That Money?

"A non-profit client of mine with a 403(b) plan absorbed a smaller non-profit organization that has a 401(k) plan. I told them that the two plans couldn't merge. The participants are all being retained as employees, but obviously they're now employed by the surviving non-profit employer. I still have nightmares about the same-desk rule -- are these people considered 'terminated' and therefore can roll their 401k money into the 403b plan as rollovers? Or is an IRA their only option?"

2 replies so far   |    Click Here to Add a Reply

jireh87 created a topic in Miscellaneous Kinds of Benefits

Free Airline Tickets for Pilots Provided Under a Mass Transit Account?

"Has anyone ever heard of airline tickets provided for pilots qualifying as a benefit as a mass transit account?"

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

PBGC Coverage -- When Does It End?

"Calendar DB plan for 2021. Owner plus 1 rank-and-file participant. As of 8/31/2021, the rank-and-file participant is paid out, so now only owner remains. Applied to PBGC for an exemption from coverage and got a response stating that the case is not yet assigned to an agent. Hence no formal exemption determination. Owner wants to make full $58,000 profit sharing contribution plus a rather large DB contribution. The rank-and-filer will receive whatever PS allocation is due. When is the DB plan officially considered not covered by PBGC? When is the PS portion is limited to 6%?"

3 replies so far   |    Click Here to Add a Reply

BG5150 created a topic in Retirement Plans in General

Recharacterize Deferrals of the HCEs as Catch Ups, So as to Avoid Top Heavy Minimum?

"Plan has two key employees who are the only HCEs. Plan passes ADP test because they defer low amounts -- let's say, $3,000 each (and they each make $100,000) for simplicity. Both are over age 50.

The plan is top heavy. Because they aren't failing the ADP test, nothing is re-characterized. They didn't run afoul of any other limits.

Do they owe the 3% TH? Or can we say that, because they are both over age 50 and their deferrals were less than $6,500, their contributions can be considered as catch-up and hence not used in determining the Key employee allocation for the year? (There are no employer contributions.)"

2 replies so far   |    Click Here to Add a Reply

FortinDM created a topic in Retirement Plans in General

File Under DFVCP Without Attaching the Required Audit?

"Is it possible to file under DFVCP without the required auditor report attached? The Form 5500 was filed already and accepted without an audit report. IRS has issued penalty notice but due to some very unique circumstances including a company merger, audit is just in the initial stages. IRS notice is coming up on 30 days. Would it be OK to have the plan sponsor/TPA refile the same Form 5500 under DFVCP (again, without an audit) and then amend the form again once the audit is completed?"

1 reply so far   |    Click Here to Add a Reply, Inc.
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