Message Boards Digest

March 30, 2022

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

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

Owner-Only DB Plan; 401(a)(26) Issue

"Owner-only DB plan. Hard frozen in 2021 before any benefit accrual. No income for 2021 and 2022. Also terminating in 2022. Plan is slightly underfunded.

Software states that the plan fails 401(a)(26). No PBGC coverage. Never had any employees. Because no key employee is benefitting, it should pass 401(a)(26) automatically, don't you think?"

4 replies so far   |    Click Here to Add a Reply

John314 created a topic in Defined Benefit Plans, Including Cash Balance

ARP Modifications to Annual Funding Notice

"Has there been any guidance released relating to if or how the Annual Funding Notice should be modified to reflect the funding relief of the American Rescue Plan?

I think the interest rate changes shouldn't be a big deal given the guidance from when MAP-21 was released, but should we attempt to demonstrate the impact on the MRC of the change from a 7-year to 15-year amortization period, along with an amortization fresh start?"

2 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in Retirement Plans in General

Lifetime Income Illustrations -- Annual Statement Was Previously Sent

"So, suppose the 12/31/2021 statement was already mailed, but without the lifetime income illustration. Can the illustration be sent now as a 'stand alone,' or must the EBS be re-sent with the lifetime illustration attached? I believe it is the latter. I haven't seen anything allowing a stand-alone in this situation. Wonder if I'm missing anything."

2 replies so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

Using EPCRS for a Loan Offset Not Reported in Year of Deemed Distribution

"If a participant terminated let's say in July 2021 and made no further payments on the loan, but the loan was not reported on a 2021 1099-R, can the employer report under a 2022 1099-R using EPCRS? I think yes.

The program indicates that this is an option in the event of a 'deemed distribution under 72(p).' Even though this is a loan offset, when I look at 72(p) it seems sufficiently broad to conclude that what I describe is a deemed distribution under 72(p). The terminology of course gives me pause, so I'm not 100% confident in my answer. EPCRS Section 6.07 is the site."

1 reply so far   |    Click Here to Add a Reply

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

Language for a Multiemployer QDRO That Might Be Affected by Supplemental Benefits Under the Butch Lewis Act

"I'm curious to know if anyone has any language for use in a multi-employer plan QDRO that addresses how the alternate payee's share will be affected in the event that the participant receives either a lump sum or installment payments as a result of the plan's qualifying for funds under the recent Butch Lewis Act?"

1 reply so far   |    Click Here to Add a Reply

Dougsbpc created a topic in Retirement Plans in General

Physician with Ownership in Dialysis Center

"I know many of you must have run into this. You have a physician client whose practice sponsors a qualified plan. One problem though -- the physician has a 10% interest in a Dialysis Center. Oh yes, and he is a kidney specialist.

ASG? Certainly seems like one. They would not want to consider an additional 15 employees for their plan. However, there is doubt (in this case) that his office together with the Dialysis Center provides services for the public. Even though he refers some of his patients there, he also refers some to the other center in town, in which he has no ownership interest.

Has anyone run into this type of sticky situation?"

1 reply so far   |    Click Here to Add a Reply

30Rock created a topic in 401(k) Plans

Merger of Off-Calendar Year Safe Harbor Into Calendar Year Safe Harbor; Transition Period

"My question involves the merger during the 410(b)(6) transition period of 2 401k safe harbor plans with the same safe harbor match but Plan A has a plan year ending 9/30 and Plan B is a 12/31 calendar year end plan.

The goal is to consolidate into Plan B by 1/1/2023 since the coverage transition period ends 12/31/22. What is the best way to accomplish this?

Options I see are:

1. Freeze plan A 9/30 and adopt Plan B on 10/1 (transition period ends but does it matter?) so participants will be in Plan B with mirror safe harbor match, and then 12/31/22 merger Plan B into Plan A, or

2. Change the plan year of Plan B to a short plan year from 10/1-12/31 and maintain safe harbor status, and then, since both Plan A and Plan B will be calendar year plans, they can merge on 12/31/2022. This option creates 2 5500's as well, a plan amendment and also the need for new safe harbor notices for the 10/1 short plan year, so it appears more burdensome. I do not think create a short plan year violates the transition period rule."

6 replies so far   |    Click Here to Add a Reply

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