Message Boards Digest

March 31, 2022

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

Catch22PGM created a topic in 401(k) Plans

Force-Out of Small Balances

"A 401(k) plan has many participants making very small contributions - $4-$5 a week in some cases. The plan sponsor records participant termination dates with the recordkeeper after each pay period. The recordkeeper has taken it upon themselves to forfeit small balances for former employees after the plan sponsor enters their termination date. They are forfeiting employee pre-tax and Roth salary deferrals without any direction from the plan trustees and with no apparent reason other than it's their "policy" not to cut a check for less than $25. In one instance they forfeited $80 of an employee's pre-tax salary deferrals - about $20 at a time because the plan sponsor made 3 $20 deposits after the employee's termination date was entered. All of the others we have found were $10 or under.

Has anyone out here come across this practice and is there anything I'm missing that would allow it? The plan document certainly doesn't say a small balance can be forfeited vesting be damned. I'd feel better about it if some of the experts on BenefitsLink have experience with similar approaches by recordkeepers and/or have had the IRS or DOL approve the practice."

7 replies so far   |    Click Here to Add a Reply

BG5150 created a topic in Retirement Plans in General

Plan Year Begins December 1 -- What Do I Prorate?

"For some reason, powers that be made this plan effective 12/1/21. What limits am I prorating when doing the profit sharing? And am I correct in remembering that self-employment income is 'earned' on 12/31? So in this case, the owner will be using his full $290,000 comp (unless the comp limit is 1/12 of course)?"

3 replies so far   |    Click Here to Add a Reply

thepensionmaven created a topic in Operating a TPA or Consulting Firm

Client Property or TPA Property?

"I have released a client from my servicing contract and he is asking me to return my files. I know this has come up before, my files consist of paperwork the client has submitted to me (W-2s, K-1, etc), my calculations, my copies of the investment reports I access online. Aside from the client having all this information already, is there any basis for me to send him my file or is this just 'sour grapes'?"

2 replies so far   |    Click Here to Add a Reply

Penflyer created a topic in 401(k) Plans

Excluded Compensation in Safe Harbor Plan

"Reviewing takeover plan docs from prior TPA. Document is 3% safe harbor with cross test language. Definition of comp excludes bonuses. Plan passes comp discrimination test but Safe harbor was calculated on comp less bonus. I thought you had to use a 414s definition of comp for Safe Harbor. Am I wrong?"

3 replies so far   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Avoid New York's Mandated Retirement Plan if No Deferrals Allowed under Existing Profit Sharing Plan?

"Is anyone familiar with the mandated retirement plan being instituted in New York? The question is, if a company has an existing Profit Sharing Plan, but doesn't allow for 401(k) contributions, are they exempt from participating in the mandated plan?"

3 replies so far   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Controlled Group Question

"I have a quick question and just want to make sure I'm not overlooking anything:

Company 1

Person 1 - 100% ownership Person 2 - 0% ownership (though they work for the company)

Company 2

Person 1 - 75% ownership Person 2 - 25% ownership

The two people are not related. Since Person 1 owns less than 80% of company 2, there isn't a Controlled Group issue (even though Person 2 works for both, they only have ownership in one)."

4 replies so far   |    Click Here to Add a Reply

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