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Message Boards Digest

April 15, 2022

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

wifrbr created a topic in 401(k) Plans

Employee Was Ineligible But Made Deferrals Anyway

"Have an employee who in 2021 and 2022 made contributions to the plan but he is an excluded employee. How would you correct? Just refund 100% of his contributions and forfeit the match? Would the distribution be considered 2022 income because it will take place in 2022? What about his 2021 Form W-2, which shows his employee 401k contribution? Does he just file as is?"

1 reply so far   |    Click Here to Add a Reply

Santo Gold created a topic in Distributions and Loans, Other than QDROs

401(k) Plan Beneficiary's RMD

"A participant passed away shortly before her RMD age. Her spouse is the beneficiary and he is beyond age 72. He does not want a distribution of the account balance and prefers to leave it in the plan. Can he leave the balance in the plan indefinitely?

He must begin taking RMDs from the plan, but is that based on his date of birth alone, or does the deceased spouse's DOB factor into this as well?"

No replies yet   |    Click Here to Add a Reply

Lucky32 created a topic in Plan Terminations

Rolling Over Excess Assets to a Qualified Replacement Plan

"An overfunded DB plan covering only the 100% owner is terminating and a QRP 401(k) plan is being set up to receive the excess assets while the participant's DB benefit will be rolled over to an IRA. She will need to complete a distribution election form for the IRA RO. Does an election for the rollover of only excess assets to the QRP also need to be made? If so, would anyone have a sample they can share? Also, I imagine the rollover to the QRP would need its own 1099-R, but what code would be used -- G, as a direct rollover?"

2 replies so far   |    Click Here to Add a Reply

Pammie57 created a topic in 401(k) Plans

Rollover to an IRA of 401(k) Account Balance Exceeding $5,000 -- Spousal Consent Required?

"A terminated participant has an account balance with a client's 401k plan. It exceeds $5,000. I've looked through the document several times for guidance. All I see is forms that have signature lines for the participant and the plan sponsor. If the balance is over $5,000 and the plan is not subject to the QJ&S annuity rules, does the distribution form need to be signed/approved by the spouse? Or is that something the plan sponsor can decide arbitrarily? The platform says they're set up to require spousal consent, but I don't see anything in the plan document."

3 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Supplemental Employer Contributions Are Taxable to Employees When Terminated Plan Is Re-Opened?

"A terminated plan needs to be re-opened because the plan sponsor discovered that some employees who were eligible for the employer incentive and match did not receive it. I believe the employer contribution is a taxable event, but the plan sponsor believes that it's only reportable income (similar to employer-paid health insurance). Is that correct?"

No replies yet   |    Click Here to Add a Reply

RayJJohnsonJr created a topic in 401(k) Plans

IRA Owners Can Have Their RMDs Used as QCDs -- But Qualified Plan RMDs Cannot?

"IRA owners can have their RMDs used as Qualified Charitable Distributions -- but Qualified Plans cannot.

QCDs are a no brainer for those who give to charity anyway, because QCDs reduce AGI. Normal charitable contributions go on Form 1040 Schedule A, which almost no one files anymore. They get no charitable deduction. Small business owners who continue to maintain their qualified plans are required to take RMDs but cannot use the QCD advantage. Any way around that?"

1 reply so far   |    Click Here to Add a Reply

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