Message Boards Digest

June 15, 2022

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

BG5150 created a topic in Retirement Plans in General

Days vs. Months for Eligibility

"Why do companies put in days instead of months for a service requirement? It is MUCH easier to figure it out with months as the baseline. For example, a plan requires 60 days of service, monthly entry (next or coinciding). Employee is hired July 3. When does she enter the plan? September 1. That's 60 days of service.What if it was April 3? June 1? Nope. July 1. 60 days of service is June 2. If it were two months of service, it would be much easier -- Anyone hired on the 3rd of the month enters the same day: first day of the third month after hire. No counting days. No missed deferral opportunity. Someone hired on Aril 3 has to wait 28 more days to enter the plan than someone hired on July 3. Doesn't make sense."

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

Doctor with Hospital 403(b) Is Starting 401(k) for Practice (Again)

"This seems to comes up periodically.... some of the threads end up trailing off, and some don't seem to come to the same conclusions (though that might be me misreading them!) because this is not particularly intuitive, so let me try and ask this with a concrete example that was just presented to me. I'll even link some of the previous threads that I thought were good ones.

Doctor D is doing the max 403b deferrals and getting a match in the hospital's 403b plan. He is now about to start a practice of his own (100% owner) and wants to start up a 401k plan -- deferrals, 3% SH, class based profit sharing. He does not control the hospital or sit on its board. He is 55 years old. I don't have exact numbers, but let's make the math easy and say he's getting $200K compensation from the hospital and expecting $300K from his S-corp practice. The hospital's 403b match is capped at 2%.

He can't double-dip on deferrals between both plans, so he will do those in the 403b plan to get the match (if the CPA can find a tax angle for him to do deferrals from the private practice in 2023 that is worth giving up the match, he can make that change in January 2023). But let's assume that he keeps deferring into the 403b plan.

Do I have to include the 403b deferrals in any testing that I do? It appears 'yes': $67,500 max including catch-up less $27,000 403b deferrals = $40,500 that he can get as employer (i.e., non-401k) contributions in the 401k plan.

Does the match he is getting affect this at all? I'm thinking 'no', since it is an unrelated employer, even though there is all that stuff about the 403b 'belonging' to him.

That's actually another question: the 1.415(f)-1 regs refer to a 403b 'annuity contract'... but what if the 403b plan is not held in annuity contracts, but it's instead on a mutual fund recordkeeping platform? Is that splitting hairs? Admittedly, it might be.... If Doctor D was establishing this as an equal partnership with Doctors E and F 1/3 apiece, since D's ownership would be less than 50%, would he not have to count his 403b deferrals against his $67,000 limit and/or $27,000 limit, in effect getting two separate limits?

Is there anything else that needs to be considered? Any of this incorrect?"

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mjf06241972 created a topic in Defined Benefit Plans, Including Cash Balance

Looking for Actuary -- Defined Benefit Plan School District -- Needs GASB

"We are looking for an actuary for a school district defined benefit plan in CT. Please contact me if interested."

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metsfan026 created a topic in 401(k) Plans

Amending Normal Retirement Age in DC Plan (Impact on Vesting)

"If a DC Plan wants to amend the Normal Retirement Age (i.e., from 55 to 65), is that an amendment that can be done mid-year or should it wait for the first of the year? The question is due to vesting, because the plan states that they become 100% vested at Normal Retirement (which the previous TPA set at 55).

I know a change like this can't have a negative impact (like when you amend the vesting schedule). Does that mean that anyone who is currently employed must still become 100% vested once they reach 55, or can it impact anyone who has not yet reached NRA (if a current employee is 54 and they amend the NRA to 65, does that mean that participant has to wait until 65 or to work the necessary years)."

2 replies so far   |    Click Here to Add a Reply

MGOAdmin created a topic in 401(k) Plans

Plan / Company Merger

"Company A, owned 100% by Adam has a 401k plan. Company B, owned 100% by Bob has a 401k plan. Neither company is related in any way. They're going to form Company C (33% owners each with a third unrelated owner) starting July 1, 2022. All of Company A clients and employees will move to Company C. 95% of clients and employees of Company B will move to Company C. The owner of Company B will be on payroll and Company B & C. The idea is to have Company C take over as plan sponsor of Company A.

[1] Can company B retain their 401k plan and not be related to Company C? The owner would like to keep his assets where they are while all of the employees of B transition to C would roll their money over.

[2] Or should Company B terminate 6/30/22 to avoid issues?

[3] For Testing purposes, how should this be handled? 1/1-6/30 for A, 1/1-6/30 for B and 7/1-12/31 for C? C do 1/1-12/31 for A employees and 7/1-12/31 for B?"

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