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Message Boards Digest

July 12, 2022

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

Jakyasar created a topic in Retirement Plans in General

DB/DC Combo Is Terminating Mid-Year

"DB/DC combo plan. Termination of DB is a possibility (PBGC covered). Assume freeze date 7/31/2022 (small enough for 15 day rule) and assume termination date 9/30/2022. Distribution for the DB may or may not happen by 12/31/2022; possibly spills into 2023 because the rates seem to be getting better for 417(e). DC has 401k/SH/PS options. What salaries should be used to determine the DC SH and PS portions as well as combo testing?"

3 replies so far   |    Click Here to Add a Reply
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HCE created a topic in Qualified Domestic Relations Orders (QDROs)

Disputed QDRO, Part II

"I posted here about this matter earlier, but there have been more developments.

In short, the Participant kept disputing the Order, but was unable to provide anything that would prevent the Order from being a QDRO and processed. We had a valid, court-certified order and we began the procedures for processing it.

Now, the Participant has started a claim for benefits under the Claims Procedures of the 401(k) Plan. Accordingly, we are putting on hold making any payments to the Alternate Payee. Is this the appropriate move?

We are legally obligated to follow the Claims Procedures, but those take time.

The Order does not provide for any earnings/losses on the amount awarded to the Alternate Payee, so the delay is actually costing the AP money (although, maybe not, given the market). Should we exhaust the Claims Procedures before we process the QDRO?"

3 replies so far   |    Click Here to Add a Reply

Tom created a topic in SEP, SARSEP and SIMPLE Plans

SIMPLE IRA -- Eligible Compensation in First Year

"We don't work with these but a referring advisor is asking. They have a client who started a SIMPLE IRA July 1. The payroll company says compensation for the full year is counted. So that if the person contributes 6% from July through December they will end up at 3% deferral for the full year and get 3% match on their full year pay rather than 3% on their pay from July through Dec. I figure the reason the IRS imposes the Octoboer 1 set-up deadline is to make sure employees get the 3% match for at least 3 months because the owner could make the maximum deferral within those three months. The payroll company disagrees with that apparently. Comments?"

No replies yet   |    Click Here to Add a Reply

52626 created a topic in 401(k) Plans

Forfeiture Allocation of Profit Sharing Funds

"Plan states forfeitures are reallocated -- must be employed on last day and 1,000 hours. Exception death, disability or retirement. Platform says the client wanted to use forfeitures to reduce the contribution. Amendment signed 5/1/2021. This was part of the amendment changing eligible to date of hire vs. 1,000 hour.

Employee eligible 4/1/2021 and died the next day. Platform is saying the amendment would be a cutback in benefits for her. She was eligible for the reallocation of forfeitures before the amendment was signed.

Client never wanted to use forfeitures to offset employer contributions. No one can figure out why the platform made this change.

What if anything can they do to reallocate the funds for 2021?

We are not talking about a lot of money.

I know this is a document issue. The amendment states --

'Costs of Administration. All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator and the Trustee in administering the Plan and Trust may be paid from the forfeitures (if any) resulting under Section 11.08, from the suspense account described in this Section, if any, or from the remaining Trust Fund. All such costs and expenses paid from the remaining Trust Fund shall, unless allocable to the Accounts of particular Participants, be charged against the Accounts of all Participants as provided in the Service Agreement.'

This is what the recordkeeper is saying requires the forfeitures to be used to offset the employer contribution. There is no option in the adoption agreement to say forfeitures are reallocated!"

1 reply so far   |    Click Here to Add a Reply

Indu created a topic in 401(k) Plans

Looking for 401(k) Retirement Plan Administrator Job

"I worked as a retirement plan administrator in India for 6+ years. Completed Retirement Plan Fundamentals 1 & 2. I moved to the United States before 4 years and recently got my work authorization to work here. I started searching for jobs in different online portals. No reply or response to my applications. Can you suggest how to approach for job in 401k field? The trouble seems to be that I do not have any work experience in this country and I have a 4 year break in service. Any leads or referrals will be appreciated."

1 reply so far   |    Click Here to Add a Reply

TPApril created a topic in 401(k) Plans

Affiliated Services Group -- Professional Corp of ALCs, or Not

"So law firm is made up of:

  1. Multiple ALC's who share ownership of the law firm
  2. Other ALC's who share office space and staffing, but not ownership in the main firm

The law firm has its own 401k plan. The other ALC's have their own individual law firm. All of them are tested as an Affiliated Service Group. Now, the other ALC's have completely left the firm. I'm pretty sure there is no ASG anymore."

1 reply so far   |    Click Here to Add a Reply

TPApril created a topic in Retirement Plans in General

Who Signs a Plan Document When Multiple Owners Are Not All Individual Trustees?

"Professional firm, each partner with their own personal service corporation. On prior plan document restatements, all of the partners have signed. For amendments, though, only the two partners who are designated as individual trustees have signed. I'm curious what the standard approach is. Generally the partners want to feel involved, but is it really necessary?"

1 reply so far   |    Click Here to Add a Reply

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