Message Boards Digest

July 15, 2022

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

AlbanyConsultant created a topic in Retirement Plans in General

XT Plan Deposits -- Testing Each Deposit

"How fanatical are y'all about this? I've sometimes mentioned it when talking to clients, but I've never really been too big on it. My current situation:

Plan of an S-corp does monthly deposits of 3% safe harbor and 2% profit sharing for everyone including HCEs. They're considering doing additional profit sharing for the owners after the end of the year-- as much as they can do that still passes cross-testing without giving the staff more allocation.

Obviously, this allocation would be all HCE and no HCE. If this deposit was tested as a discrete event, total fail. But it would pass for the year in total.

Given the recent comments by the IRS that they want to increase their audit revenue, is this something that I should be discouraging?

Wait wait wait... in my head, I was POSITIVE that testing each deposit was a thing. Now, I can't find any reference to it anywhere. Sure, I'd be thrilled if it were gone, but am I through the looking glass or what?"

5 replies so far   |    Click Here to Add a Reply

Dawn Marlar created a topic in 401(k) Plans

Death Benefit to Spouse When Both Spouses Have an Account Balance in Same 401(k) Plan

"We have a client, call him John, who has a 401K Plan under which the Plan allows rollovers into the Plan. Both Husband and Wife are employees of John, who sponsors the plan, and both the Husband and Wife participant in John's plan. To put it another way, both Husband and Wife have separate participant account balances in John's plan. Wife recently died. Husband, being her surviving spouse, wants to receive a distribution of Wife's account in John's plan as a subaccount under his account in John's plan. Is this type of distribution allowed? Is it considered an eligible rollover distribution under Code Section 402(c)(2) and (4)?"

1 reply so far   |    Click Here to Add a Reply

Archimage created a topic in 401(k) Plans

Failure to Provide 30-Day Investment Change Notice

"Have a client that failed to give a 30-day fund change notice to participants. From what I can tell, there is not an actual penalty prescribed by the DOL other than a plan sponsor could be held liable for a fiduciary breach. Based on this I was going to advise them to just give out the updated notice ASAP. Anything I am missing?"

1 reply so far   |    Click Here to Add a Reply

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