Message Boards Digest

July 27, 2022

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

cathyw created a topic in Correction of Plan Defects

Recordkeeper Pays Missed Earnings?

"Due to an error by the recordkeeper, the vested benefits paid to many terminated participants were understated and balances that should have been vested were forfeited. This occurred for several years and we are now filing a VCP application to correct. The participants' accounts will be reopened and the restoration of the vested benefits will come from the plan's forfeiture account. The missed earnings will be calculated based on the plan's rate of return for the intervening years.

The recordkeeper has acknowledged responsibility and will pay for the missed earnings amount. Can the recordkeeper just fund the missed earnings directly (i.e., deposit the amount into the participants' accounts)? Alternatively, should the earnings also be restored from the forfeiture account and the recordkeeper then reimburse the plan sponsor outside the plan? Any downsides to the two approaches? Thanks for all input and/or past experiences."

3 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in 401(k) Plans

Long-Term Part-Time Employees

"I haven't seen any official guidance on the following situation, and I wondered if there was something that I missed? Suppose a plan excludes 'truck drivers' for all purposes. They are excluded even if they have satisfied the plan's 1 YOS/1,000 hour requirement. Plan passes coverage with flying colors.

Now skip ahead to 2024 (*or possibly 2023 if SECURE 2.0 further complicates things). Must the LTPT truck drivers be allowed to defer?

It seems like the grossest type of stupidity if they must be covered, while excluding people in the same employment classification who satisfy a 1 YOS/1,000 hour requirement.

If there hasn't been any official guidance I've missed, anyone have a pipeline with some IRS folks for 'unofficial' conversations that they might have had?"

6 replies so far   |    Click Here to Add a Reply

Anon401kTPA created a topic in 401(k) Plans

Lifetime Income Statements

"I have been doing this a LONG time, but I think I may have missed an important class somewhere along the way. [1] If a plan offers self-direction, the participants are getting monthly statements from the brokerage firm (ie, Merrill Lynch) or online platform (e.g., Empower). These statements should satisfy the quarterly requirement. I don't prepare quarterly statements because my clients don't pay me to do so. [2] If a plan does not offer an annuity form of payment, what purpose do these silly things serve?"

10 replies so far   |    Click Here to Add a Reply

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