Message Boards Digest

August 12, 2022

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

Basically created a topic in Retirement Plans in General

Top Heavy Failing

"I have a plan. It's top heavy. All eligible employees receive at least an 18% contribution. When I run the tests I am failing TH. How can I be failing a TH test? Eligibility is 500 hours. 2 employees work less (much less). To pass 410b I had to override and let 1 of them in. What more needs to be known?"
6 replies so far   |    Click Here to Add a Reply

John314 created a topic in Operating a TPA or Consulting Firm

IT Outsourcing Vendors

"I work for a small TPA/consultancy (under 20 employees) who have outsourced their entire IT function to a third party. We are in the process of trying to upgrade some of our IT systems and are interested in what other options are out there especially with regard to remote work situations. For those of you that have also outsourced your IT support would you be willing to share what group you work with, whether or not you would recommend them, and do they facilitate remote work environments? Bonus points if they are in the San Francisco area."
No replies yet   |    Click Here to Add a Reply

Peter Gulia created a topic in Investment Issues (Including Self-Directed)

How Many ERISA-Governed Plans Have at Least One Participant's Account Balance Not Fed to a Recordkeeper's System?

"In recent months, some BenefitsLink discussions have remarked on ERISA § 105’s command for lifetime-income illustrations. These discussions assume recordkeepers provide a service to generate the illustrations. Some discussions observe that an illustration is not routinely furnished for a self-directed brokerage account. I guess those mentions refer to a situation in which there is a securities broker-dealer’s account AND there is not an arrangement that results in a computer feed of the SDBA’s balance (not the details) to the recordkeeper’s system. BenefitsLink neighbors, how much does this happen? How many ERISA-governed plans have this situation?"

9 replies so far   |    Click Here to Add a Reply

Carol V. Calhoun created a topic in Distributions and Loans, Other than QDROs

How to Enforce RMD Requirements in a DB Plan?

"Any thoughts on what to do if a plan participant who should be receiving RMDs does not apply for benefits in a defined benefit plan, even after numerous reminders? The application would include an election of a specific form of benefits and providing bank account information for the deposits. I'm assuming that one should then start providing benefits in the form of a joint and survivor annuity, or a life annuity if the person is not married, using paper checks. (It's actually a governmental plan, so a joint and survivor annuity does not have to be the default form, but that would at least satisfy the RMD requirements.) But if the person later wants to select a lump sum form, can they be permitted to do so if the plan otherwise does not permit a change of elections after beginning to receive benefits? Alternatively, can they be forbidden from making the election (because obviously there is the potential for adverse selection if participants can elect a lump sum after starting a J&S)? Also, what happens if checks are sent but never cashed? There are procedures for dealing with missing participants, but I have not located any for dealing with participants whose whereabouts are known but who simply ignore checks."

2 replies so far   |    Click Here to Add a Reply

AlbanyConsultant created a topic in Retirement Plans in General

Getting Back a Small Overpayment That Shouldn't Have Been Deposited in the First Place

"The plan sponsor calculates and deposits the employer contribution per pay period. For this particular participant, they calculated it incorrectly and deposited $30 too much for the 2021 calendar plan year. Unfortunately, the plan has immediate distributions; by the time we got to do the reconciliation, the participant had terminated and taken a distribution. Sure, the plan could try and get the money back because it was an excess distribution... but that would be returning money to the plan that didn't belong there in the first place. Similarly, if the participant balks at returning it, we'd normally instruct the plan sponsor to deposit $30+earnings to the forf account... but, again, that's $30 that shouldn't have been there at all. Is there any justification for letting this go? I need a justification because it's an audited plan, so I have to be able to back this up to the audit team. Thanks."

4 replies so far   |    Click Here to Add a Reply

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