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Message Boards Digest

August 15, 2022

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

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

3% DC contribution as offset

"Hi, I recall seeing that an the contribution to the DC Plan that will serve to offset the DB Plan benefits (DB is floor offset plan) should be a minimum of 5% of comp. Therefore, to use 3% of comp as the DC Plan is not advisable. 1. Is this correct? 2. Or is this only so that the DB Offset plan is a safe harbor, so technically 3% can be used, however, the db plan will now be a NON safe harbor offset plan? Thank you very much for any insights from all the Pros out there."
1 reply so far   |    Click Here to Add a Reply

metsfan026 created a topic in Defined Benefit Plans, Including Cash Balance

Segment Rates for 2022 Cash Balance Contributions

"I have a client who is terminating their Cash Balance Plan and wants to make their 2022 contributions based on the short plan year, so they can get the money paid out before the end of the year. Have the '22 segment rates been released as of yet? If not, is it OK to use the '21 rates? Thanks!"
1 reply so far   |    Click Here to Add a Reply

metsfan026 created a topic in Defined Benefit Plans, Including Cash Balance

1,000 Hour Requirement For Short Plan Year

"I just wanted to make sure I was correct. Cash Balance Plan is terminating as of July 31, 2022. In order to calculate the 2022 requirement, they can maintain the 1,000 hour requirement correct?"
1 reply so far   |    Click Here to Add a Reply

Dougsbpc created a topic in Plan Terminations

Timing of Distributions after Plan Termination

"After a plan termination, we have always provided benefit elections to participants and have required that all be executed and returned to us before the distribution of benefits. Then upon receiving all elections, we prepare a letter to the broker (signed by the trustee) to make the distributions all at one time and attach instructions and amounts for each participant. Must it be this way? I have heard others that just process the distributions as the benefit elections arrive. I think this could be a problem in a DC plan with pooled investments, but may be ok if the DC plan has all self-directed investments. What about a non-PBGC DB plan with insufficient assets to pay benefits? In this case, the business owner will waive a portion of his benefit to pay all other benefits. In this case the business owner will receive his distribution first and all others will receive theirs as the benefit elections come in? I don't think this should cause any discrimination issues as ultimately all remaining participants (all NHCEs) will receive their full benefits and the owner will already receive less than his full benefit. Anyone disagree or have any comments with this way of thinking? Thanks."
2 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in Employee Stock Ownership Plans (ESOPs)

Disqualified persons and family members for 409(p) testing

"We administer a 401(k) where the ESOP is administered elsewhere. Please don't waste any time on this if you don't know off the top of your head. This is an academic question only, as it is the ESOP's problem (if there is any problem) but I'm curious, as I had to look through the ESOP document for some items. I'll spare you the details, (involved and confusing) but for 409(p) testing (this is an S-corp) the ESOP document refers to Code sections that don't exist, etc. so I'm unable to verify this via the Code sections referenced in the document, but here's the gist: The plan document refers to "disqualified persons" as including family members. "Family members" include, for these purposes, "a brother or sister of the individual or the individual's spouse and any lineal descendant of the brother or sister." So, this creates attribution between siblings. Is this correct? Different from "normal" 318 attribution rules."
3 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Deemed Defaulted

"One of the terminating plan there is a participant with a deemed defaulted loan. The acquiring company will not accept the deemed defaulted loan, the part was not aware the loan is in the deemed defaulted status and the interest just kept accumulating. The loan was only for $15000 however the now with the interest it is $52000. Since the loan is deemed defaulted should the participant pay the $52000 or is there any other way this can be handled. Thanks"
No replies yet   |    Click Here to Add a Reply

austincpa created a topic in SEP, SARSEP and SIMPLE Plans

SEP IRA with Multiple Businesses

"Client has operated as a sole proprietor and contributes to his SEP based on the net earnings from the business every year. Client and his spouse open a new business in which they materially participate (husband /wife partnership filed 1065). This business will also have employees separate from the husband/wife. In year 1, the new business reports a loss for self-employment purposes. Would the client be able to exclude the net earnings from the partnership and determine his SEP contribution based on his sole proprietor business or would the net earnings from both businesses have to be aggregated for purposes of determining net earnings from SE for contribution purposes? Would this SEP now be subject to controlled group rules as well and potentially make the employees eligible in future years?"
No replies yet   |    Click Here to Add a Reply

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

male 1983 GAM interest rate 6%

"What is the life annuity rate for male age 81 My chart only goes to age 80, Age 80 rate life annuity rate is 68.605 Thanks"
3 replies so far   |    Click Here to Add a Reply

khn created a topic in 401(k) Plans

Payroll Setup - Settlor expense?

"We have a client converting from one recordkeeper to another. Their payroll vendor is charging them to set up the new payroll files. Would this be considered a qualified plan expense that can be paid from plan assets or is considered a settlor expense? We have received varying opinions."
2 replies so far   |    Click Here to Add a Reply

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