Message Boards Digest

August 18, 2022

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

KJJ-TPA created a topic in 401(k) Plans

Plan 002 with an Earlier Effective Date than Plan 001

"We have a situation where a client has a new safe harbor match plan "001" with a 1/1/22 effective date with a bundled provider. They will be moving from the original service provider to our firm and. in order to meet their objectives, we will be setting up a profit sharing only plan (cross tested/new comp) and then merging the plans effective 1/1/23. They would like to setup the new profit sharing plan, with a retroactive effective date of 1/1/21. I'm wondering if anyone sees any issues with the new plan, eff. 1/1/21, being plan 002 even though it has an earlier effective date than plan 001? We'll be skipping the 2021 5500 filing for this plan and the first 5500 filing will be for the second plan year (2022)."

2 replies so far   |    Click Here to Add a Reply

AlbanyConsultant created a topic in 401(k) Plans

Participant Under 72 Dies, Beneficiary Is Over 72 - RMD?

"A 63-year-old active participant died in 2022. Her 75-year-old spouse is trying to roll the balance to an IRA. The product platform is saying that an RMD must be taken first. Looking at 1.401(a)(9)-5 Q&A 5, it seems that there is a catch. The way I'm reading it, it talks about the calculation for the year after the year of the participant's death... but nothing for the year OF the participant's death. Does that mean that there's a "free year"? I can kind of justify that, since as of 12/31/21, there was no RMD to be calculated for 2022. Or am I just reading into it what I want to see? Of course, if the product says "we're making the beneficiary do an RMD because that's how we do it, period", then that's the way it goes, but since we do non-product plans, I figured I'd see if I was at least taking a reasonable position (in case this comes up again, which I hope it never does). Thanks."

4 replies so far   |    Click Here to Add a Reply

HCE created a topic in 401(k) Plans

Deferrals Based on Clawed-Back Bonus

"A participant made an elective deferral election of 25% of his bonus. The bonus was $4,000, so $1,000 was deferred under the 401(k). However, the bonus was subject to the participant remaining employed with our company for at least one year. The participant has chosen to leave the company after 6 months, and is required to pay back $2,000 of the bonus. How does this affect the $1,000 deferred under the 401(k)? Since half the bonus was forfeited, does that mean we have to remove half the deferral that was based on the bonus before forfeiture? In other words, do we kick $500 out of the plan? *Please note: The numbers are made up, so to the extent some de minimis rule applies to the figures above, it is probably not applicable in this situation."

4 replies so far   |    Click Here to Add a Reply

Santo Gold created a topic in 401(k) Plans

Are These Permissible Conditions for 401(k) Match Contributions?

"Would a plan sponsor of a 401k with a match (non-safe harbor) be able to require exclude certain groups of employees from sharing in the match (regardless of hours worked)? And then could they specifically say that employees with less than 30 hours/week will not share in the match? (I don't think this would be permitted)."

7 replies so far   |    Click Here to Add a Reply

Tax Cowboy created a topic in Employee Stock Ownership Plans (ESOPs)

DOL/EBSA Investigation Statute of Limitations

"Group, I apologize if this has been answered some time ago but how many years back can the Department of Labor go when investigating potential breach of fiduciary duties related to an ESOP? I thought there was a 3 yr SOL under IRC 6501 similar to an irs assessment. But can't seem to find a case on point. I seem to be getting conflicting information in my own initial research and discussing with clients general counsel. Anyone have a case where DOL was outside of their SOL in asking for information from 10 years prior? Thoughts and comments appreciated."

4 replies so far   |    Click Here to Add a Reply

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