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Message Boards Digest

September 16, 2022

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

PS created a topic in Plan Terminations

Effect of Filing of Form 5310 on Administration of ESOP Termination

"Sponsor wants to terminate its ESOP plan. It's an individually designed plan. which is terminating due to acquisition. The stock funds are to be liquidated and the proceeds transferred to money market funds. There is a blackout period until the processing of the merger proceeds is completed. The liquidation and settlement will be completed the week on 9/19/2022. The sponsor intends to inform the participants that they have option to roll over into an IRA, roll over into their 401k plan or the new employer 401k plan, or take a cash distribution. They are filing a Form 5310. Is there something we will need to consider because they are filing Form 5310, or should we just follow the normal termination process?"

5 replies so far   |    Click Here to Add a Reply

metsfan026 created a topic in VEBAs

Mental Health Coverage of a Self-Insured, Non-Grandfathered Plan

"Does anyone know what, if anything, is required to be covered in terms of mental health benefits for a self-insured, non-grandfathered plan?"

1 reply so far   |    Click Here to Add a Reply

Dobber created a topic in 401(k) Plans

Distribute Stock Holding Net Unrealized Appreciation While Rolling Over Remaining Stock?

"401k plan participant account incudes appreciated employer securities and mutual funds. The participant wants to transfer a portion of his appreciated company stock to a taxable brokerage account while rolling to an IRA the balance. Mutual fund balance would also be rolled to an IRA ensuring a lump sum distribution.

More specifically he wants to roll over the stock basis to an IRA (thus avoiding paying income tax on the basis) while transferring NUA portion to a brokerage account (avoiding LTCG tax until he sells the stock). Thus leading to no immediate taxation.

From my research the IRS has blessed this NUA strategy in a series of PLRs. My question(s) are regarding the order and method of transactions. [1] Does the stock need to be distributed first (before the mutual funds) or vice versa? [2] Does the ordering of employer securities rollover/transfer matter? For example, let's say the participant has $100,000 in stock ($10,000) in basis where the remaining $90,000 is NUA. Can the $100,000 be split (90/10) in a single transaction by a IRA rollover and transfer to a taxable brokerage account? Does it matter if the stock is moved via trustee transfer vs. a 60-day rollover?"

No replies yet   |    Click Here to Add a Reply

TPApril created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Is an SMM Required If Welfare Plan Changes Service Providers (But Nothing Else)?

"If the change to the welfare plan is only service providers, but actual contributions, benefits, eligibilties etc all remain the same, is an SMM actually required? Or is it sufficient to provide this information on the annual Open Enrollment paperwork?"

1 reply so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Seller Can Be a Participating Employer After an Asset Sale?

"Plan is terminating due to asset sale and the sale will happen December 1 2022. Regular payroll ends on November 30 but there will be a retention bonus post-acquisition. The terminating employer will be a participating employer. I believe this might be a controlled group, or lead to a controlled group. Agree? Can they make the bonus payment after the plan termination? The plan will terminate in December. They're likely to start the process in Feb 2023. Can the seller be a participating employer?"

4 replies so far   |    Click Here to Add a Reply

fmsinc created a topic in Qualified Domestic Relations Orders (QDROs)

Designation of Beneficiary of Defined Benefit Plan -- What a Mess

"Read this case (click) from the U.S. District Court in Georgia (Southeastern Carpenters & Millwrights Pension Trust Fund v. Carter) dealing with the naming of a beneficiary of a pension plan.

Who is responsible for the chaos described? The participant, who had no idea what he was doing? The plan administrator who obviously was not paying attention to the actions of the participant and his violation of plan requirements? The sponsor who adopted plan rules that clearly were not understood by the participant?

Lots of lessons here. I suspect the case will be appealed."

1 reply so far   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Switching From Form 5500-SF to Form 5500-EZ

"Taking on a new client where the forms have been filed as a Form 5500-SF. However, it's a one-person plan and really should have been filed as a Form 5500-EZ from inception. Is there any issues with just making the switch for the 2021 Plan Year or should we continue to file it as an SF? Just want to make sure we don't create any issues for the client."

8 replies so far   |    Click Here to Add a Reply

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