Message Boards Digest

September 27, 2022

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

justatester created a topic in 401(k) Plans

Defer Part of Employer's Profit Sharing Otherwise Allocated to Electing Participant's Account?

"I have a plan that traditionally gives a 16% profit sharing contribution. They would like to allow employees to be able to take a portion in cash.

For example: 10% would still be PS, but the other 6% could be cash or deferred. So, I believe I have a CODA situation.

That being said, for the 2022 plan year, they would like to start this arrangement. They would make the PS in March 2023. Would the CODA portion be a 2022 or 2023 contribution? I am thinking a 2023 deferral. For the amount that is taken as cash, I assume it would be 2023 income."

1 reply so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Terminating Plan Before End of Calendar Year Means Participant's Limit on Deferrals Is Reduced?

"A plan's termination date is 9/21/2022. An employee has contributed $27,000 (the 2022 maximum + catch up) in deferrals. Is such a maximum deferral amount allowed if the 401(k) plan only operates for a short plan year, i.e., January 1 through September 21, 2022?"

2 replies so far   |    Click Here to Add a Reply

Lou S. created a topic in Defined Benefit Plans, Including Cash Balance

Please Help Me Understand the PBGC Premium Alternative Method

"Anyone have a decent primer on this they could share? What needs to be in the election by the Plan Sponsor to opt into this method instead of the standard method? Is there a summary of the 24 month average rates? Is that a single rate or are they segmented, i.e., 3 separate 24 month rates? When you choose a specific look back month for the 24 month average does that same month have to be used for each of the next 4 years you are required to use the alternative method?

The standard method is pretty straight forward and verifying rates seems easy on the PBGC site. The alternative method I feel should be somewhat straightforward too but for some reason it's eluding me.

This seems like something I should know but I don't do a lot of PBGC plans and most of them are under 25, where it's simply cheaper and easier to pay the small plan cap. I have a plan that has a significant (for them) VRP this year due to the very low PBGC rates, and I'm trying to see if the alternative method can reduce that substantially even though I know it means using the alternate method for at least 5 years."

3 replies so far   |    Click Here to Add a Reply

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