Message Boards Digest

September 30, 2022

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

JHalligan created a topic in 401(k) Plans

Where to Account for Forfeitiures on the 5500?

"I have a few plans where the forfeiture account has increased, either from zero, or from some amount to a higher amount. Do these assets get counted as employee assets? I don't know what was done in past years for these, but I wanted to make sure they are in the correct place."

2 replies so far   |    Click Here to Add a Reply

Chaz created a topic in Multiemployer Plans

Multiemployer Funds and DOL Voluntary Plan Safe Harbor

"Can a multiemployer health & welfare fund (which, by definition is not an 'employer' or an 'employee organization') take advantage of the DOL voluntary plan safe harbor contained in DOL Reg. Section 2510.3-1(j) to avoid application of ERISA (assuming it otherwise satisfies the safe harbor requirements)?"

No replies yet   |    Click Here to Add a Reply

TPApril created a topic in 401(k) Plans

Each Owner in an ASG Has a Separate Plan -- Some Are Departing Mid-Year -- Compliance Testing Issues

"Professional Services Group with shared ownership of company by the professionals. Each professional has their own Corporation/LLC and their own plan. All plans mirror each other and are cross-tested together.

Some of the professional are exiting the Company at, say, 9/30, although their individual companies will continue. The PS contribution requires last day worked and they will be making PS contributions as separate companies.

It is assumed then that their PS contributions will not be included at year end testing. Somehow I know I'm not thinking of everything clearly.

Two questions:

[1] I believe they are treated in the testing as terminated at 9/30, so 401(k) contributions made prior to 9/30 are included in testing. Agree?

[2] One of the Partners leaving is over 65, so is eligible for a PS contribution as a Retiree, but the contribution will be made long after 9/30. Is this included in the testing?"

3 replies so far   |    Click Here to Add a Reply

TPApril created a topic in Retirement Plans in General

Owner Is Closing One Corporation But Starting Anoter One -- Can Keep Same Retirement Plan?

"Business owner is shutting down his practice, moving states, and opening a brand new practice. Although it's the same line of work, for practical purposes he is planning to create a new S-Corp in the new state and shut down the old one. There are and will not be no other employees. Any reason he cannot just keep the same 401(k) plan and rename it under the new Corp?"

4 replies so far   |    Click Here to Add a Reply

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

Marital 'QDROs' (Also Called 'Post-Nuptial' QDROs)

"I've recently come across a new type of order purporting to be a QDRO. Colloquially termed 'marital' or 'post-nuptial' QDROs, these are court orders that transfer property rights to a current spouse but no divorce or legal separation is anticipated. The sole purpose of the court action is to get the order. Because these are court-signed orders awarding marital property rights to a spouse pursuant to domestic relations law, they technically satisfy 206(d) and would seem to require approval by a plan. Of course, they appear contrary to the spirit and intent of the law. All of this is reminiscent of the sham divorce issue about a decade ago, where the court told the administrator to take an order at face value and not dig into the motivations. Have any of you come across this yet? Thoughts?"

3 replies so far   |    Click Here to Add a Reply

TPApril created a topic in Form 5500

Davis Bacon Plan -- Need to Report Delinquent Contributions on Form 5500?

"I understand that for Davis Bacon prevailing wage contributions, they must be deposited quarterly, as opposed to the 401(k) contribution deadlines. I don't think it's included but has anyone ever reported that on the delinquent contribution line of the 5500? I have to figure out what kind of penalties there are for this."

2 replies so far   |    Click Here to Add a Reply

EmpbAF created a topic in 401(k) Plans

Plan Was Terminated But No Interim Amendments Had Been Adopted

"We have a company that terminated its pre-approved 401(k) plan very recently. The plan timely adopted the Cycle 3 restatement, but did not adopt the interim amendments prior to the termination. The resolutions do reserve the authority of officers to execute any amendments necessary to effectuate the termination, and the assets have not been distributed yet.

Section 7 of Rev. Proc. 2016-37 provides that:

Notwithstanding Sections 5 and 6 of this revenue procedure, the termination of a plan ends the plan's remedial amendment period and, thus, generally will shorten the remedial amendment period for the plan. Accordingly, any retroactive remedial plan amendments or other required plan amendments for a terminating plan (that is, plan amendments required to be adopted to reflect qualification requirements that apply as of the date of termination) must be adopted in connection with the plan termination regardless of whether such requirements are included on a Required Amendments List.

It doesn't say that the amendments absolutely have to be adopted prior to the termination, just in connection with it. So I am wondering if we can make a reasonable argument that the interim amendments can still be adopted in connection with the termination if they go ahead and adopt them now? The resolutions adopting the amendments would of course reference the provisions from the prior resolutions and the Rev. Procedure.

Or do you all think we should not risk that and just do VCP? There are some timing pressures that make VCP not desirable."

2 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in 401(k) Plans

Including a Lifetime Income Illustration on 'One' Quarterly Benefit Statement per Year

"These blasted things. The DOL has stated: Section 105(a)(2)(B)(iii) of ERISA provides that participant-directed individual account plans that furnish quarterly benefit statements under ERISA § 105(a)(1)(A)(i) must include the lifetime income illustrations on only one pension benefit statement in any 12-month period.

So let's look at a participant directed quarterly valuation plan. Suppose the 12/31/2022 valuation is completed, and the valuation and lifetime income illustration is sent on February 15, 2023. Then the 12/31/2023 valuation and lifetime income illustration is sent on March 31, 2024. This is more than 12 months later. What's your interpretation on this? Is it out of compliance?"

6 replies so far   |    Click Here to Add a Reply

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