Message Boards Digest

October 5, 2022

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

Basically created a topic in Form 5500

Form 5500-EZ Still Available to Owners If All Common-Law Employees Not Yet Eligible to Participate?

"If a small business (husband and wife) in Alaska brings in employees to help during the summer and those employees never satisfy the eligibility requirements (1 year, 1,000 hours, last day), can this plan still be considered owner-only so as to qualify for filing a Form 5500-EZ?"

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PS created a topic in Plan Terminations

Safe Harbor Notice Still Needed Despite Upcoming (October 7) Termination of Safe Harbor Plan?

"The plan termination date is 10/07/2022, and all contributions have been completed. It's a safe harbor plan. Does a 30-day notice need to be sent to the participants?"

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Roxie99 created a topic in 401(k) Plans

Missed Deferrals Spanned Several Plan Years

"We have missed deferrals that have spanned several plan years due to an error in determining eligible compensation, including this plan year (calendar year 2022). For the 2022 plan year, can we provide a 0% QNEC for participants who were only affected in 2022 and otherwise meets the requirements for no QNEC, or does the correction depend on the first missed deferral for all participants which occurred a few years ago?"

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Renee H created a topic in Plan Terminations

Excise Tax on Qualified Replacement Plan After 7 Years

"I have a 1 participant 401k/PS (sole prop.) plan that received 100% of excess assets from a terminated DB plan in 2017. Plan was amended as a QRP. The QRP has been funding the ERPS contribution beginning in 2017. The owner/trustee opted to invest these assets as opposed to keeping them in a non-interest bearing account. Year 7 will be 2024 and based on the MV as of today, it looks like there will still be assets remaining in the QRP. Can someone advise me on what the excise tax will be for any remaining assets that revert back to the employer? Is there anything else I should be advising my client on with respect to this situation?"

1 reply so far   |    Click Here to Add a Reply

Scott created a topic in Cafeteria Plans

401(k) Deferrals: Can Be Based on Year-End Cash-out Payments from PTO Purchase Plan?

"Company has a PTO purchase program under its cafeteria plan in accordance with Proposed Regs Section 1.125-1(o)(4). The program provides that unused elective PTO will be cashed out before the last day of the year. If the cash-out payment satisfies the definition of 'Compensation' under the Company's 401(k) plan, is there anything that would prohibit employees from deferring the cash-out into the 401(k) plan? Would this somehow be considered a violation of the prohibition against deferred compensation under a cafeteria plan under 1.125-1(o)(4)? I can't seem to find any guidance on this."

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Misty created a topic in Plan Document Amendments

Contents of Early Inclusion Provisions in a Corrective Amendment

"When drafting the Corrective Amendment for early inclusion, it is required to add the participants' specifics; DOB, Date of Hire and date they were let into the plan? Or can I just add the year into which they were let in early? For example:

WHEREAS, as provided in IRS Revenue Procedure, 2021-30, the Employee Plans Compliance Resolution System (EPCRS) allows correction of Early Inclusion of an Otherwise Eligible Employee Failure through the Plan Amendment Correction Method;

NOW THEREFORE BE IT RESOLVED, the Plan is hereby amended under the above Revenue Procedures for the 2021 Plan Year, as follows:

The Plan is amended under the above Revenue Procedures for the 2021 Plan Year, to permit [Participant Name Here] to participate prior to the satisfaction of the Plan's eligibility requirements."

2 replies so far   |    Click Here to Add a Reply

Basically created a topic in Distributions and Loans, Other than QDROs

Participant Is Willing to Return a Mistaken Distribution

"If a participant takes a distribution but then returns it to the plan within 60 days,

  1. Can they do this?
  2. Would a 1099-R need to be generated for the original payout? Or can it be considered a wash?

I recall that if someone takes a payout and never cashes the check, and then deposits the check into an IRA, it's considered an IRA rollover. A clean transaction. What if they cash the check and then roll the total amount into the IRA within 60 days? Would they still get the rollover benefit?"

3 replies so far   |    Click Here to Add a Reply

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