Message Boards Digest

November 9, 2022

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

dragondon created a topic in 401(k) Plans

For the Gateway Requirement Can a 3% Safe Harbor Non-Elective Contribution Be Used to Offset the 5% Necessary Allocation?

"We have a new comparability plan and I want to see if we can offset the cost of the gateway requirement with the 3% safe harbor non-elective, or instead we must give an additional 5% on top of that. Could we also offset it by a safe harbor match? Obviously this is all assuming that the 5% is lower then the 1/3 of the highest contribution to HCEs."

1 reply so far   |    Click Here to Add a Reply

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IM4ERISA created a topic in Other Kinds of Welfare Benefit Plans

Choose Between Cash or PTO Bank: Constructive Receipt Issue Goes Away with a 'Haircut'?

"I have a client who allows its employees to make a choice about cashing out their PTO bank or accruing additional time. This no doubt triggers the constructive receipt doctrine. Is it possible to use a haircut provision of 10% as a 'substantial limitation' to work around the constructive receipt issue? I know that these provisions were common in deferred compensation arrangements pre-409A. However, I don't believe the IRS ever explicitly accepted the haircut approach but after losing several court battles opted for a non-enforcement approach. As such, I am inclined to advise them against using a haircut provision."

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dragondon created a topic in 401(k) Plans

Safe Harbor Plans with Profit Sharing

"If I have a safe harbor plan either with non elective or match and I add in the new comparability profit sharing, do I have to run the ADP/ACP and top heavy tests on the entire plan or just the profit sharing portion? I know that the gateway requirement will need to be met, and that the non elective match can help offset this, but wanted to understand the testing requirements when adding profit sharing to safe harbor plans."

4 replies so far   |    Click Here to Add a Reply

Tinman created a topic in Governmental Plans

Merging Three Governmental 401(a) Plans

"I have a city that is considered a second-class city in Nebraska (doesn't have a population of more than 5k). They currently have a City Employee plan, Police Officers plan and a Firefighters plan. In Nebraska second-class Cities are not required to have separate plans for these different types of employees. That being the case, they would like to combined these three plans into one plan, having all current and future employees in the City employee plan. I am new to governmental plans -- are there any issues with merging these three plans I should be aware of?"

1 reply so far   |    Click Here to Add a Reply

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

Does 'Post-Secondary Education' for Hardship Purposes Include College-Sponsored Multi-Day Programs?

"Plan permits Hardship Distributions as per safe harbor rules. Limited to 401k and Rollover sources. Terminated Participants are permitted to request (plan delays termination distribution to close of plan year in which termination occurs). No limit to Hardship requests per year. Self Certification regarding other financial sources is accepted; documentation requested to substantiate need: 'Participant must provide supporting documentation or information, which may include bills, contracts, estimates, and other information that will support the request for a hardship distribution.'

Former Terminated Participant has submitted a Hardship Request indicating it is 'to pay tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for me, my spouse.' The substantiation provided shows two multi-day programs offered by two prestigious universities (UPenn and Harvard) and a flight/hotel accommodations quote but none are actual bills or registrations with balances due. One program is live online for 5 days (4.5 hrs per day) in December 2022 and the other is 4 days on-site June 2023. Neither reflects whether a certificate or continuing ed of some kind is provided at the conclusion of attending.

Do the above multi-day presentations qualify for 'post-secondary education' hardship purposes? And, must the substantiation reflect more than just what appears to be promotional materials for upcoming programs hosted by universities? If there is no Participant specific registration, how can the plan be certain the request is for expenses that will be paid on behalf of the participant as documented? Finally, does it matter that one of the events is next year, albeit within 'the next twelve (12)months...'?"

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Connor created a topic in Operating a TPA or Consulting Firm

Looking for Actuary to Do Part-Time Remote Work

"We're interested in working with an actuary who is an independent contractor and can provide all of the actuarial support electronically for the couple dozen or so DB plans that we have. While we would do all of the administration on the plans, we would just rely on him/her to certify the schedule SB and AFTAP calculations, calculate RMD amounts, do cross-testing when DC plans are involved, and any other actuarial tasks that may come up in the normal course of a plan's life. Please PM me if you are interested or know of someone who would be."

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Belgarath created a topic in Defined Benefit Plans, Including Cash Balance

Terminating a Frozen DB Plan -- How Much Needed in Way of Retroactive Amendments?

"I'm not a DB person, but a question came up as to required amendments for the past 'several' years. These are a couple of plans that are evidently frozen (at what year I don't know) and that haven't been updated, apparently, for 4 or 5(ish) years. They are not cash balance/hybrid plans, not union, not governmental (but one is apparently a non-profit), and apparently HAVE received IRS approval letters at some point in the past.

They want to terminate the plans. I do not know if they are pre-approved plans or not -- I'm speculating 'not' but I don't know. Looking at the IRS cumulative list, it doesn't appear there is too much required in the way of DB amendments going back to 2016.

Do you agree that this would generally be the case, or am I missing something obvious? Of course, if they are terminating, they would have to also be updated for CARES/SECURE as applicable, but that's a separate question. Just looking for general thoughts."

1 reply so far   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Is Interest on Late Contributions Needed?

"We have a new client that just realized that a 2021 Matching contribution was missed for a few participants. Do they need to also add interest for the late contributions? I believe that, because the market is down, no interest was needed because the participants actually have benefited from not being invested in the market. Agree?"

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Pat Crum created a topic in 401(k) Plans

Beneficiary's Inherited Funds Will Stay in Plan; Is Spouse's Consent Needed by Beneficiary to Name a Non-Spouse Beneficiary?

"A non-spouse beneficiary has elected to leave her inherited funds in the 401(k) plan. The plan does not allow annuities. She is married but does not wish to name her spouse as sole beneficiary of her assets in the plan. Is spousal consent required?"

3 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in Cafeteria Plans

Different Corporation Wants to Take Over Sponsorsip of Existing Cafeteria Plan

"If a corporation (A) changes name, entity type, and gets a new EIN for the new corporation (B), is there any reason why (B) can't assume the assets/liabilities of the existing corporation (A) Section 125 plan, similar to what often occurs in the qualified plan world? I don't see why not, although Section 125 and the 125 regs don't appear to address this. But there is some info in RR 2002-32. With all the mergers/transactions going on, I assume this happens all the time. Comments?"

5 replies so far   |    Click Here to Add a Reply

thepensionmaven created a topic in Form 5500

Mistaken Double-Payment to DOL on a DFVC Filing

"Client paid 2x for one filing in error. How do we request a refund? There is nothing on the DOL's DFVC webpage. The client's receipt mentions the Office of the Chief Accountant, which of course is a recording asking to leave a message and 'we'll get back to you.' Keep calling? Any other suggestions?"

1 reply so far   |    Click Here to Add a Reply

Tom created a topic in Relius Administration

Frustration with Migration from Relius ASP to Relius Admin

"We went with Pentabs in 1991, then Quantech, then Relius in-house, and then Relius ASP in May 2020. It was an adjustment but overall went well each time. And I realize we are only 2 days into this new migration but we are all locked out of being able to log into Relius Admin.

Work accumulates rather quickly and so we hope for resolution soon. There were multiple emails with instructions, pdfs, etc. More than I wanted to deal with.

I called FIS this morning and was on hold for perhaps a half hour. Someone did finally pick up -- tells me maybe we aren't the only ones with this issue. So I'm waiting for a callback and hope for resolution.

We had trouble with the portal when that came out. I finally got that to work but haven't logged on in months and can almost guarantee I will be blocked from logging in. Any comments about your experience with this new migration? I know we'll get there but it is frustrating."

1 reply so far   |    Click Here to Add a Reply

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