Message Boards Digest

November 10, 2022

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

JHalligan created a topic in 401(k) Plans

NHCE only 401(k) Profit sharing plan discrimination

"Honestly, I should know this, but if a plan has no HCEs, can they still exclude classes (job classes) and have no testing?"
2 replies so far   |    Click Here to Add a Reply

Doogan created a topic in SEP, SARSEP and SIMPLE Plans

Open enrollment

"Hi, we offer a simple IRA. Our employee base is all per diem hourly workers. My question is, during open enrollment (11/1-12/31), does every employee have to re affirm their selection? or if they ignore the offer and are already enrolled in the prior calendar year (2022), should I continue their withholding into 2023 I know it might be off for some of you to read that an employee would not reply to this, but this is the reality with my workforce. thanks"
2 replies so far   |    Click Here to Add a Reply

Santo Gold created a topic in Retirement Plans in General

Start up 401k wants to include sub contractors

"I have not run into this previously, but I have a potential start up 401k that would be pretty routine in many ways, but the owner wants to include most sub-contractors in the plan. He started his career as a sub-contractor and feels strongly that he wants to offer a 401k to them as well. He is considering a safe harbor 401k match plan. But how would that work in regard to withholding pay for individuals who are not on payroll but are paid without any tax withholding? Would the SubCs indicate that only a portion of their income be paid to them while $X.XX goes into the 401k? Can they employer provide the match on a payroll basis if they are included? This seems like it could get messy...... Thanks"
6 replies so far   |    Click Here to Add a Reply

AJC created a topic in Retirement Plans in General

Funds overpaid in participant rollover returned to Plan. How is it reported?

"A client plan delivered funds based on a terminated participant's rollover request. The payment included the participant's vested balance plus a $10,000 overpayment amount (a simple clerical error - check was written for $60,000 instead of $50,000). The error was caught within 30 days. Both the participant and receiving custodian were notified of the mistake. And the receiving custodian returned the $10,000 overpayment amount to the client plan in a timely manner. Nothing has been reported yet. Does the Form 1099-R reporting for the participant distribution need to include or otherwise address the $10,000 error in any way, since the participant received what was due and the original client plan was made whole? Does the client plan need to report a plan failure?"
2 replies so far   |    Click Here to Add a Reply

Rory created a topic in 401(k) Plans

402(g) excess - if caught prior to end of plan year, can it be corrected through payroll?

"An employee works for two unrelated entities in 2022 (not in controlled group or ASG). He approaches the second employer to advise that due to contributions to his prior employer's 403(b) plan, he has now exceeded the 402(g) limit. Since it is before the end of the plan year, is it permissible to move the excess contributions & attributable earnings to the current employer's 403(b) plan's suspense or forfeiture account and refund the contributions to the participant through payroll, or is it required to process a corrective distribution from the plan?"
3 replies so far   |    Click Here to Add a Reply

dragondon created a topic in 401(k) Plans

End of year requirements for Profit sharing and non-electives

"Is it legal to specify that you have to be employed by the company on the last day of the year to receive profit sharing (new comparability, pro rata ect) even if they have earned eligibility throughout the year to be eligible for the profit sharing? Also is this possible to do with safe harbor non elective contribution or do they have to receive the non elective distribution regardless of their employment on the last day?"
1 reply so far   |    Click Here to Add a Reply

dragondon created a topic in 401(k) Plans

How to predict date met eligibility

"According to the law you must give 30 days notice before a person becomes eligible to make deferrals to the plan. How is this calculated because a participants hours may vary in any given month? For salaried employees I would think we can make an assumption. The plan doc specifies that the eligibility is 175 hours and is using the actual hours method to calculate eligibility."
2 replies so far   |    Click Here to Add a Reply

Indu created a topic in 401(k) Plans

Contribution Calculation Template

"If some one have all contribution calculation that can be done in a single template/Spreadsheet where you just input the formula based on plan and fill up comps & deferrals. Can you share it?"
No replies yet   |    Click Here to Add a Reply

lou22 created a topic in 401(k) Plans

401k transfer mapped to same funds

"My employer switched 401K providers. The new provider had the same funds I was in. Instead of using the ACATS To transfer my shares they mapped my funds, sold them off and bought them back the next day. I ended up losing shares because the market went up while I was out. I've lost about $6000 in the transaction. Do I have a claim to get my shares back?"
4 replies so far   |    Click Here to Add a Reply

Diane Thompson created a topic in Investment Issues (Including Self-Directed)

Prohibited Transaction-son of trustee as investment advisor on 401(k) plan

"Father is a trustee on a corporate 401(k) plan. Son (over age 18) is an investment advisor and is interested in being the investment advisor for the plan. As the son would be a party in interest, would this be a prohibited transaction? Is there prohibited transaction exemption for this situation? Thanks for any help you can give."
1 reply so far   |    Click Here to Add a Reply

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

RMDs and Rehire

"If a non-owner participant terminates employment after age 72 (or 70-1/2, as the case may be), but is later rehired within the same calendar year, are RMDs triggered? There doesn’t appear to be any guidance on this. Where the rehire occurs in a later calendar year, and RMDs have already started, there is at least informal guidance stating that they must continue. (See ERISA Outline Book and 2010 ASPPA IRS Q&As.) However, I've found nothing addressing termination and rehire in the same calendar year prior to starting RMDs."
3 replies so far   |    Click Here to Add a Reply

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