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Message Boards Digest

December 6, 2022

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

Peter Gulia created a topic in 403(b) Plans, Accounts or Annuities

May a 403(b) employer add provisions beyond the IRS-preapproved document?

"For a § 401(a) plan stated using IRS-preapproved documents, a user’s reliance on the IRS’s letter is not lost merely because the user changed or added some “administrative” provisions the Revenue Procedure sets up some limited tolerance for. For a § 403(b) plan, the 2013 Revenue Procedure omits a similar tolerance. Is that correct? Is that still current? Is it so that a user must do no change beyond what the adoption-agreement form allows?"
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Jakyasar created a topic in 401(k) Plans

2022 deferral and terminated employee

"Hi I am no 401k expert so looking for any suggestions on options. PS plan signed Sept 2022 for 2021. Only PS provisions. Covered owner+employee. Now in year 2022, wants to add 401k deferral option but the problem is, the employee was fired (embezzlement of company assets) in May with over 500 hours. No other employees. I know that I have to provide PS allocation to the employee for 2022, if owner decides to make one. What can I do if the owner wants to defer (will take full year salary next week)? Employee never had a chance for deferrals. Owner is over 50 and expected 2022 w-2 is 100k and employee's final w-2 is 15k. QNEC is an option, may be 4%SH additional is an option, what else can be done? 5% limit of deferral to the owner? Any thoughts are appreciated. Thank you."
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Luke Bailey created a topic in Correction of Plan Defects

Can you use self-correction (SCP) under Rev. Proc. 2021-30 if all requirements are met, but plan was terminated??

"The following is a prior BenefitsLink exchange that only had two posts: I completely agree with Roxie99's summation of the issue. A reader could draw from Section 4.07 of Rev. Proc. 2021-30 the negative inference that SCP is not available for a terminated plan. However, it's not really clear from the text that the IRS intended this inference. I don't see why the IRS would want to foreclose the use of SCP for a terminated plan. For example, suppose that a few months after a plan was terminated the plan sponsor discovers that a few participants were overpaid a few hundred dollars and also that some participants were underpaid a small amount because the employer had not made some contributions it was committed to making. These were inadvertent administrative errors and the employer would like to self-correct in the prescribed fashion for these errors, but the ability to do so is being questioned because the plan has been terminated. Has anyone had any hands-on experience with this issue with IRS, or possibly heard someone from IRS at a conference expand on this issue either way? Have some practitioners just assumed that IRS did not intend the negative inference and used self-correction for terminated 401(a) and 403(b) plans, without this having been called into question by IRS or anyone else?"
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pmacduff created a topic in Distributions and Loans, Other than QDROs

Plan termination - loan offsets - participant age 55 to 59 1/2 - 1099-R form

"I believe I'm clear but need reinforcement: Plan termination, qualified plan loan offsets, some participants over age 55 but under 59 1/2 - the IRS Code for the 1099-R forms would be a 2M, is that correct? I know those under 55 get a code 1M and those over 59 1/2 get the 7M code. Edited to add: I should clarify that these participants are also separated from service as the company has closed."
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Nic Pospiech created a topic in Relius Administration

Schwab Savings Bank - Custom Statements

"Does anyone utilize the Schwab Savings Bank asset and also produce their own quarterly statements using the Statements provided in Report Writer? We currently are trying to add this as an option, but are running into issues as I am not great at Crystal reports. Just looking for some advice from someone who is doing this. Thanks!"
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Luke Bailey created a topic in Distributions and Loans, Other than QDROs

When does the distribution occur for 1099-R and withholding purposes when you interplead a benefit?

"The question is, suppose that A dies and it's not clear whether B or C is entitled to A's 401(k) account. The plan administrator decides to interplead the benefit into Federal court. Assume also (which may not be the case) that the interpleader rules require that the funds be deposited into the court. Finally, assume it takes a couple of years before the court reaches its decision. Does this mean that a distribution has occurred for 1099-R and withholding purposes when the transfer of funds is made to the court? It seems to me that the only practical answer (although it is also not without complication, especially where RMDs may be involved) is that the court is the plan's agent and that reportable distributions for 1099-R and withholding purposes do not occur until the court cuts a check to B or C, but I cannot find any guidance on this. It certainly would be hard to tell B and C that either of them have income for Federal income tax purposes if neither of them has received any portion of A's account yet, and one of them will probably not ever receive any portion of it. I'm hoping it turns out that we don't have to pay the funds into court in order to interplead, but that has not yet been ascertained, and so am posting this to see whether any of the BenefitsLink experts have had any hands-on experience with the issue. I found the following discussion on BenefitsLink from 15 years ago: Not a lot of analysis in the above post or, apparently, in the following 15 years, and I have not been able to find anything else on the topic."
8 replies so far   |    Click Here to Add a Reply

AlbanyConsultant created a topic in Retirement Plans in General

filing 8955-SSA but FIRE is down?

"Doesn't this happen every year - the FIRE system goes down for December? What are we supposed to be doing for 8955-SSAs due by 12/15? Just file them ASAP when it comes back up on 1/6/23 and wait to see what happens? I don't recall ever running into this personally before, which is hard to believe (maybe I've just gotten my 2/28 plans done earlier in the year before?)..."
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