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Message Boards Digest

December 14, 2022

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

BG5150 created a topic in 401(k) Plans

Late Safe Harbor Notice: What Are the Consequences?

"Plan has been around for four or 5 years and have been SH match all the long. What happens if they give their SH notice on Dec 20 this year? Or January 12, 2023? what are the consequences?"

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Coleboy1 created a topic in Plan Terminations

Vesting of Participants Who Terminated Employment Prior to Plan Termination

"Plan is terminating. There are a few participants that terminated and have a 5 year break in service but were never paid out. Do these people also become 100% vested due to the plan terminating? Or are we able to pay them out based on their vested amount at the time they left the company. Thank you!"

2 replies so far   |    Click Here to Add a Reply

MEP created a topic in 401(k) Plans

Is Multiemployer Plan Change in Contract Holder a Severance Event Making Participants Eligible for Distribution?

"As noted in the title, I am dealing with a multiemployer 401k plan. We are going through a situation where the employer contract holder is changing and we are being asked whether this should be treated as a severance event for impacted participants making them eligible for a distribution. Our plan document notes that if a participant is deemed to be separated from covered employment, defined as quitting, discharge, or layoff, the participant is entitled to a distribution. The plan document notes that there is no separation benefit if at the time of application for payment the participant is employed by his employer. Any assistance appreciated. My initial thought is that the answer is no, but it would be great to have some statute/regulation/case law to use to support the provided answer."

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Peter Gulia created a topic in 401(k) Plans

Coverage and Nondiscrimination Tests When Eligibility Criteria Change During the Year

"Imagine this situation: An employer sponsors and administers a § 401(a) plan that allows § 401(k) elective deferrals, provides matching contributions, and provides nonelective contributions. None of this is a safe-harbor arrangement. All plan, limitation, accounting, and tax years are the calendar year. When 2022 begins, the plan did not exclude union-represented employees; they were participants under the same conditions as all employees. In the spring, the employer and the union negotiate a collective-bargaining agreement. The CBA, effective June 1, provides for the union-represented employees to be covered only by the union’s multiemployer individual-account (defined-contribution) plan, including for § 401(k) elective deferrals, matching contributions, and nonelective contributions (which all are set to no less than what was provided under the single-employer plan). Promptly after signing the collective-bargaining agreement, the employer amended its single-employer plan to exclude, from June 1, the union-represented employees. The amendment also specifies that the 2022 nonelective contribution allocated to a union-represented participant is counted only on her January-through-May compensation. How does a plan’s administrator (and, more practically, its recordkeeper or third-party administrator) run coverage and nondiscrimination tests for this year? Are there two sets of tests--one for the year’s first five months, and another for the year’s last seven months? Or are there other ways the measures or tests (or both) adjust for the fact that classifications of participants changed during the year?"

2 replies so far   |    Click Here to Add a Reply

401Karina created a topic in 401(k) Plans

One-Time 'Open Enrollment'

"Can an employer offer an "Open Enrollment" option to allow ALL employees, even if they have NOT met eligibility requirements, to enter the plan?"

1 reply so far   |    Click Here to Add a Reply

Lou81 created a topic in 401(k) Plans

Trust ID and SS-4 Application for Long-Running Plan

"We have a plan that we took over recently. its a small plan with little distribution activity. It does not appear that they have applied for a Trust id. They can not locate if they did. Is there any way to find out if they have one? If i try to apply for a new one the plan was effective in 1994, more than 25 years ago. The system only allows 1 year in the future or 25 years in the past. Would you just enter 1997 to apply for it? Thanks!"

2 replies so far   |    Click Here to Add a Reply

run2win17 created a topic in Multiemployer Plans

Structure to Facilitate Shared Services and Multi-Employer Health Plan

"I am a benefit consultant who has been approached by two colleges who are currently participating in a self insured captive with other colleges for Health & Welfare benefits. They would like to leave the health insurance captive, continuing to operate independently, but wish to create a new organization for shared services (finance, HR, IT, etc) that would service both colleges as well as potentially be a product they could offer (sell) to other colleges. This new, shared services organization will have less than 100 employees (100 FTEs required in NYS for stop loss). Does anyone have any ideas for the best path that would enable these two colleges to continue to operate independently, but for their to be common control (i.e. a parent organization) that is set up over both colleges and the new shared services organization so that from an employee count perspective, all 3 groups could be considered as one and the new shared services organization also be permitted to be self insured with stop loss? Are there any other paths that reach this same end that don't involve common control? Thanks in advance for any help you can provide!"

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Santo Gold created a topic in 401(k) Plans

Account Structure for Mega Back Door Roth

"We have an owner-only 401k/PS plan. He has the after-tax employee contributions and will be converting to Roth for 2022. Is it recommended that he keep the converted $$$ in an plan account, or after the conversion move the $$$ to a Roth-IRA outside of the plan (plan allows for withdrawal of after-tax at any time)? Thank you"

4 replies so far   |    Click Here to Add a Reply

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