Message Boards Digest

January 6, 2023

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

Ajillity created a topic in 401(k) Plans

Plan Entry for a Rehire

"Plan entry requirements are 6 consecutive months of 83.33 hours per month. Monthly entry. Plan is not using 1 year hold out. Is using Rule of parity. After initial eligibility computation period, computation period reverts to the plan year. Plan uses counting of hours method. Employee(not ever a participant) DOH - May 2019 Term - Nov 2019 Rehire - May 2021 Term - October 2021 Rehire - April 2022 2019, 2020 and 2021 hours less than 500. Employee never met the 83.33 hours per month requirement. But worked over 1000 hours in 2022. Did work 6 consecutive months of 83.33 hours from April 2022 to December 2022. When is the employee eligible? After 2019, does their eligibility computation period revert to the plan year? Do they enter 1-1-23 after having 1000 hours in 2022. Or do they start new April 2022 and enter November 1, 2022 after meeting the 6 consecutive month/hours requirement?"

4 replies so far   |    Click Here to Add a Reply

BG5150 created a topic in Retirement Plans in General

Long Term Part Time Employee Rules Under SECURE 2.0

"In Secure 2.0 there is a section on LTPT that references 2 years of 500 hour of service and it is set to take effect in 2025. Does that override the current rules? Or do we use 3 years of 500 hours UNTIL 2025 then scale back to 2 years?"

3 replies so far   |    Click Here to Add a Reply

Bri created a topic in Retirement Plans in General

Top-Paid Group Election Among Related Employers

"So, it's known that if a client makes an election to use the top-paid group for HCE determinations, it needs to use the same election across all plans of the employer for the determination year. But what happens if separate plans from related employers have conflicting elections? I would suspect that since not all plans actually include the election, then the election is invalid and everyone over the pay threshold will count as HCEs. But it'd be nice to have something to point to. Does anyone have anything reliable for that?"

No replies yet   |    Click Here to Add a Reply

msmith created a topic in 401(k) Plans

Participant or Not

"Calendar Year Plan Effective 07/01/2022, the hours requirement for eligibility was changed from 1,000 hours to 800 hours in a 12 consecutive month period. Employee was credited with more than 800 hours in the 2021 Plan Year, but is under 800 hours for the 2022 Plan Year. I would think she is not eligible -- but software says differently."

2 replies so far   |    Click Here to Add a Reply

arthurkagan created a topic in Retirement Plans in General

Plan Design Question

"Two doctors own a medical practice. They want to start a pension plan. They each have their own corporations. They have 7 employees of the practice who are eligible for the plan. They each want to establish a pension plan for their respective corporations without covering any of the employees, and to establish a separate 401k Profit Sharing plan for the employees. CPA insists that several TPAs have told him this design is ok. Can this pass IRS rules."

1 reply so far   |    Click Here to Add a Reply

EBECatty created a topic in 401(k) Plans

Forfeiture Before 5 Years

"For a partially vested participant who has terminated employment, but has not taken a distribution, is it permissible for the plan to forfeit the unvested portion of the balance before five breaks in service (subject to any restoration and continuation of vesting on rehire)? I don't see any rule affirmatively stating that the forfeiture cannot occur. The guidance seems to say that, by implication, a forfeiture can't (shouldn't?) occur before five years because the participant may still advance on the vesting schedule if rehired. The pre-approved plan documents I can locate from several vendors all require five breaks in service. IRS Pub. 6389 (review of vesting provisions under 2020 RA list) also states the rule explicitly by saying a forfeiture before five years can only occur by a cash-out distribution."

1 reply so far   |    Click Here to Add a Reply

metsfan026 created a topic in Defined Benefit Plans, Including Cash Balance

If $0 Income, Is a Contribution Owed to Cash Balance Plan?

"Good morning! We have a Cash Balance Plan that has the owner and 2 employees being covered. The issue is, for 2022 the owner ultimately didn't take a salary due to business being terrible for the year. Would a contribution still be owed, even though there was no salary drawn?"

1 reply so far   |    Click Here to Add a Reply

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