Message Boards Digest

January 10, 2023

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

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

TPA Delay Resulted in Higher Interest Rate for Calculation of DB Plan Lump Sum Payment - Any Workaround?

"Calendar year DB Plan uses December as the look back for the 417e rates for lump sum calculations. A participant requested on Nov 7 2022 his benefit, as he was retiring. Had the benefit been prepared anytime prior to 12 31 22 then the lump sum would have been calculated based on the 417e rates of December 2021. The December 2021 were quite low and thus, the lump sum would have been quite high. Although the sponsor was pushing in late December for the calculations to be completed, however it was not done until now in 2023. Question: The December 2022 rates are much higher and therefore the lump sum, calculated now in 2023, will be much lower. Do we give the participant the lower lump sum, or do we say, that since the participant requested his benefit in November 2022 and the sponsor really was pushing in late December 2022 for the benefits to be completed that the lump sum should be calculated as if it was done in 2022 based on the lower December 2021 417e rates and therefore give a higher lump sum?"

9 replies so far   |    Click Here to Add a Reply

Advanced Pension Conference on January 24-26, 2023

Sponsored by FIS Retirement Education
Join us at the APC for a deep dive into SECURE 2.0 and its impacts. The panel of ERISA experts will provide a substantive analysis and a discussion of the practical implementations. Earn up to 15 CE credits. See agenda and register here.

thepensionmaven created a topic in Operating a TPA or Consulting Firm

Ethics Question

"I was just advised by my client that, per his broker (that I have done business with for years) he is changing plan investments from American Funds to Vanguard. Apparently, the only way Vanguard will accept new business is to insist they handle the plan administration through a party they contract out with, Ascensus. This is an excellent client, pays his bills on time, no problems with the plan. I'm sure he did not know any of this. My client just sent over the standard form letter informing me of this. We all lose a client now and then, but to find out from the client who advised us of this and not the fellow I have been doing business with for years I find highly unethical. Possibly good for the client, until he discovers what Ascensus charges for the administration of the plan. Perhaps this is just 'sour grapes' on my part and my only recourse would be not to do any more business with the broker."

4 replies so far   |    Click Here to Add a Reply

Christine Oliver created a topic in Health Savings Accounts (HSAs)

Leave of Absence and Medical Flex Spending Account Catch Up Contributions

"If an employee chooses to catch-up on their medical FSA contributions upon their return from leave and they do not have enough pays to complete the catch-up contributions prior to year end, can the employer post the remaining contributions due as post-tax contributions and take the remaining amount due in the following calendar year?"

2 replies so far   |    Click Here to Add a Reply

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

5 Years Missed RMDs; TPA Responsibility?

"Just received this question from a CPA friend. One of his tax client who was a 5% owner in a small consulting firm (about 5 years back) and then reduced his ownership to 2% later. He received RMD while he was a 5% owner. Since then he never received any RMD from the plan (for 5 years). Recently he received a letter from the TPA that he missed taking his RMD for the past 5 years and they will be processing all of his RMDs and he will owe taxes and penalties (for failure to take RMD) as well as the TPA has told this participant that the plan now has a compliance failure and that needs to be corrected and said that they (the TPA) will bill him about $5,000 for the filing fee + TPAs fee. What should be the response by the participant."

5 replies so far   |    Click Here to Add a Reply

Jakyasar created a topic in Retirement Plans in General

What Is the Comp to Use?

"Hi Need to revisit the following as I am now getting contradictory info from CPA. There are no exclusions per plan document. From W-2 Box 1 $240,000 Box 6 $225,000 On the earnings summary Gross Pay $225,000 - matches box 5 less deferral $ 20,500 plus s-corp 2% $ 42,000 - medical premium less catch up $ 6,500 Reported W-2 $240,000v - matches box 1 What to use as salary for pension purposes? Thank you"

4 replies so far   |    Click Here to Add a Reply

cobraparticipant created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Gap in COBRA Coverage After M&A Plan Change for New Year?

"I enrolled and paid for COBRA coverage starting 10/1/2022 from Company A which I was an employee. I voluntarily terminated Company A in September 2022. Company B acquired Company A in 2022 in an all stock sale and continues operations offering remaining employees 2023 benefits from Company B. Despite several written communications to the merged Company proactive seeking revised COBRA coverage elections from Company B health plan(s) before 1/1/2023 (and prior to employee annual enrollment), the merged Company failed to provide notice of continuation options and payment arrangements for annual elections to continue COBRA coverage prior to loss of coverage on 1/1/2023. Any suggestions for how to retain legal assistance or rights to address health related costs, damages, and any possible non-compliance liability due to loss of coverage? The plan administrator is now behaving as if I did not make payment by new period. No notice of 2023 enrollment information about plan options or payment arrangements were provided before coverage lapsed on 12/31/2022."

No replies yet   |    Click Here to Add a Reply

Plan Doc created a topic in 457 Plans

Post-Year-End Employer Contribution to 457(b) Plan

"Can an employer nonelective contribution for 2022 be made in January, 2023 for a calendar year nongovernmental 457(b) plan? The contribution would be made to the account of a participant who contributed less than the applicable deferral limit in 2022."

2 replies so far   |    Click Here to Add a Reply

52626 created a topic in 401(k) Plans

Protected Benefit - Definition of Disability

"Company B is merging into Company A (controlled group issue and surviving plan). Company B's definition of disability -- determined by a licensed physician Company A (the surviving plan) does not require physician approval. The document states The Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. The permanence and degree of such impairment must be supported by medical evidence. Company A wants to use the Social Security Administration as the determination for disability. Is there a protected benefit issue here? Can the plan change licensed physician to Social Security and not have any protected benefit issue?"

1 reply so far   |    Click Here to Add a Reply

Flyboyjohn created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Non-ALE with ICHRA Required to File 1094-B and 1095-Bs?

"My understanding is that non-ALEs offering an ICHRA are supposed to file 1094-B and 1095-Bs. Other than the 'because it's the law' and 'there could be substantial penalties if your failure is discovered' is any real purpose served by such filings? Thanks"

1 reply so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Retirement Plans in General

How Do You Check Whether a Beneficiary Designation Is Real or a Forgery?

"Here’s the situation (with some facts adjusted slightly to protect my client’s and others’ privacy): About four weeks after a 78-year-old participant’s death, the plan’s administrator receives a document the sender presents as the participant’s beneficiary designation. It is dated a few days before the participant’s death. Nothing about the form is witnessed, by a notary or anyone else. But the employer has no record that its former employee ever had a spouse (or any child or other dependent), and the obituary mentions no spouse or former spouse and no child. The employer/administrator worries that the ostensible beneficiary-designation form might not be the participant’s act. Here’s the difficulty: Because the participant retired 16 years ago, the employer discarded records that might have showed its former employee’s handwriting. The retiree’s request, a few years ago, for automated minimum-distribution payments was processed through the plan’s website. The recordkeeper too has nothing that shows the participant’s handwriting. No one now working for the employer knows anything about the retiree beyond what’s in a computer system record from when she retired. (The employer has tens of thousands of employees, and many retirees.) What information would you want to form a discretionary finding about whether the form submitted as the participant’s beneficiary designation likely is the participant’s act? What information might suggest to you that the ostensible beneficiary designation is not genuine?"

3 replies so far   |    Click Here to Add a Reply

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