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Message Boards Digest

January 11, 2023

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

justanotheradmin created a topic in 401(k) Plans

SECURE 2.0, Sec. 604 Employer contributions as Roth

"How are folks interpreting this section? I recognize it is optional, but because its effective now, there seems to me a lot of questions about it. Let's start with a basic 401(k) plan, that has a basic safe harbor match provision. There are two options coming up -

  1. The employer would make a blanket decision to have the safe harbor contributions as Roth. Can this be a yearly election? What if it's just the annual discretionary employer contribution (profit sharing) does it have to be in the plan document that the employer contributions for year 20XX will be designated Roth Contributions?
  2. Each individual participant would elect if they wanted the SH contribution made as Roth or not.

For item 2- I'm not seeing anything in section 604 where the the participants get to elect one way or the other. Plus plans can already accomplish pretty much the same thing if they allow for in-plan Roth conversions. I think #1 is how I am interpreting 604, which will be useful for plans that have an auto-enroll feature where the default enrollment is a Roth deferral, so any match will also be Roth. I can see the plan issuing 1099-R at year end for the amounts of the Roth contributions that weren't Roth deferrals. What say all of you?"

10 replies so far   |    Click Here to Add a Reply

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

Offset DB Plan -- Need a Refresher

"Hi Looking at a possible takeover. This is a question on what is used for offset calculations. I have not done of these in 20+ years. DB is 50% of pay offset by 26.25% of TWB, fractional DC has 401k+PS+NESH (mandatory 3%) What is used for offset? Thank you"

5 replies so far   |    Click Here to Add a Reply

youngbenefitslawyer created a topic in 401(k) Plans

SECURE 2.0 Mandatory Auto Enrollment for New 401(k) Plans (What Is Considered 'New'?)

"When considering spinoffs and plan mergers, what would be considered the date of establishment for the plan that is spun off or for plans that merge. Would it be the establishment date of the original plan? Would these plans be considered new for purposes of the new auto enrollment requirement?"

5 replies so far   |    Click Here to Add a Reply

Mikerbpm created a topic in 401(k) Plans

Tax Credits for a New Plan Even Though We Have an Existing Plan

"For the new tax credits for 2023, can we start a new plan even though we already have a 401(k) plan. Freeze the existing plan and merge into the new plan but yet take advantage of the new credits including the $1,000 credit for matching. This is a small 6 person plan."

1 reply so far   |    Click Here to Add a Reply

J.Phills created a topic in Distributions and Loans, Other than QDROs

2020 COVID Withdrawal Issue

"What options would a plan administrator have if it were found that loan from 2020 should have been distributed as a COVID hardship withdrawal? Plan does not allow for multiple loans at one time however a participant was somehow able to take about two loans less than 10 days apart. somehow the participant had two active loans that went delinquent as not enough money was coming out of paycheck to cover both. the first was a loan and the second should have been a COVID hardship as it had to be done over the phone. Our participant tried fixing the issue and has since learned the second 'loan' would be considered a hardship withdrawal and will need to amend their taxes. If we find this was a systems error on the plan side and it was not done correctly, would this hold up that the record keeper did not follow our plan and we should ask to recoup some of the fees and penalties for this participant?"

No replies yet   |    Click Here to Add a Reply

Peter Gulia created a topic in 401(k) Plans

Which SECURE 2022 Changes Are in Effect Now?

"Which SECURE 2022 changes are in effect now? Assume a Section 401(a) plan with a Section 401(k) arrangement for elective deferrals (non-Roth and Roth), but no matching or nonelective contribution. Assume the plan has no automatic-contribution arrangement, and no auto-escalation provision. Assume the plan's year began January 1, 2023. Assume the plan's sponsor will amend and restate the documents within the remedial-amendment period. Which SECURE 2022 changes now are mandated as a tax-qualification condition? Which SECURE 2022 changes are permitted? Let's use our BenefitsLink community to see that we have a thorough list. Remember, even if there's a long delay about plan documents, we operate the plans now."

4 replies so far   |    Click Here to Add a Reply

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