Message Boards Digest

January 12, 2023

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

kmhaab created a topic in Plan Terminations

Recent IRS response time on Form 5310s?

"Can anyone comment on how long the IRS has been taking to issue plan termination favorable determination letters following submission of a 5310 in the past few years? Are ESOPs taking longer? TIA!"
2 replies so far   |    Click Here to Add a Reply

Inquiring Mind created a topic in 401(k) Plans

Real Estate deposits in a 401(k)

"I'm trying to search this topic on-line and not finding much. Don't deposits coming in from a Real Estate LLC investment count as contributions in a 401(k) plan? If not, how would they be identified as?"
3 replies so far   |    Click Here to Add a Reply

Kac1214 created a topic in 401(k) Plans

Acquisitions with a SIMPLE and a 401k

"I have a client who is starting to grow through acquisitions. Client sponsors a SH 401k. They have purchased a Company (Stock purchase not Asset). New firm has a SIMPLE. I know there are transition rules that allow this arrangement to continue through the end of 2023. They are about to complete another acquisition (or more) as Asset purchases. The target has a 401k and they want to allow that new staff to join when acquired. I believe the SIMPLE has to continue and that staff should not be eligible/contribute to 401k If they amend the current Plan to recognize the new group(s), don't they lose the 410b6c exclusion that allowed the first acquisition to complete the SIMPLE for 2023? Can we amend to only allow the asset purchases to enter the Plan early? Any guidance is appreciated!"
2 replies so far   |    Click Here to Add a Reply

JProehl created a topic in Nonqualified Deferred Compensation

SERP Reporting / FICA / Vesting

"I am have been tasked with setting up a NQDC plan for a few key executives at our small company and it has my head spinning a bit. Basically the owners of the company want to set aside an annual discretionary amount for a few key employees. The contribution would be tied to employee and company performance. The amount is intended to be a SERP (no employee deferrals) and become available after the employee retires. Most of the target employees are 10-15 years away from retirement. We are looking at the standard clauses providing for acceleration in the event of death, disability, change in control. Also provision regarding non payment for termination for cause or going to work for a competitor. I will admit I am getting somewhat confused regarding the difference between vesting and triggering event. I have talked with a couple of folks who state that it is normal for employees to vest over a 5-10 year period. For example can 50 year old employee have a 5 year vesting schedule at 20% per year but the plan specify that payment is not made until they reach normal retirment age? My lack of clarity of over the vesting / triggering question leads me down the path of the what is the correct reporting and payment regarding payroll / FICA. I have some done some research and want to make sure we handle any issues regarding the special timing rule for FICA correctly. What the owners have in mind is to make these annual discretionary contributions, perhaps tie a return rate on the contributions to the S&P500, and pay the employee out either in a lump sum or in 3 years after retirement. The funds would be available at the later of age 65 or a separation from service (some employees may work until 67). What I think I know so far: - This would be a defined contribution SERP plan. - It would be a non account balance plan. - Distributions from the plan should be reported on a W2 and are subject to income tax when paid - If FICA is not paid according to the special timing rule, then FICA would would also be owed at the time of distribution under the general timing rule. FICA would be paid by both the employee and employer. What I am confused about and seeking guidance - The difference between vesting and triggering - When would the FICA tax be due? Does the special timing rule apply? - If the special timing rule applies, how is the amount determined? - What am I not thinking about that I should be?"
2 replies so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

Am I the only one?

"Listening to a presentation today on SECURE 2.0 and I left with the impression that this is literally impossible to implement. Anyone else? Between Roth as catch-ups, match as Roth, mandatory auto enrollment (with Auto Increase to boot), 37 new distribution options that you can only take once every 3 years. Sure I'm exaggerating but only a little. I just can't see implementing this stuff with a small service business that has 25 employees."
19 replies so far   |    Click Here to Add a Reply

susieQ created a topic in Operating a TPA or Consulting Firm

Administration, Testing, 5500 Document Software Vendors

"I've been looking at the various options for administration and document software or subscription service. It seems the only options are: ASC ftWilliam Datair FIS Relius Are there any others? Thank you,"
No replies yet   |    Click Here to Add a Reply

Santo Gold created a topic in Form 5500

how far back can you go to file an amended 5500?

"Its January, 2023 and we realized that there was a minor mistake on the 2018 5500-S/F filing. The client would like to file an amended 5500-S/F. EFAST will only allow back to 2020. Can we still file an amended return for 2018 on a 2020 form, or is there no way to file an amended return at this late date? Thank you"
2 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in 401(k) Plans

Addition of investment alternative - advance notice requirement?

"Suppose a plan that is participant directed merely adds another mutual fund as available. Doesn't change any of the alternatives already available. Is there a 30 day advance notice requirement before the new mutual fund can be available?"
1 reply so far   |    Click Here to Add a Reply

ejohnke created a topic in 401(k) Plans

Who is the beneficiary?

"I have a client that utilizes individual brokerage accounts for their participants' investments. The Plan requests beneficiary elections from all participants, as does the Custodian. The participant files a beneficiary election with the Custodian, but NOT the Plan. If the participant dies, does the beneficiary election on file with the Custodian stand or would you default to the plan document provisions?"
3 replies so far   |    Click Here to Add a Reply

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