Message Boards Digest

January 16, 2023

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

HCE created a topic in Qualified Domestic Relations Orders (QDROs)

Failure to Promptly Notify Participant of QDRO

"We have a situation where we may have failed to promptly notify a participant of receipt of a QDRO. He claims he first became aware after the QDRO was qualified (but it hasn't yet been processed, though we're about to). If true, is there a penalty associated with the failure? I assume that the AP isn't penalized and we can still process the QDRO, even if there is a penalty on the Administrator. Is this correct?"

1 reply so far   |    Click Here to Add a Reply

TPApril created a topic in 401(k) Plans

Solo to General 401(k) Plan?

"Company has existing 'Solo 401(k)' Plan. Contributions were made once, in year started up, > 5 yrs ago. Now there are employees and they would like to offer them opportunity to participate. Actually, they would like a brand new plan. Is there an issue to terminate existing 'solo' plan and start a brand new plan, or rather do a complete restatement? Eligibility in 'solo' is immediate but they would like 21/1."
7 replies so far   |    Click Here to Add a Reply

Jeannine created a topic in SEP, SARSEP and SIMPLE Plans

Simple IRA: Include W-2 Employees But Exclude 1099s?

"Can a Simple IRA for a business with less than 25 employees be established only for W-2 employees and exclude contractors paid through 1099? If it can, anything they need to be careful about?"

3 replies so far   |    Click Here to Add a Reply

thepensionmaven created a topic in

Considering Migrating Admin Platform, Looking for Feedback

"I'm a Datair user, former Accudraft user, seriously considering ftwilliam for admin, forms as well as docs. Familiar with forms and docs. How easy to use, has all one needs to do DC an DB valuations and testing? Pros and cons (if any)?"

1 reply so far   |    Click Here to Add a Reply

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

NRA in the Document Is 55

"Looking over a possible takeover DB plan. It is 2 years old. It is for a law firm. 2 partners are in their late 40s and early 50s The NRA is written as (I have not seen this before): Later of age 55 and 5 YOP and 17 YOS. Maximum NRA is 65 and 5th anniversary of plan participation. As this is not one of those special category of employers (like football players etc), how kosher is the way the definition is written? If kosher, how would you calculate the funding requirements? I would never use less than 62 but might be missing some allowance here."

8 replies so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Retirement Plans in General

Do We Need to Know NOW Whether a Plan Allows a Qualified Disaster Recovery Distribution?

"Considering a tornado’s harms to people and places in Alabama, do we need to know now whether a plan allows a qualified disaster recovery distribution? For a provision tax law permits but does not require, remedial-amendment periods make it impractical to look to what many people call the plan document as a reliable source to discern whether the plan allows or omits the provision. To deal with those situations, recordkeepers, third-party administrators, and other service providers use less formal writings to ask a plan’s sponsor which provisions it wants. Some of these might state an implied instruction: absent a written response, the plan’s administrator is deemed to have instructed its service provider to provide its services assuming the plan provision (or omission) the service provider’s request for an instruction specified as a presumed choice. Some service providers might have hoped much of 2023 would elapse before it became necessary to ask for instructions about optional provisions under the SECURE 2.0 Act of 2022. But if a service provider knows or suspects a plan’s participants could include some with one’s principal place of abode in Alabama’s Autauga and Dallas counties, should we ask the plan’s sponsor whether the plan allows a qualified disaster recovery distribution? A plan may, following Internal Revenue Code of 1986 § 72(t)(2)(M) and 72(t)(11), provide such an early-out distribution. The incident period began January 12."

1 reply so far   |    Click Here to Add a Reply

Plan Doc created a topic in 401(k) Plans

Canadian Company Becoming Parent and Sponsor

"Existing U.S. company sponsors a 401(k) plan and is to be acquired by a Canadian corporation, which has an existing U.S. subsidiary with U.S.-based employees and U.S.-based employees of its own. Upon acquiring the U.S. company that sponsors the plan, the Canadian corporation intends to become the plan sponsor, having its own U.S.-based employees participate, as well as the employees of its existing U.S. subsidiary and the employees of its newly acquired U.S. company. Any problems with this concept? The Canadian corporation owns other entities in various countries outside the U.S., but no other U.S.-based organizations."
1 reply so far   |    Click Here to Add a Reply

Jeannine created a topic in Retirement Plans in General

What Type of Retirement Plan Can Be Set Up for This Employer?

"A husband and wife each own their own business with 50% ownership in the spouse's business. There is [1] W-2 employee in the wife's business. However, they are looking to hire in the future. There are several contractors. They had a solo 401(k) -- but terminated the plan in 2022. What plan options are available to allow husband and wife to be part of a plan, along with the W-2 employee -- they do not want to include contractors. Note -- they do not want the administrative burden/testing requirements of a 401(k) at this time. Another question -- after researching, self-employed individuals appear to be considered sch. c. However, in order to defer into a solo(k) for Roth deferrals, would they have been treated as W-2? If so, would this allow them to start up a Simple IRA for themselves and the employee?"

1 reply so far   |    Click Here to Add a Reply

Dougsbpc created a topic in Retirement Plans in General

Husband and Wife Controlled Group

"Have a physician that sponsors a defined benefit plan. His wife is also a physician who owns 50% of a separate medical practice. Since we are in a community property state I believe we have a controlled group. I know we need to test for 401(a)4 and 410(b) as though the two entities were one. I don't see where the defined benefit plan needs to consider all employees of both entities for 401(a)26. Does anyone believe this is correct / not correct?"

1 reply so far   |    Click Here to Add a Reply

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

1099R Year for Rollover Processed in Early January

"Client rolled over accounts due to plan termination. Rollovers processed 1/9/23 but client is saying that Schwab says they can designate which year the rollover is attributed to, 2022 or 2023. Would that affect what year we do the 1099R? My thought is the 1099R will reflect the actual year of distribution. Agree?"

No replies yet   |    Click Here to Add a Reply

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