Message Boards Digest

January 31, 2023

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

Jewels0110 created a topic in Other Kinds of Welfare Benefit Plans

Section 129 (DCAP) W-2 Reporting for Failed Test

"My team has told me that we failed section 129 non-discrimination test last year and made the appropriate adjustments prior to the end of the plan year. But they have told me that the W-2s still reflected the full election/contribution amount and not adjusted for the amounts that were considered taxable therefore added as imputed income. I just spoke Payroll, and they said this is how it should be done. But I have also read that only the amount considered pre-tax (tax favored) should be reported on the W-2 box 10. Does anyone know what is correct or is either fine as long as the imputed income is reflected correctly for the plan year?"

1 reply so far   |    Click Here to Add a Reply

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Jewels0110 created a topic in Other Kinds of Welfare Benefit Plans

Workday Payroll and FSA/HSA Limits

"We outsource our benefits administration and use Workday Payroll. Currently we have to audit total FSA and HSA contributions at year end to ensure no one has gone over their election or IRS limit. I asked Payroll why we wouldn't have at least the IRS limits programmed on the Workday Payroll side, and the response was that Workday can only handle the 401(K) IRS limits. Does anyone have an experience with this? In my past experience with other payroll systems, the outsourced provider would send goal amounts with the FSA deductions that would be stored on the payroll side to ensure no one goes over that limit by year's end. Looking for any insights for those who may use an outside benefit administration vendor and Workday payroll."

1 reply so far   |    Click Here to Add a Reply

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

Top Heavy, 401(a)(26), Stuff Like That

"Fun stuff here, doing a DB/DC combo. One terminated NHCE is the only statutory exclusion. But she did get to 1000 hours and is getting a contribution credit, but not enough to cross the theoretical 0.5% threshold. My hope was that I could leave her out of the 'main test' so that she gets a 5% top heavy minimum only under the DC and not the normal gateway 6.5% rate. Problem is, if I disaggregate the statutory exclusions, then I've got a 'plan' with just the one NHCE who doesn't 'benefit'. And the Regulation 1.401(a)(26)-1(b)(1) excludes NHCE-only plans from 401a26 if (a) not top heavy (b) no HCEs (c) not aggregated for 410b or 401a4. The conclusion I'm drawing here is that I can't wait for the disaggregated top heavy testing under SECURE 2.0. Because I'm thinking either (a) increase the CB credit up to 0.5%, or (b) just test her with the non-excludables and give her the higher gateway. And since (b) is cheaper than (a), I feel like I wasted an hour trying to carve her out in the first place. Any other thoughts?"

2 replies so far   |    Click Here to Add a Reply

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

Plan Termination and Prepaid

"Hi A DB Plan on 01/01/2022 had a prepaid (FASB) of $567,000. The plan terminated in November 2022 and the assets were rolled over into IRAs in November 22. At 12 31 22 (and forward) what happens to the prepaid?"

1 reply so far   |    Click Here to Add a Reply

TPApril created a topic in 401(k) Plans

Successor Plan and Adoption vs. Effective Date

"Er terminates plan 12/31/21. All assets distributed by 3/31/22 Company wants to start new plan as of 4/1/23 for 401(k).

  • Question 1: is there an issue with adopting it prior to 4/1/23 (ie within 12 months of distribution of assets in prior plan, even though plan won't be effective until after 12 months)

Alternatively Company wants to adopt the plan after 3/31/23, but make PS effective 1/1/23

  • Question 2: Being adopted after 12 months, then calculating back to 1/1 - does that violate the successor plan rule?"
2 replies so far   |    Click Here to Add a Reply

MAS created a topic in 401(k) Plans

RMD required for spousal beneficiary

"A participant takes an RMD in 2022 and dies later that year. The spousal beneficiary is now (in 2023) doing a rollover of the benefit into a regular IRA. Does a 2023 RMD need to be distributed to the spouse prior to the rollover?"
1 reply so far   |    Click Here to Add a Reply

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