Message Boards Digest

February 15, 2023

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

msmith created a topic in Plan Document Amendments

Retroactive Amendment to Maintain HCE Eligibility for Safe Harbor Contribution

"For the CYCLE 3 Restatements, we went from FIS/Relius Volume Submitter to ASC (non-standardized Adoption Agreement). While the Relius document had default language that a 'discretionary' Safe Harbor Non-Elective could be contributed to HCE's, the ASC Adoption Agreement required a special check off that was missed for the 12/31/2022 Plan Year. Is a retroactive Amendment permitted to add HCE's as eligible for the 2022 Safe Harbor contribution?"

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FishOn created a topic in 401(k) Plans

Leased Employees Mistakenly Allowed Into Plan

"I have a plan where the plan sponsor mistakenly submitted census' for the plan that included some leased employees despite being excluded plan document. That caused safe harbor non-elective and profit sharing contributions to be made on their behalf for several years. Now that the plan sponsor has realized the mistake they want to move these employees out of the plan. I assume that we cannot forfeit the balances like the plan sponsor wants. Any idea on the correct way to handle this?"

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WCC created a topic in 401(k) Plans

Possible to Limit Catch Ups to Roth for Everyone (Not SECURE Related, But Kind Of)

"Assume a 401k plan currently allows pretax, Roth and catch up deferrals. In theory, can a 401k plan allow pre tax deferrals, Roth deferrals, and only Roth catch up deferrals for all employees regardless of pay and SECURE 2.0? (Ignore document restraints for this question and ignore that catch ups were accidentally deleted) My answer is 'no' based on the following: 414v allows for catch ups, that section defines 'deferrals' under 402g(3), which defines deferrals under section 401k, which says a plan cannot only allow Roth deferrals (1.401(k)-1(f)(1)(i)). Since a catch up is a deferral, I am not sure how a plan could only allow catch ups as Roth. Thoughts?"

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austin3515 created a topic in 401(k) Plans

HCE Definition / Multiple Plans / Different Plan Years

"I have a client who sponsors two plans, a calendar year 401(k) plan, and a profit-sharing plan with a November 30 plan year end (the latter is paired with a cash balance plan). Do I determine highly compensated employees for both plans with respect to the look back year that corresponds to their plan year? It just seems odd to have, perhaps, two different groups of highly compensated employees."

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

ASC Calculation of 'Meaningful Benefits'

"We use ASC for our DC/CB testing (including 401a26). We have some plans where in the CB plan, the 'staff' get the minimum amount possible. Just enough to satisfy the meaningful benefit (401a26 test). There has been some discussion within our actuaries that the meaningful benefit in ASC (typically calculated at .5%) isn't really enough. Granted the .5% meaningful benefit isn't set in stone law and instead people point to the infamous Schultz memo. I am curious if others use ASC's calculation of the meaningful benefit or are uncomfortable with the value being presented out of ASC?"

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52626 created a topic in 401(k) Plans

Forfeitures from Merged Plan

"On 1/1/2023 Company B merged into Company A's 401(k) Plan ( controlled group). Prior to the merger Company B had a match tied to a vesting schedule. Company A maintains a Safe Harbor 401(k). At the time of the merger there were funds in Company B's forfeiture account. Company A needs to fund a QNEC and Match for participants. Any issue with using the forfeitures that came from Company B to fund this contribution. Once the plans merged, there is no distinction as to where which company generated the forfeiture, correct? A forfeiture is a forfeiture and can be used to offset, SH match, pay admin expenses, or used to fund QNEC and missed match."

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Belgarath created a topic in 401(k) Plans

Safe Harbor Match Question

"Employer with a Safe Harbor Matching contribution - Plan (A) calendar year plan. The business (stock sale) was purchased by a Canadian company, effective date of sale was 12/15/2022. It becomes a controlled group at that point. An amendment was prepared in early October, to be effective 1/1/2023, to exclude non-resident aliens with no US source income. Plan sponsor never signed the amendment until February of this year. First, it seems that the 410(b)(6)(C) period is still good through 2023 - I don't think this would pose any significant change in eligibility to the current plan, since they have no such employees currently anyway. Agree/disagree? I'm more concerned with Safe Harbor issue. The amendment can't be retroactive to the prior plan year, so that means a new amendment. A mid year amendment can't reduce or otherwise narrow the group of employees eligible to receive safe harbor contributions, but does the 410(b)(6)(C) transition period relief extend to this situation - such that a new amendment could be done retroactive to 1/1/2023? Or even effective, say, 2/28/2023?"

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