Message Boards Digest

February 20, 2023

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

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

File Without SB

"What are the ramifications, if efiled without the SB and then amend a couple of days later to include the SB? Thank you!"

2 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Spin Off and Plan Termination

"There are three entities and out of which two of them wishes to continue with the retirement program and hence they decided to spin off their portion into a new plan however the client never got it to our attention or spoke about spinoff. We went ahead with the termination of the 401k plan and now we are in a situation the term needs to be on HOLD since participants have not received spin off notification letter, looks like some have even taken a distribution any idea from the regulatory stand point how this can be rectified and handle the spin off first."

2 replies so far   |    Click Here to Add a Reply

dougmal created a topic in Retirement Plans in General

When Eligible Becomes Ineligible?

"I have a document that excludes non-key HCE's. My problem is what happens to participants who enter as an NHCE, and then become an HCE is a future year? The document says that if you go from eligible to ineligible that you immediately cease to participate in the plan. What does that mean? Just that you no longer get a benefit? How do I code this person now? Active? Excluded? They still have a benefit due to them, vested or not. I've been trying to research it, but not having much luck. Most other threads that mention going from eligible to ineligible are based on hours and devolves into another discussion entirely."

7 replies so far   |    Click Here to Add a Reply

Sully created a topic in Retirement Plans in General

Top Heavy

"Hello, We are trying to figure a possible way out of a top heavy issue and would appreciate any thoughts. Facts:

  • Calendar year 401(k) Plan. Does not allow profit sharing contributions.
  • Plan has been safe harbor (safe harbor match) for several years and the employer elected to stop the safe harbor match effective 1/1/2023.
  • Safe Harbor Match is an annual match and is calculated and funded after the end of the year. They are getting ready to submit their 2022 required safe harbor match now.
  • The Top Heavy ratio as of 12/31/2022 is 61% calculated on a straight cash basis, i.e. no receivable accrued. This would mean the plan is top heavy for 2023.

We came up with a couple of ideas that we hope might allow the plan to not be considered top heavy for 2023.

  1. If we accrue the 2022 safe harbor contribution in our 12/31/2022 balances the top heavy ratio drops to 59%. I looked into this and came across the IRS Q&A from 2002 concerning contribution receivables. Do you think it would be permissible to include the required 2022 safe harbor match in the 12/31/2022 balances for top heavy testing?
  2. Establish a new profit sharing plan retroactive for 2022 and make a $15,000 contribution to non-key employees. If we could include that $15,000 in our 12/31/2022 balances for top heavy testing then the plan would not be top heavy for 2023.

Do you think either of these to options would work? I appreciate any thoughts or comments. Thank you!"

No replies yet   |    Click Here to Add a Reply

Peter Gulia created a topic in Plan Document Amendments

Is a Plan Amendment Ineffective Because It Lacks a Distinct Signature for an Adopting Employer?

"In 2022, a retirement plan's sponsor asked its recordkeeper to prepare a plan amendment to add, effective January 1, 2023, a business organization the sponsor acquired last summer. Using an IRS-preapproved document's forms, the recordkeeper sent a restated adoption agreement. In December, the plan sponsor's chief financial officer signed it. That signature is dated and time-stamped in the recordkeeper's electronic-signature system. The trouble? The recordkeeper now says the amendment is ineffective because it lacks a signature on behalf of the adopting employer. The CFO who signed for the sponsor also is the CFO of the sponsor's subsidiary and has power to sign for it. I'm guessing there is, or ought to be, no defect. But I know enough to recognize that I might not know enough about rules or customary processes for using IRS-preapproved documents. What am I missing?"

3 replies so far   |    Click Here to Add a Reply

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