Message Boards Digest

March 20, 2023

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

Tax Cowboy created a topic in Miscellaneous Kinds of Benefits

Looking for Resource/Treatise with Comparison Between SAR's, Phantom Stock and Other Restricted Stock Options

"Group: Anyone have a good resource they use that shows to side-by-side comparison with SAR's, Phantom stock other RSO's and non-qualified executive compensation packages that will include tax consequences for employees and employers, limitations if any, along with necessary documentation (plan documents, corporate resolutions other documents?)? Or a company that can assist in creating the above. Thank you in advance."

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Tom created a topic in 401(k) Plans

Identifying Key Employees When Corporation Is Owned by ESOP

"Corporation is 100% owned by an ESOP. Corporation sponsors a 401(k) plan. There are 5 corporate officers. These 5 plus an additional 10 constitute the ESOP Board of Directors. All 15 Board members are 401(k) plan participants, not all have balances. The 401(k) plan is a deferral-only plan with about 250 participants. So the question is who is a key employee? Only 2 of the corporate officers have wages of $200,000. None of the other Board members has wages of $200,000. No one is a >1% or >5% owner of the corporation since it is 100% owned by the ESOP participants. I see past comments that plan balances in an ESOP are not treated as owned by the individual but by the trust. Even if I treat all ESOP Board members as key employees, the plan is far below 60% but obviously I have to get this right. And as for the ADP, we are just looking at compensation for 2021 in the 2022 HCE determination process. There have not been individual owners for about 5 years."

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

401(h) Accounts: Availability of Medical Benefits

"401l(h) accounts can add up to 25% tax deductible contributions to a pension plan. Are 401 (h) accounts which provide incidental post retirement medical benefits appropriate for small Cash Balance and Defined Benefit plans, where all the participants take lump sum distributions or rollovers on retirement or termination? Suppose an employer has 3 owners and 10 non-key employees. If one of the non-key employees retires and distributes or rolls over their full lump sum pension amount, are they still eligible thereafter to benefit from post retirement medical expenses, or must they be receiving a monthly pension from the plan to be eligible for post retirement medical expenses. Similarly, suppose an employee terminates prior to retirement and takes a full distribution at termination, and later reaches the plan's retirement age while the plan is still inexistence. Are they then eligible for post retirement medical benefits? If a key employee is past the plan's retirement age, but still an active participant, can they start to received post retirement medical benefits? What actuarial requirements are needed for a pension plan with a 401 (h) account. Is anyone actively administrating plans with 401 (h) accounts for many of their clients?"

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Dougsbpc created a topic in 401(k) Plans

Safe Harbor match when Ineligible Participant Funds Salary Deferrals

"We administer a 401(k) Plan with a safe harbor match. Turns out the employer allowed an employee who was not eligible, to make salary deferral contributions. Generally, this can be self corrected by having the plan execute a corrective amendment that would allow the ineligible participant to have funded salary deferral contributions. Since the plan does have a safe harbor match, must a safe harbor match be provided to this ineligible employee?"

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