Message Boards Digest

April 4, 2023

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

RaiCMC created a topic in Plan Document Amendments

Secure Act Roth Catch Up requirement

"I just wanted to know if anyone is dealing with the same issue. We use Relius pre-approved IDP Volume Submitters Plan documents. Currently we have 100+ plans that don't allow for Roth 401k deferrals. We are trying to determine if we now have to force these plans to allow for Roth 401k because of the new rules (taking out the catch-up provision is not a route we want to go, we know this is an option to avoid the roth catch up). Currently there's no way to amend the FIS/Relius IDP VS to add Roth 401k deferrals, without losing reliance. We would have to restate the entire plan document, which we are trying to avoid since we recently restated all plans for Cycle 3. We thought a plan could possibly only allow Roth for Catch Up eligible but that doesn't seem to be the case, it looks like we may have to force plans that don't allow for Roth deferrals to now allow for it because of the new rules (well at least that's what our understanding is so far). Again not so much a question but just wanted to know if we're the only ones dealing with this right now :)."
4 replies so far   |    Click Here to Add a Reply

sb0828 created a topic in 401(k) Plans

Successor Plan Rule Issue?

"A Plan Sponsor elects to discontinue their single-employer plan and join a PEO/MEP. 3 months later, the Plan Sponsor decides they want to leave the PEO/MEP and go back to a single-employer plan. Is this an issue since less than 12 months have passed since the Plan Sponsor originally discontinued their single-employer plan in favor of joining the PEO/MEP?"
10 replies so far   |    Click Here to Add a Reply

LANDO created a topic in Correction of Plan Defects

Corrective Distributions > $75

"I'm having trouble getting my head around the rules in EPCRS about when a sponsor doesn't have to make a corrective distribution of small benefits. EPCRS Section 6.02(5)(b) says: Delivery of small benefits. If the total corrective distribution due a participant or beneficiary is $75 or less, the Plan Sponsor is not required to make the corrective distribution if the reasonable direct costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution. This section 6.02(5)(b) does not apply to corrective contributions. Corrective contributions are required to be made with respect to a current or former participant, without regard to the amount of the corrective contributions. My questions are:
  • What may be considered a "corrective distribution"? Like are corrective distributions limited to 415 excess, 402(g) excess, and ADP/ACP refunds?
  • When it says "This section 6.02(5)(b) does not apply to corrective contributions.", does that mean corrective contributions for former participants with no balance still have to made if the amount is < $75 or the actual cost of making a distribution, even if the TPA's cost for making a distribution will wipe out the benefit?
    • Can corrective contributions for former participants with no balance be forfeited if they are less than $75 or the cost of making the distribution?
  • Essentially, how liberally can this section be used to avoid having to fund small corrections to terminated participants with no balance?
No replies yet   |    Click Here to Add a Reply

Peter Gulia created a topic in 401(k) Plans

Do Roth 401(k) participants not get excused from before-death minimum distributions?

"With a heading “Mandatory Distribution Rules Not to Apply Before Death”, Internal Revenue Code § 402A(d)(5), as SECURE 2022 adds it for tax years that begin on or after January 1, 2024 (with a transition for 2023 measures to be paid in 2024), provides: Notwithstanding sections 403(b)(10) and 457(d)(2), the following provisions shall not apply to any designated Roth account: (A) — Section 401(a)(9)(A). (B) — The incidental death benefit requirements of section 401(a). Am I reading correctly that only Roth 403(b) and Roth 457(b) participants are excused from minimum distribution before death? Or is there another provision I didn’t read thoroughly enough to find?"
5 replies so far   |    Click Here to Add a Reply

pam@bbm created a topic in 401(k) Plans

Testing a Safe Harbor 401(k) Plan with a Non-Safe Harbor 401(k) Plan

"We have a 401(k) Plan that has safe harbor match. The employer acquired a second company in October 2022 and this company has a 401(k) Plan that does not have any safe harbor contribution. I'm not sure how to test the 2 plans. Can we test them separately or are they required to be aggregated?"
1 reply so far   |    Click Here to Add a Reply

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

Default IRA Custodians

"As many of you run into, we sometimes have on-going plans with former employee participants that cannot be located. I believe the rule is as follows: 1. For on-going plans - after a diligent search, the plan can distribute a former employee's vested benefit to a default IRA Custodian, but only if it is $5,000 or less. 2. For Terminated plans - (non pbgc plans) after a diligent search, the plan can distribute a participant's benefit to a default IRA custodian no matter how large the participant's benefit is. Anyone disagree with this? Thanks."
1 reply so far   |    Click Here to Add a Reply

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