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Message Boards Digest

April 12, 2023

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

Bird created a topic in 401(k) Plans

Excess Deferrals with Investment Losses

"A participant has excess deferrals of $2000. There were losses during the year. My recollection, which might be wrong, is that the excess is taxed in the year of the contribution (2022) and the gains are taxed in the year distributed (2023) but how does this work with losses, or am I mistaken?"

3 replies so far   |    Click Here to Add a Reply
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Pension Nerd created a topic in 401(k) Plans

Allowing Roth Only for Catch Up Contributions?

"What do you think? Can a plan allow Roth contributions to only be made for catch up contributions? Participants who are under age 50 would have no option to make a Roth contribution - Roth would only be available to those who are making catch up contributions."

8 replies so far   |    Click Here to Add a Reply

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

Loan Repayments Allocated to Sources Differently Than Loan Withdrawal

"This is for a large 401(k) plan that is administered by a major payroll/benefits company. The funds for new loans are withdrawn from several sources, no problem with the amounts taken. The loan repayments are what I'm questioning. In most cases (if not all) for the repayments, principal is only applied to one source - the profit sharing source. No principal is applied to deferral, Roth or safe harbor match until the loan balance in the profit sharing source is paid in full. For example, a participant took a $3200 loan - 75% from the deferral source, 12% from the safe harbor source, and 13% from the profit sharing source. The payments show that only interest is credited back to the deferral & safe harbor match sources and the profit sharing source is credited with all the principal repayment and some interest. Is this ok? I have only seen repayments applied back in the same manner as they were withdrawn."

5 replies so far   |    Click Here to Add a Reply

Peter Gulia created a topic in Defined Benefit Plans, Including Cash Balance

Might a Cash-Balance Pension Plan Provide No Benefit After an Unmarried Participant's Death?

"In a recent BenefitsLink discussion on how to handle a situation about an absence of a participant’s beneficiary designation, Calavera alluded to some possibility that a pension plan might, if there is no surviving spouse and no participant-designated beneficiary, provide no benefit distributable after the participant’s death. Even if it’s rare, has anyone seen a cash-balance pension plan with provisions like that?"

6 replies so far   |    Click Here to Add a Reply

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