Message Boards Digest

May 23, 2023

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

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

Rollover Receiving Plan Wants a Qualification Letter

"Several times recently, distributions have been requested where the receiving retirement plan or IRA has requested a 'qualification letter' from the sending plan. Sometimes the receiving plan is appeased with a copy of the IRS opinion letter, other times there is pushback. There is one right now where Fidelity is insisting the Opinion Letter is not what they want (the sending plan is not audit sized, so there is no audit statement, and while the assets are held with a custodian that does recordkeeping, not all plans pay extra for a certified trust statement either). What do they mean when they say they want a qualification letter? The receiving plan provider can't seem to articulate it, and it is holding up distributions. I don't think the sponsor (who is the named Plan Administrator) minds writing a letter saying they believe the plan to be qualified. They would be happy to. But is that what they want? At one point a receiving plan was saying the letter had to cover the qualification of the plan for this year (they didn't like the date on the opinion letter I guess, among other things). Anyone have a good resource or article or something that can help me understand?"

6 replies so far   |    Click Here to Add a Reply

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Old Reliable created a topic in Estate Planning Aspects of IRAs and Retirement Plans

Owner-Only DC Plan: Participant Deceased with No Designated Beneficiary

"DC Plan, only participant was owner, spouse pre-deceased, no children, no beneficiary designation. There is a will directing how the Estate is to be distributed. Do the plan assets get paid to the estate, and then distributed accordingly? Can any relatives (or even non-related beneficiaries) roll to IRA's? Any other tax advantaged methods of distribution available?"

2 replies so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

Long-Term Part-Time Employees

"The more I read these rules the more convinced I am that the only possible option is to avoid these rules altogether by designing eligibility rules to avoid excluding LTPT Employees. So for example the most simplified approach here will be to change the 1,000 hours in 12 months eligibility to 500 hours (at least for 401(k)). There are other options, but I am concluding that what is not an option is for a client to try and administer these LTPT rules in the context of a plan with 1,000 hours and 12 months 'normal' eligibility."

5 replies so far   |    Click Here to Add a Reply

dragondon created a topic in 401(k) Plans

Is There a Common Practice for the Threshold of HCE's and When You Should Think About Top Heavy

"Obviously there are so many things that go into making a plan top heavy, including how much each participant contributes, who participates in the plan, and which participants contribute more etc. But is there a threshold that is common practice in the industry to say if you have x% or more HCE's than NHCE's then you should use the Top Paid Group?"

4 replies so far   |    Click Here to Add a Reply

Tom created a topic in 401(k) Plans

Top Heavy Plan Excludes HCEs, No Profit Sharing, But What If an HCE Is Non-Key?

"We have a plan that excludes HCEs from the 3% non-elective safe harbor. Several HCEs are non-key employees. There is no employer contribution other than the 3% safe harbor. The question is -- do the non-key HCEs have to receive a 3% profit sharing contribution since the plan is top heavy? The plan passes coverage on the safe harbor since the only ones excluded are a couple HCEs."

8 replies so far   |    Click Here to Add a Reply

Jakyasar created a topic in Retirement Plans in General

Combo Plan Deduction Issues

"Hi CB & DC plan combo, DC has 3% NESH 3% Controlled group, 2 schedule c, both entities adopted the plans. Employees, some paid from both and some separately from each entity. Sch X had 500k net c Sch Y had 200k losses There are mandatory CB, SH & PS contributions attributable to both entities. Q1, for all purposes,need to combine the income, correct? Q2, should each entity fund its own portion of contributions? Q3, as to deduction, cannot exceed combined sch s, correct? Anything else I didn’t think of?"

No replies yet   |    Click Here to Add a Reply

Pensions2020 created a topic in Retirement Plans in General

Is Startup Auto Enroll Tax Credit Available for Owner- and Spouse-Only Plan?

"Would they be able to receive $500 tax credit for adding auto enroll in Plan? It is only Owner and spouse in Plan. I know this isn't the spirit of the tax credit but if it is in Plan Document would it be able to be used? If anyone would be hired they'd be auto enrolled. I'm of the understanding that they wouldn't qualify for any of the other tax credits since there are no HCEs."

1 reply so far   |    Click Here to Add a Reply

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