Message Boards Digest

September 18, 2023

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

AlbanyConsultant created a topic in Retirement Plans in General

MEP Resources

"My co-worker who understands MEPs best is retiring. The rest of us have picked up enough to be able to run them, but are there good resources for in-depth information? I've already got the sections in the EOB tabbed."

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EBECatty created a topic in 401(k) Plans

Retroactive New Plan and Deduction Timing

"I would appreciate any thoughts on the following two situations:

  1. Employer wants to adopt a new PS plan in 2023 retroactively to the 2022 plan year ... If the employer timely filed its 2022 tax return on March 1, 2023, and did not request/receive an extension, can the employer on, say, August 1, 2023, adopt a plan effective January 1, 2022, and contribute and deduct a 2022 PS contribution on August 1, 2023? The employer would have to amend its 2022 return, but is it permissible?
  2. Employer wants to adopt a new PS plan in 2023 retroactively to the 2022 plan year. The employer did receive an extension until September 15, 2023, to file its 2022 tax return. The employer filed its 2022 tax return on July 1, 2023. Then, on August 1, 2023, the employer adopts a new plan effective January 1, 2022, and makes a contribution on August 1, 2023, that it would like to deduct for 2022. Can the employer amend its 2022 return to claim the deduction?"
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pmacduff created a topic in Distributions and Loans, Other than QDROs

Installment Payments from Pooled DC Plan to Beneficiary

"Pooled investment fund profit sharing plan that used to allow installment payments. The plan has related rollover funds from an old money purchase plan subject to QJSA rules. Anyway -- participant was receiving monthly payments directly from the plan until 2017 when he passed away. QJSA and pre-retirement survivor annuity option was waived with proper consent by both participant and spouse. He was over 70-1/2 and the installment payments more than covered the RMD amount each year. After he passed away the plan began paying the monthly installment payments to his spouse as beneficiary. She is also over 70-1/2. How long can she receive those payments from the plan? Is there a limited amount of time before the account must be completely distributed out to her as beneficiary?"

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TPApril created a topic in Operating a TPA or Consulting Firm

CPA Search

"New plan in need of a CPA to prepare financial statements for past couple years as plan was not aware of this. Seems that no local firms have capacity to take what I think is a pretty good revenue raising opportunity. Curious if there are more national firms that might be a better fit? They understand they will not be filing 5500 for this last year on time."

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Plan Doc created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Buyer 'Can't' Offer COBRA to Dependents Losing Coverage?

"Employee (E) of Seller (S), a small company with a group health plan covered by Florida mini-COBRA, has twins age 28 on the coverage, thanks to Florida law that requires allowing certain unmarried dependents to remain covered to age 30. Buyer (B) acquires all of the S stock in mid-July, 2023, and E continues working for S, with the twins remaining on the coverage, as before. S terminates its group health plan on July 31, and E, along with other S employees and their dependents, enrolls in B's group health plan effective August [1] Only the twins are left out in the cold.

"B's plan is subject to COBRA. Though operating in Florida, B's coverage is underwritten in Illinois, where it also does business. The policy does not extend coverage to dependents beyond age 26, consistent with Illinois law. B refuses to offer continuation coverage to the twins, who lost coverage when the S plan terminated, insisting that the carrier won't allow it because the twins are older than 26. In a phone conversation with the Florida Office of Insurance Regulation, I was informed that a company doing business in Florida but 'headquartered' in another state does not have to follow Florida's coverage rules, at least insofar as allowing certain dependents to remain on the coverage to age 30.

"My contention is that federal law, in the form of COBRA, supersedes whatever state law may have to say on the subject, and that B became responsible to the twins under COBRA when B acquired S, followed by S's termination of its plan. The twins 'aged off' of coverage at that time, thereby experiencing a COBRA qualifying event when they lost coverage due to B's policy failing to pick them up because of its lower age threshold for terminating dependent coverage. Sound reasonable? Even if B is unable to enroll the twins on its coverage, isn't B still under some obligation to them for failing to honor their COBRA rights? Perhaps B can help offset the cost of the twins obtaining Marketplace coverage, for example."

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thepensionmaven created a topic in Form 5500

Amend Prior Year Filing for Successor Sponsor

"5500-SF filed for a sole prop 401K with employees for 2021, extension 10/15. Not knowing at that time, client incorporated in 2021. 5500 for 2021 filed under sole prop EIN. Form 5558 filed for successor for 2022. Attempting to correct ASAP in order to avoid any IRS love letters, we could amend 2021 under new corp EIN and complete box 4 with info from predecessor plan and move forward to 2022, BUT won't DOL/IRS look for an extension on the successor sponsor with successor EIN, which had not been file as we were not advised of the error previously??"

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Towanda created a topic in 401(k) Plans

Rehires and Rule of Parity

"Profit Sharing only plan. A former employee who worked from April 2013 through October 2015 was rehired in 2021. We are currently trying to find out from the employer whether this participant -- although they were eligible for the plan on January 1, 2015 -- received an allocation for 2015. The plan uses the Rule of Parity ... My understanding is that if a participant has more than 5 breaks in service and they were not vested at the time of termination, it is permissible to start from ground zero when they are rehired. In this particular instance, the participant would have been 20% vested at termination. She is not likely to have been eligible to receive a Profit Sharing for 2015 due to her termination prior to the end of the year. (We are waiting for confirmation from employer since we do not have history). My question: Would prior vesting service but no vested benefit permit us to rely on the Rule of Parity? OR was she immediately eligible for the plan on her date of rehire in 2021 because, although she may have never accrued a benefit in the plan, she had nevertheless accumulated vesting service?"

3 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in 401(k) Plans


"So, aside from the fact that IRS guidance is badly needed (anyone heard any rumors of app. date?) I have the following item for general thoughts.... If your employers are like many of ours, it is an absolute given that many will screw this up (no matter how much we try to tell them) and will NOT immediately allow deferral opportunities to some people who qualify under the LTPT rules. So, has anyone heard rumors of any special correction for some of these situations, or will it simply fall under the 'normal' EPCRS correction procedures? We're not looking forward to the potential corrections for missed deferrals, some (many?) of which we won't find out about until sometime in 2025."

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