Message Boards Digest

October 4, 2023

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

PS created a topic in Plan Terminations

Form 2678

"Hi, I've never come across Form 2678, can any one explain what Form 2678 is and if this is required for terminating plan. Thanks"
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pmacduff created a topic in 401(k) Plans

LTPT YOS credits under age 21

"Regular plan eligibility is 1 YOS, 12 months over 1000 hours, age 21, quarterly entry dates. Assume the January 1 entry date for LTPT and plan year counting of hours. Employee born 01/2005, hired on 10/04/2021. Works less than 500 hours in 2021. Works 784 hours in 2022. Do the LTPT credit years start for him in 2022 even though he is not yet 21? Or - do you start counting when he is age 19 (2024) that would make him LTPT eligible in 2026 when he is 21 provided he works more than 500 in 2024 and 2025? Or do you start counting when he turns 21 in 2026 and he would be eligible in 2028? Thanks in advance....."
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Ananda created a topic in 401(k) Plans

Adoption vs. Effective Date of Corrective Amendment

"A plan adopts a 1.401(a)(4)-11(g) corrective amendment on 10/14/22 with an effective date of 1/1/21. The amendment adds employees to the Plan that complete 1 year of service. An employee completed one year of service for the Plan year 2021 based on the 1/1/21 effective date. However, this individual terminated service on 3/1/22 which was 7 months before the amendment was adopted. Since she terminated service prior to the adoption date does she still meet the one year of service requirement? I would say she does since the effective date of the amendment is controlling. Any thoughts?"
3 replies so far   |    Click Here to Add a Reply

auditor created a topic in Correction of Plan Defects

Deferrals contributed to wrong participant

"Currently working on an audit for a 2022 plan year(calendar year) wherein it was recently discovered during our audit that a participant's deferrals were withheld but contributed to an incorrect participant's account due to a SSN error on the deferral upload. The participant who did not receive their deferrals was only with the company for a short amount of time (3 months) and is no longer in the Plan. Additionally, the participant who incorrectly received the funds has since distributed their funds out of the plan due to the fact that the plan is currently in the process of terminating. Because of this we presented the client with the options of either: 1) reaching out to the participant who incorrectly received the funds and request that they distribute that money out of their account due to the error, or 2) the trustees of the terminating plan fund the participant themselves in order to make them whole. Plan management was able to reach out to the individual who incorrectly received the funds and they have agreed to return the funds back. We are now trying to figure out how this process would work in regards to having the funds distributed from the incorrect individuals new 401k, as well as how to get the funds back to the correct individual through the self correction program, as opposed to the VCP. Is this possible? Any help would be greatly appreciated."
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Tom created a topic in 401(k) Plans

LTPT rules - anniversary year vs. plan year or calendar year

"Our plans all switch to plan year after first anniversary year. Everything you read talks about 500 hours worked in 2021, 2022 and 2023 implying the hours are counted on a calendar year basis. Example: DOH 8/1/2021 and completes 500 hours in first anniversary year. Since plan eligibility switches to plan year after that, the person is eligible if worked 500 hours in calendar year 2022 and also 500 in 2023, then is eligible 1/1/2024 since worked 500 hours in 3 determination years. Seem right? Example 2: DOH 8-1-2020 and completes 500 hours in first anniversary year and also 500 hours in calendar year 2021 and 2022 but not in 2023. Does this person have 3 years since the first employment year started in 2020? I read "pre-2021" service is excluded. Does that meant the hours in the first anniversary year worked in 202 are excluded? Maybe I'm overthinking. The more I try to provide specific advice the more questions I have. Almost all our plans are calendar year. Seems we should just be able to count calendar year hours - not anniversary year hours. Does anyone know if FIS will provide a good-faith amendment soon so we can provide clients with a document and SMM? Tom"
2 replies so far   |    Click Here to Add a Reply

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