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October 22, 2024

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

cheersmate created a topic in 401(k) Plans

Amend PSP Into Safe Harbor Matching 401(k) Prior to Year End

"Can an existing Profit Sharing Plan with a 1/31/2025 plan year end be amended before 11/1/2024 to add Safe Harbor 401k provisions with the Safe Harbor contribution being the traditional Safe Harbor Match? My concern is with the 30-day Notice for Participants in advance of this new feature. The first pay date in November is mid-month."

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khn created a topic in 401(k) Plans

Contributing to Wholly Owned Subsidiary

"As of 10/1, Company A became a wholly owned subsidiary of Company B. Company A's employees moved to Company B's payroll, but continue to work for Company A. Company B wants to keep allowing Company A's participants to contribute to their plan until the plans are merged in 2025 but their TPA is saying if they are being paid by Company B they are Company B employees and can no longer contribute to Company A's plan. is that correct? In past acquisitions, Company B has moved employees to their payroll and continued to remit contributions to the acquired entity's plan until the merger date. Why would they not be able to do that again?"

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John K created a topic in 401(k) Plans

Failure to Deposit Elective Deferrals: SCP or VCP?

"A plan sponsor's accountant did not fully transmit payroll contributions to the plan for 10 months of the year. (How they did not notice the substantial amount of money built up or warnings from the recordkeeper is unknown -- Excess of $75k). It looks like the IRS states that significant mistakes made in the aggregate may be self-corrected by making a corrective contribution by December 31. (SCP) However, in my opinion, this is one of the worst mistakes that can be made while operating a plan. Would anyone know of a reason this wouldn't fall under SCP? It seems too significant, but maybe it is not."

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Tom created a topic in 401(k) Plans

Mandatory Distributions vs. Rollovers

"Participant terminates employment after attainment of the later of age 62/NRA and has balance say of $3,000. Participant does not respond to distribution communication provided to them. The plan provides for the standard provisions of mandatory IRA rollover <$7,000 but cash-out if <$1,000. The plan also appears to say that a terminated participant who has attained 62/NRA is not to be rolled to an IRA but instead provided a lump sum distribution. That doesn't seem helpful to a person of retirement age. Is my understanding correct."

1 reply so far   |    Click Here to Add a Reply

Tioscrooge created a topic in 457 Plans

Tax Reporting for a Transfer of 457(b) Funds from One Spouse to Another as Part of Divorce

"Two spouses are participating in the same non-governmental 457(b) plan and have accounts at another company's 401(k) plan. They are getting divorced. As part of their divorce settlement, one spouse agreed to give over her entire 457(b) funds to the other spouse in exchange for the second spouse to transfer the same amount to her from his 401(k) account. The reason they did this was to avoid distribution to one spouse after relocation / termination. The custodian didn't need QDRO, just a letter from the trustee, for the transfer. The transfer is now complete. What, if any, IRS documentation or forms need to be filed for this transfer of 457(b) funds from one spouse to another?"

2 replies so far   |    Click Here to Add a Reply

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