Jakyasar Posted September 2, 2021 Share Posted September 2, 2021 Hi DB/DC combo plans. DC is straight PS only, no other provisions. DB is covered by PBGC. 3 participants, owner/HCE, non-owner HCE and rank&file NHCE. Both the non-owner HCE and NHCE terminated on 6/30/2021 but worked over 1000 hours. Assume each had final salary of 50k for 2021 i.e. the 2021 w-2's will show 50k for each. Sponsor wants to terminate the PS plan as of 9/30/2021. His salary as of 9/30/2021 will be 200k and as of 12/31/2021 will be 290k. He has always been at maximum limits for the past 3+ years. The DB plan will stay active for the time being - no 401a26 issues for 2021. They are asking me to finalize the PS contributions for 2021 now. I have thoughts on performing all on a very conservative level but want to check on the following. What salary do I use for the owner for deduction of PS portion and what salary do I use for testing? If I did not ask the question properly, please feel free to correct. Thank you Link to comment Share on other sites More sharing options...
C. B. Zeller Posted September 2, 2021 Share Posted September 2, 2021 You can't aggregate plans for testing if they have different plan years. If the PS plan terminates and has a short plan year, but the DB plan has a full plan year, that's going to be a problem if they won't pass testing separately. Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co Link to comment Share on other sites More sharing options...
Jakyasar Posted September 2, 2021 Author Share Posted September 2, 2021 You know what, totally spaced out before asking the question, long day, brain dead. Obviously, I will have them terminate on 12/31, thankfully one of us has the thinking cap on. Much appreciated and problem solved. Link to comment Share on other sites More sharing options...
Mike Preston Posted September 3, 2021 Share Posted September 3, 2021 While I agree that termination as of 12/31/2021 solves all problems, the plan termination does not establish a short year for non-discrimination purposes. John Feldt ERPA CPC QPA 1 Link to comment Share on other sites More sharing options...
Jakyasar Posted September 4, 2021 Author Share Posted September 4, 2021 Hi Mike Thank you for pointing this out. Are you referring to 2015 Gray Book Q&A 16? Have a great weekend. Link to comment Share on other sites More sharing options...
Mike Preston Posted September 4, 2021 Share Posted September 4, 2021 IDK, am i? Link to comment Share on other sites More sharing options...
Jakyasar Posted September 4, 2021 Author Share Posted September 4, 2021 IDK, was trying to find some reference and came upon grey book reference. Thank you though. Link to comment Share on other sites More sharing options...
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