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What is the deduction limit for 2021 and also the testing salary?


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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

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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.

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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.

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