thepensionmaven Posted January 25, 2023 Share Posted January 25, 2023 Received a referral on a cash balance as well as a 401(k) plan. Cash balance no eligible employees (presumably), 401(k) remains to be seen. My first question to him is the 401(k) "handled" by a payroll company as I refuse to takeover any such plan. Secondly, ADP has no knowledge of the cash balance plan. Third, the cash balance is on a 10/1-9/30 plan year; the 401(k) is calendar. Regardless of different plan years, granted they need to be aggregated for deduction purposes; don't the plan need to be tested together for 401(a)(4) ? Seems like a loss leader. Link to comment Share on other sites More sharing options...
Lou S. Posted January 25, 2023 Share Posted January 25, 2023 I don't think you can test plans with different PYE together for 401(a)(4) and each needs to pass on its own. Link to comment Share on other sites More sharing options...
thepensionmaven Posted January 25, 2023 Author Share Posted January 25, 2023 I seem to remember that. TX. Link to comment Share on other sites More sharing options...
CuseFan Posted January 26, 2023 Share Posted January 26, 2023 Correct, to aggregate for coverage and nondiscrimination the plans must have the same plan year. Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com Link to comment Share on other sites More sharing options...
C. B. Zeller Posted January 27, 2023 Share Posted January 27, 2023 If the cash balance plan passes coverage and nondiscrimination on its own, then it does not need to be combined with the DC plan for testing. Practically the only way I can see that being possible would be if there were no employees that met minimum age and service conditions. Maybe the CB plan uses 2-year eligibility, to keep some more people out. If there are any employees who did meet minimum age and service, the CB plan would fail 401(a)(26). The combined deduction limit only applies if the DB plan is exempt from PBGC coverage (which, if it only covers the owner, it would be exempt), and if the deduction taken for employer contributions on the DC plan exceeds 6% of compensation. 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...
truphao Posted February 4, 2023 Share Posted February 4, 2023 can somebody cite where it is in regs that you cannot aggregate plans with different plan years? Link to comment Share on other sites More sharing options...
Belgarath Posted February 6, 2023 Share Posted February 6, 2023 I think what you may be looking for is 1.410(b)-7(d), 1.401(a)(4)-9(a), and 1.401(a)(4)-1(c)(4). And possible subsections for special situations, cross references, etc... Link to comment Share on other sites More sharing options...
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