Leaderboard

All the time

It's not uncommon for a TPA to give a sponsor options - plain 3% SH, a "3 + 9" where it's exactly as you describe, and then a "5 + max" for small, medium, and large contributions.

And it was?

I take a much more draconian position. If an annuity must be purchased then the entire benefit is used to purchase it. Ouch.

Lou is correct. I do think the owner has some flexibility in which company he's recognizing the compensation. For example, he could just assume it's pro rata compared the the actual comp. Or he could use all the the comp from 1, all the comp from 2 and just the remainder needed from 3. As long as it's all reasonable.

If he has a W-2, that's the amount to multiply by 25% (not 20%). Should be 6,375. Of course, since that would be a 415 problem, he should limit the PS to 6,000. You definitely don't do self-employed calculations for an S-corp. shareholder as you would a Schedule C filer.

I thought that tax code 5 was used when the IRA engaged in a transaction that violated IRC 4975? Even though the IRA was funded by embezzled funds, to me, this does not violate IRC 4975. My guess is that the funds will be clawed back and normally you would use a tax code 2 for that.

As long as they're unrelated entities, (and I think his ownership can't be more than 50% after the first entity); then yes the full 415 limit applies to each employer plan separately. Ditto, only it was contractor supply business's.

Out of the test entirely: 1.410(b)-2(a) says that a plan satisfies section 410(b) for a plan year... "...with respect to employees for the plan year..." 1.410(b)-9 defines employee as, "an individual who performs services for the employer..." The last service day was in 2020, therefore not an employee in 2021 and not to be tested.

If the two firms didn't form a controlled group (including the laxer criteria for 415 purposes) then this would be fine to do. My old firm once had a client where a guy owned several restaurants but had a different partner for each one and it allowed him the 415c limit several times over.

I question whether the IRA custodian is the one to make this determination.

Yes, it is too late. Retroactive adoption under the SECURE Act requires that the plan be adopted before the tax filing due date, including extensions. If the return was filed on time, then there is no extension to the due date - this is true even if an extension request was filed on time.

No as inherited IRAs have different distribution and RMD rules.

Without doing any digging, I believe the the answer is no. For non-spouse beneficiaries, you can't treat it as your own IRA and roll money into or out of it. However, this is from memory, and I haven't looked for citations or back-up. My brain has pretty much turned to Swiss Cheese at this point...

It's pretty clear under Section 6.02(2), and Appendix A, .01(3) that other reasonable corrections are permitted. But of course, facts and circumstances...

You asked: "Can a participant claim that if the payment was made quicker, he would have received a higher lump sum?" Answer: Only if he will agree that if the market increased during the time frame in quetion he sould have given back the higher higher lump sum.

The important date is the "Annuity Starting Date" which is the date at which the benefit may be paid. Unless the plan specifically allows for a retroactive ASD, the ASD must be a date after the QJSA notice is provided (which should be 30+ days before the ASD, but can be closer). If you are doing calculations now then as Effen noted you're looking at a likely ASD of 5/1. That is the date as of which your benefits should be calculated, including the lump sum. And you will need to actuarially increase from age 65 (depending on actual retirement and plan terms) to that 5/1 ASD.

As Effen said, you will get multiple answers. One of them is LS is recalculated as of 3/1 and you add 2 monthly payments with interest for 1/1 and 2/1.

That was the point of my first sentence. I wasn't sure exactly what question you were asking. You need to check your plan document and maybe talk to ERISA counsel. The document should tell you how to handle people beyond NRD, but you definitely need to make an adjustment. The total payout should not be lower at the later date, assuming the 415 limit is not in play. You either need to actuarially increase the benefit to reflect the delayed commencement date (NRD to commencement date), or you need to retro the payments from NRD. Both are acceptable under the law, but I think most attorneys would say "retro payments" is the default if the document is silent. IOW, you can only do an actuarial increase if it is expressly stated in the document. If the documents is silent, you should retro the payments from NRD. I am also assuming this participant terminated prior to NRD. If they were active at NRD, it can get even more complicated. Just to be clear, the 1/1/22 date is not relevant, unless it was the termination date and even then it still might not be relevant. The adjustments need to be made from NRD.

On your facts - claiming deductions without making contributions - the correct answer is he should amend returns or he is just playing audit lottery. Hard to believe an accountant prepared returns claiming deductions without seeing actual conributions.