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What happens in the case of a self-employed business with only the owner as an employee (e.g. independent contractor-type businesses) and the non-descrimination provision?  Can they offer a Trump Account to their employees (just themselves in this case)?  Obviously, in this case, no true discrimination can occur, as there are no other employees to discriminate against. Further one could argue that we cannot calculate the average benefits paid to non-highly compensated employees (we cannot divide by zero), so the 55% rule should not apply. Is there any guidance or case law on this?

Hi,

Does anyone see anything wrong with a DB plan sponsored by an s corp, the owner needs cash to make the contribution  so he will contribute from his personal brokerage account (and not from the corp account).? Thank you

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The plan document states that catch-up contributions are not matched. In operation, the client uses a separate election for catch up contributions (regardless of the mandatory Roth catch up rules). The match is per pay period and there is no true up. No limit on deferrals.

My understanding is that a catch up contribution is not a "catch-up" until it exceeds a plan or statutory limit. The issue is that the plan's payroll provider has not been matching on any contributions that are in the elected catch up bucket. As an extreme example, let's consider 2 participants both over 50:

Participant 1 elects only catch up deferrals and has $0 in the regular catch up election. Participant 2 elects only regular deferrals and $0 in the catch up election. Both employees defer a total of $7,500. Part. 1 gets no match and Part. 2 gets the full match.

IMHO - I think they both are owed the match because no plan or statutory limit has been exceeded. Wanted to see if anyone else had run into this situation, especially now that separate elections are an option for handling the mandatory Roth catch-ups.

p.s. I have also considered that this impacts more than just the match allocation, because the $7,500 in deferrals should be included in the ADP test for participant 1, not to mention the 415 limits. Thoughts?

We administer a defined benefit plan and a 401(k) plan for a small employer.

They have two shareholders (husband and wife) and 3 full time employees.

Just the shareholders participate in the DB (passes 401(a)26).

All participate in the 401(k) plan. The 3 non-shareholder employees get a 7.5% contribution in the 401(k) plan every year. Both plans together pass 401(a)4.

The DB plan has had and still has a benefit formula of 5% of FAC per year of participation. They want to increase benefits (with a fresh start of course) to 9% of FAC for each year of participation. Would this be considered discriminatory because the amendment itself is just raising benefits for HCEs? All other employees are excluded but are getting adequate contributions in the the 401(k) plan every year.

Would this type of amendment be considered discriminatory?

Thanks

Hi all, we are taking over a plan that uses the Relius document.  We use DGEM/ASC.  We don't have the Cycle 3 basic doc yet but we do have the PPA - assuming not too many changes but wanted to confirm. 

They are a law practice where the staff is paid by the plan sponsor then two of the partners are paid through their PA and they are adopting employers...well that's the issue.  We have the participation agreements from the PPA (one was 1/1/2026 and then one joined on 1/1/2017).  The cycle 3 adoption agreement only lists the one that was added later on, the original one is mentioned nowhere (which is one our issues).  We asked for the participation agreements and they said the prior TPA told them:  Our previous company advised that the agreements only needed to be signed once and did not require signatures upon restatement.  

We submitted a ticket with ASC and they responded: In the absence of executed participation or adoption agreements, we recommend reviewing the Relius plan document to determine how adopting employer participation and execution requirements were handled, as this will be key in evaluating whether separate execution by each employer was required.

I am not that familiar with Relius, does anyone know if the basic plan document states the adopting employers are not required to sign off on plan restatements?  

Thanks!

An accountant is asking if he can just lower the W-2 compensation of the S-corp owner so that it's below the HPI threshold and that gets the owner out of the new Roth catchup rule.  Can they shift more income to the dividend K-1 and avoid the issue that simply?  Sure, it lowers their overall employer benefit, but I suspect some will find that a fair trade-off.  Thanks.

A client just sent me a Final Order of Garnishment from a US District Judge, demanding $X from a participant account for restitution and court-ordered interest.  The order names the Participant as Defendant and the recordkeeper/custodian as "Garnishee".  Nowhere does it mention the plan name.

Anyone have any experience with this?  I get that it's not the same as a QDRO, but shouldn't there at least be some basic standards it has to meet?  I don't want to do anything that will put the plan sponsor in a bad position, either by paying out without proper due diligence or by rejecting it without good reason.

Thanks!

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Hi

DB plan terminated and did all the distributions during 2026 and also paid the RMD based on account balance method.

Now, a small residue ($550) hit the account which is also subject to RMD. It is roughly $20.

I cannot remember if there was a de minimum amount that can be ignored? Actual distribution was 2.5M with RMD of 100k.

TIA

A plan has an eligibility requirement that a participant must work 6 moths with 150 hours in each month in order to become eligible for the Profit Sharing source?

Eligibility computation period is defined as anniversary year for the first year and then it switches to the calendar year.

We have a participant who was hired a few years ago and worked around 500 hours per year, then was terminated and re-hired multiple times over the years.

We count all years after a break in service.

For eligibility determination, which option is correct:

1) We determine if the employee is eligible (worked 6 months with 150 hours in each month) for each eligibility computation period. So, if the employee did not work 6 months with 150 hours from date of hire to anniversary date, we switch to calendar year and determine if she worked 6 months with 150 hours during that calendar year, etc.

2) We determine if she ever worked 6 months with 150 hours (at any point since being employed).

I believe option 1 is correct since the eligibility computation period is the 12 month period.

Do you agree?

Thanks!

Hi All,

A DB participant terminated at age 60. Was entitled to his benefit at the plan's NRA of age 62. Did not get paid his benefit until age 74. Actuarial increases are bring given to reflect the benefit payments that were not made for the period of age 62 until age 74. Question: The increased a accrued benefit at age 74 is $2,950. The participant's average monthly comp was $1,964. Is this increase up to 2,950 that is greater than his avg comp allowed or is the increase capped at $1,964, his average monthly comp (as cannot increase the benefit past 100% of comp)?  Thank you.

VFIAX = the "Vanguard 500 Index Fund Admiral". I have a client for whom I'm calculating a marital portion of an old 401k containing that single investment. That 401k has undergone some mergers and recordkeeper changes such that historical statements for individuals are no longer available. The parties agreed to ballpark the present value of the premarital balance, and to estimate that premarital balance by working backward from a later balance by subtracting annual fund overall returns on that single investment. Whether or not this is the right/smart way to approach it is not the issue, finding the historical fund returns is. (I'm a lawyer rather than a math person, but I can run a spreadsheet with reasonable competence.) The annual returns sought on that VFIAX fund as a whole are for the years 1997-2003. I have been able to locate overall fund returns back to 2003, but not before that, and would be grateful if anyone happens to have those. Suggestions and criticisms are also welcome.

Lawyer gets 1099-R income of about $1 million from a partnership in which he has no equity and wants to set up a solo DB plan.