John Feldt ERPA CPC QPA

Isn’t that only if it’s a parent-subsidiary? Not brother-sister?

Owners? If they have a 403(b) plan, how would the plan sponsor have any owners? How many participants have account balances? is it a deferral only plan with no employer involvement? If you have already quoted the 5500 instructions and pointed out the number of participants with balances, perhaps ask for their citation to the contrary. It’s not a belief system and not an interpretation. Try to find someone who will listen, but as a provider, you are engaged to prepare the 5500 properly, so the consequences to the plan sponsor are on them or they can engage another provider to do the work.

Today's CPI-U was issued for August. One more month to go for the full limit change to be known. Here's what we have if the September CPI-U is exactly the same as August: 2025 Estimated limits and the unrounded values: 414(v) Age 50 Catchup: $7,500 (unrounded 7,993) to become $8000, I think the annual inflation rate for September would need to be about 3.165% 402(g) limit: $23,500 (unrounded 23,979) to become $24,000, I think the annual inflation rate for September would need to be about 3.165% 401(a)(17) Comp limit: $350,000 (unrounded 354,080) to become 355,000, I think the annual inflation rate for September would need to be over 9.772% 415 DC annual addition limit: $70,000 (unrounded 70,816) 415 DB limit: $280,000 (unrounded 283,264) 416(i) Key Employee: $230,000 (unrounded 230,152) 414(q)(1) HCE: unchanged: $155,000 (but unrounded 159,992) to become $160,000, the annual inflation rate for September only needs to be just over 0.24%

If you have the right ratios of HCEs and NHCEs at each rate or above, test it on a contributions-basis to avoid the gateway. Maybe you’ll pass. If you have each person in their own allocation rate group and a rate fails, just find more NHCEs for that rate or tell the HCEs that they will receive a lower allocation rate that will pass.

Doctors can be wrong? Yes, have them engage an ERISA attorney and wait for the doctor to say “But that’s not fair!” - which was the funniest thing I’d heard that day.

I think the latest required restatement will be in 2076.

You must follow the terms of the written plan. Look at the notes or other parameters around the safe harbor and see if the employer has any discretion there. If not, follow the written plan provisions, as a plan must comply in operation with those terms to retain its tax friendly (tax qualified) status. The plan may be amended prospectively to exclude HCEs from safe harbor, of course.

Triple-stacked match and encouraging participants to defer. Well, that’s something! The ADP test won’t apply due to the safe harbor match. But, if a cap is on the other matches, as indicated, then I think you have the potential for different ultimate match rates based on deferrals. A low paid spouse of the owner can get a higher percent of pay match than an employee making $345,000 but is a NHCE due to last year’s wages. So, regardless of the demographics, I think the caps on the two extra matches will suffer from a malady known as ACP testing. I could be wrong about that, of course, since I did not quote the applicable regulation and its requirements.

And what does the statute, and for that matter, the regulation, say about this minimum meaningful benefit of 0.50% as a life annuity at Normal Retirement that all these pre-approved documents now require? Anyway, if a plan wants reliance on its written language, I am not seeing how this Chevron change would undo the power that the treasury holds there. Sponsors are still bound to the terms of their written plans.

Yes. ERISA requires the advance notice regardless of who is being reduced because the plan subject to ERISA.

You definitely did not overlook anything impofrtant.

The plan is safe harbor. I don’t have the plan document, but I doubt it has something that says you are not safe harbor when the compensation definition fails 414(s). So unless the document requires it, you don’t run ACP testing. Instead, the plan loses its nice tax-qualified status, that’s all. You then wonder why you got rid of an ACP test in exchange for a 414(s) in the first place. You can’t just retroactively tell everyone with commissions that you are now going to retroactively include commissions for the match and say “We sure hope you deferred enough under the old compensation definition so that now with this new definition you will retroactively get the full match. We’re sure your deferral election would have been the same if you knew this beforehand.” Maybe EPCRS has changed and I missed that this is now available to be self-corrected? I admit, that is possible so I’ll be happy to hear about it.

A non-ERISA plan is not required to give an ERISA 204(h) notice. The plan only covers the 100% shareholder and their spouse, and no one else is eligible, so the plan is not subject to the notice requirement.

If the benefit formula in the plan is written, for example, to accrue a benefit payable beginning at retirement at a rate of $27,500 per year, and the participant accrued that same formula year after year, then they are accruing at a rate of exactly 100% of the actual rate that they earned in any prior year under the plan’s written benefit formula. If, instead, the formula was written to be $5,000 per year for the first 5 years and $15,000 per year thereafter, then the 133-1/3 accrual rule is not met. Accruals in years 6 are thereafter are more that 133-1/3 percent more than the accruals in at least one of the prior years under the formula. But fret not, you may amend the plan with a fresh start date instead and the adoption of the new formula can be designed to be a million times higher than the old formula and, if worded properly, not violate the 133-1/3 rule.

Will some employees be accruing a top-heavy minimum life annuity benefit within the CB plan until they become eligible for the 401(k) plan? Not terrible, but if so, that is a bit annoying.

What does the plan document say regarding what happens when the 436 restrictions are lifted?

This thread is discussing OEEs. Employees under age 21/1YOS can be tested separately from everyone else. When they are, the OEEs usually have no HCEs or they all have a uniform allocation, and if so, the benefits given to the OEEs won’t need cross-testing to pass testing so no gateway applies to them, period. But, if the OEEs are needed to help the non-OEEs (over age 21/1YOS group) to pass testing, then any minimums that apply to those over 21/1 also apply to those under 21/1, such as a gateway. Component plan testing is different in that it is an option that can be applied to the plan in a way that is not cut off at age 21/1YOS to delineate the components. If any component is cross-tested, then the gateway applies to all the components. If none of those components needed to use anyone under 21/1 to pass, the OEEs, then those OEEs are still not required to get the gateway unless the OEE group itself was cross-tested (super rare).

Check your plan document to make sure, but the regulations don’t require the under 21/1 group to get a gateway if none of their benefits are cross-tested in their group.

You can test those under 21 and 12 months on a contribution basis and I would think the 3% SH would be all you need in that group. The group over 21 and 1 YOS can be cross-tested and the NHCEs benefitting with any nonelective in that group will get at least the minimum gateway. I would think the system could easily do that. Otherwise perhaps look for the system instructions for restructuring or how to test using component plans

If you use the OEE group (under 21/1) to help the over 21/1 group pass testing on a benefits basis, then the NHCEs in the under 21/1 group must all get the gateway since they are all getting a nonelective. You can still component test, however, hopefully you have the right demographics to pass.

Did you try testing the under 1YOS group on a contributions basis? That group does not have to cross-test. What percent of pay is the son getting as a nonelective allocation?

None of the SEP contribution gets counted in the nondiscrimination testing, so the amounts contributed to the SEP count as a zero EBAR and fulfills $0 toward the minimum gateway.

Operational error only, assuming all amounts actually withheld from paychecks were deposited timely. So no prohibited transaction, as Kenneth stated above. The correction should include missed earnings, of course, but there is no employer use of withheld amounts to create a PT, assuming there isn’t some other fiduciary breach here.

So the question should be asked, how does the cash balance plan pass nondiscrimination?

Differing benefits, rights, and features are also subject to nondiscrimination testing. See 1.401(a)(4)-4. You have “current availability” that you can test, and “effective availability” that you can smell.