John Feldt ERPA CPC QPA

The CPI-U for September 2022 was published with a value of 296.808. Based on Tom Poje's spreadsheet, the dollar limits for 2023 are projected to be: ALL Increased (NOT Official yet, of course): Deferral limit: $22,500 (up from $20,500) Catchup: $7,500 (up from $6,500) Compensation Limit: $330,000 (up from $305,000) Annual Addition Limit: $66,000 (up from $61,000) DB Limit: $265,000 (up from $245,000) HCE: $150,000 (up from $135,000) Key Employee: $215,000 (up from $200,000) Just for reference, the unrounded figures are: Catchup: $7,528.50 Deferral limit: $22,586.50 Compensation Limit: $333,500 Annual Addition Limit: $66,700 DB Limit: $266,800 HCE: $150,688 Key Employee: $216,775

Warming up this old thread and getting ready to fire up Tom's old spreadsheet next week Thursday. The CPI-U for July 2022 was 296.276 and August was 296.171 (July and August of 2021 were 273.003 and 273.567). So we have two of the three months needed to determine the 2023 limits. September is scheduled to be published on October 13 at 8:30 A.M. Eastern Time. The sum of the three CPI-U's from last year, July through September of 2021, was 820.880, for an average of about 273.627. So we're looking at about 8.25% as an increase if the 2022 September CPI-U is also 296.171 (unchanged from August). Once the September CPI-U is released, the expected limits for 2023 will be posted here, all based on Tom's spreadsheet (not official limits). Current ESTIMATED LIMITS, assuming the September CPI-U is the same as the August CPI-U, are: Deferral limit: $22,500 (up from $20,500) Catchup: $7,500 (up from $6,500) Compensation Limit: $330,000 (up from $305,000) Annual Addition Limit: $66,000 (up from $61,000) DB Limit: $265,000 (up from $245,000) HCE: $150,000 (up from $135,000) Key Employee: $215,000 (up from $200,000)

Agree.

You can always ask in the VCP application and be prepared to negotiate, but don’t set any expectations with the plan sponsor that the IRS will just accept that as the solution.

What does the plan document say? It likely says the spouse at the time of death is the 100% beneficiary unless such spouse has provided written, witnessed consent to waive that right. Meaning, the remarriage likely makes the new spouse the 100% beneficiary regardless of the prior designation. However, you need to check the terms of the plan document.

The adoption of the solo-k makes the SIMPLE invalid for the years where they overlap. The multiple SIMPLEs are also a problem. A SIMPLE is required to cover all employers of a controlled group and all employees. No other SIMPLE is allowed for that same group of employers.

Exactly right. Normally it’s all NHCEs, deemed pass.

As Mike and Cusefan indicted, the otherwise excludable employees do not have to get the gateway, but they would get the DC plan top-heavy minimum (if top-heavy). They don’t get a gateway if you are “testing” the OEEs separately from those over 21/1/1000etc. and if that separately tested OEE group can pass nondiscrimination testing on some basis other than cross-testing. Remember, the gateway merely allows the nondiscrimination test to be done on a benefits-tested basis, that does not mean you pass just because you provided the gateway.

4 of the 13 leased employees are HCEs? Of the non-leased employees eligible for the DC plan, what is the number of HCEs and NHCEs in that group? After getting that info for the coverage test for the combo, 401(a)(26) should also be reviewed.

The rule that allows the terminated employee with under 500 hours to be not counted for the test can only be applied if the reason they do not benefit is that they fail to meet an allocation condition imposed by the terms of the plan, such as a last day or minimum hours requirement. Perhaps the Otherwise Excludable Employee rule can help you instead? Is this a 403(b) plan?

You stated the plan is top-heavy. Due to the PS allocation, the plan is not TH exempt, so those whose deferrals are too low to get a 3% of pay match must get a TH minimum. If they are OEE that just means they won’t have to get the minimum gateway, which you indicated is just slightly over 3%.

Except the $10,000 de minimis benefit can’t be paid out as a lump sum.

It has been done, yes. In the late 90s early 2000, I assisted with a plan with about 9000 active employees and 8000 deferred vested and a few thousand retirees. Only the active employees were converted to cash balance and the plan sponsor used a very very long transition and provided several overlapping years of both cash balance accruals and traditional formula accruals. In 2006, the Pension Protection Act came along and cleared up a lot of issues for such conversions, as the “wear-away” method was one of the glaring issues that needed to be resolved. An ERISA counsel and an experienced large plan actuary should have no problem guiding you.

I agree with CuseFan.

A governmental employer’s 457(b) plan -is that what you’re looking for?

The underutilized amount is equal to zero since they were not eligible for the plan before, so the catch-up is limited to that, which is zero. Now 2021 is over. If they entered in 2021 and no allocation was done for 2021, then they have an underutilized amount now equal to $19,500 which can be used now. Also, read the 3-year language carefully, my understanding is that the year they reach normal retirement age is not a year that can provide a catch-up, it’s the 3 years prior to the year they reach normal retirement, but check the document.

What has ERISA counsel suggested?

Seems like that’s what it says. You can always check with your document provider, of course.

Yes, you’re rounding third now and almost home. The regulations do not require the RMD, but you now have to read the fabulous plan document. And also check to see if, perhaps, they started RMDs in a prior year already.

Is this non owner still working for the employer/plan sponsor? Are they an indirect owner through attribution?

And watch out for 403(b) there, as those accounts are considered owned by the employee, so if they own a side business and it has a plan, aggregation for 415 comes into play.

No. The SEP does not behave like a SIMPLE in this regard.

The 401(k) plan cannot count contributions made to the SEP when running the 401(a) tests for the 401(k) plan. Good: owner contributions in SEP aren’t in the test. Yay! But, too bad: employees allocations are also not in the test, not for helping with top heavy, they don’t count toward the minimum gateway, etc.

Or the notice itself. https://www.irs.gov/pub/irs-drop/n-21-61.pdf

Official numbers are out. Results are what was expected. https://www.irs.gov/pub/irs-drop/n-21-61.pdf