XTitan

I would say you do need to observe the 5 year delay, since at the time of deferral you would not have a single objective, non-discretionary formula to calculate payments.

Maryland still says 7.75% according to the link below. https://www.marylandtaxes.gov/forms/Tax_Publications/Tax_Facts/Withholding_Tax_Facts/Withholding_Tax_Facts_2020.pdf

From the release Coronavirus Stimulus bill: SEC. 2203. TEMPORARY WAIVER OF REQUIRED MINIMUM DISTRIBUTION RULES FOR CERTAIN RETIREMENT PLANS AND ACCOUNTS. (a) IN GENERAL.—Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: (I) TEMPORARY WAIVER OF MINIMUM REQUIRED DISTRIBUTION.— (i) IN GENERAL.—The requirements of this paragraph shall not apply for calendar year 2020 to— (I) a defined contribution plan which is described in this subsection or in section 403(a) or 403(b), (II) a defined contribution plan which is an eligible deferred compensation plan described in section 457(b) but only if such plan is maintained by an employer described in section 457(e)(1)(A), or (III) an individual retirement plan. (ii) SPECIAL RULE FOR REQUIRED BEGINNING DATES IN 2020.—Clause (i) shall apply to any distribution which is required to be made in calendar year 2020 by reason of— (I) a required beginning date occurring in such calendar year, and (II) such distribution not having been made before January 1, 2020. (iii) SPECIAL RULES REGARDING WAIVER PERIOD.—For purposes of this paragraph— (I) the required beginning date with respect to any individual shall be determined without regard to this subparagraph for purposes of applying this paragraph for calendar years after 2020, and (II) if clause (ii) of subparagraph (B) applies, the 5-year period described in such clause shall be determined without regard to calendar year 2020. (b) ELIGIBLE ROLLOVER DISTRIBUTIONS.—Section 402(c)(4) of the Internal Revenue Code of 1986 is amended by striking 2009 each place it appears in the last sentence and inserting 2020. (c) EFFECTIVE DATES.— (1) IN GENERAL.—The amendments made by this section shall apply for calendar years beginning after December 31, 2019. (2) PROVISIONS RELATING TO PLAN OR CONTRACT AMENDMENTS.— (A) IN GENERAL.—If this paragraph applies to any plan or contract amendment— (i) such plan or contract shall not fail to be treated as being operated in accordance with the terms of the plan during the period described in subparagraph (B)(ii) solely because the plan operates in accordance with this section, and (ii) except as provided by the Secretary of the Treasury (or the Secretary’s delegate), such plan or contract shall not fail to meet the requirements of section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974 by reason of such amendment. (B) AMENDMENTS TO WHICH PARAGRAPH APPLIES.— (i) IN GENERAL.—This paragraph shall apply to any amendment to any plan or annuity contract which— (I) is made pursuant to the amendments made by this section, and (II) is made on or before the last day of the first plan year beginning on or after January 1, 2022. In the case of a governmental plan, subclause (II) shall be applied by substituting 2024 for 2022. (ii) CONDITIONS.—This paragraph shall not apply to any amendment unless during the period beginning on the effective date of the amendment and ending on December 31, 2020, the plan or contract is operated as if such plan or contract amendment were in effect.

For Group Term? Not PS58, Table I.

I suppose if the employee premium payment was less than the amount to be imputed, the employee should be imputed for the difference.

Since a rabbi trust is optional, there shouldn't be any issues with establishing now.

Or "The coronary issue might be the amount of the requested fee.

There is nothing new about this type of arrangement, and as long as the agent helps monitor, insurance companies don't really have an issue with it. BTW, that's quite the marketing name; back in the 90's (before the term was banned) it would have called a "private pension plan". Yes, you can buy a life insurance policy that is designed for the owner to take tax-advantaged policy loans and withdrawals. As long as the policy is held until death (no lapse or surrender), the loans are tax-free because they are paid off by the tax-free death benefit. Usually structured as paying the maximum premium for the minimum face amount. There are a significant number of pitfalls. For example, if the policy becomes a MEC, then the taxation of the distributions is impacted and may also be subject to an additional 10% penalty if the insured is under 59.5. If the policy lapses, the loans become taxable to the extent there is gain in the contract. The loan interest is not deductible so it's usually added to the loan balance.

When you look at it objectively as a single transaction, it looked discounted.

It really depends on the terms of the trust document. I usually see sub-trusts for each plan where assets can be reallocated only when there are excess. I haven't seen beneficiary consent to do this, but I have seen trustees be concerned about irrevocability.

Acceleration of vesting is not a problem under 409A.

Should be fine as long as you follow the voluntary plan termination and liquidation rules (1 year/2 year/3 year) for all elective account balance plans and leave the non-elective account balance plans alone.

Issue Number: IR-2019-179 Inside This Issue 401(k) contribution limit increases to $19,500 for 2020; catch-up limit rises to $6,500 WASHINGTON — The Internal Revenue Service today announced that employees in 401(k) plans will be able to contribute up to $19,500 next year. The IRS announced this and other changes in Notice 2019-59, posted today on IRS.gov. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020. Highlights of changes for 2020 The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500. The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500. The limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019. The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2020. Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or his or her spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor his or her spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2020: For single taxpayers covered by a workplace retirement plan, the phase-out range is $65,000 to $75,000, up from $64,000 to $74,000. For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000, up from $103,000 to $123,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. The income phase-out range for taxpayers making contributions to a Roth IRA is $124,000 to $139,000 for singles and heads of household, up from $122,000 to $137,000. For married couples filing jointly, the income phase-out range is $196,000 to $206,000, up from $193,000 to $203,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000. The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, up from $64,000; $48,750 for heads of household, up from $48,000; and $32,500 for singles and married individuals filing separately, up from $32,000. Key limit remains unchanged The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000. Details on these and other retirement-related cost-of-living adjustments for 2020 are in Notice 2019-59, available on IRS.gov.

Those are the dates when the IRS Notice is printed in the IRB. Last year's News Release IR-2018-211 was issued November 1, 2018 https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000.

According to the IRS 2019-2020 Priority Guidance Plan, limits are intended to be released in November. https://www.irs.gov/pub/irs-utl/2019-2020_pgp_initial.pdf page 24 Last year the release was November 1 which was a Thursday, so I'm betting on no later than November 7.

According to the IRS 2019-2020 Priority Guidance Plan, limits are intended to be released in November. https://www.irs.gov/pub/irs-utl/2019-2020_pgp_initial.pdf page 24 Last year the release was November 1 which was a Thursday, so I'm betting on no later than November 7.

You can't. If you try adding an "earlier of" retirement age to the existing balances, which would make both separation and change of control distributions be delayed 5 years, either one of these triggering event occurs before 65 (so retirement age is irrelevant) or they occur after 65 (so payment at 65 is an acceleration).

I'm assuming that when you say the plan can accelerate distributions upon a change in control that you are talking about the voluntary plan termination rules in §1.409A-3(j)(4)(ix)(B) and not a change in control payment distribution event (which would be a must distribute). The change of control rules are defined in §1.409A-3(i)(5) with a lot of nuance. The original seller does not seem to be a relevant corporation to the subsequent corporate transaction per §1.409A-3(i)(5)(ii)(A). Something to think about: with the "same desk" rule applying, who is letting the original seller know when there is a separation?

To the second question, you have multiple payment events. The addition of a new payment event (retirement age) must conform with §1.409A-2(b)(6) (subsequent changes in time and form of payment to multiple payment events) and §1.409A-3(j)(2) (Prohibition on acceleration of payments applied to multiple payment events). In your example, if the retirement age is not added, then if someone separates at 62, they get their existing balances at 62. If someone separates at 69, they get paid at 69. if you add retirement age at 65, then if someone separates at 62 (assuming this has been in place for a year), then the payment can't be made before 67. If someone separates at 69 and you paid them at 65, you've accelerated their payment. To the first question, the reason you won't find anything explicit is that you are establishing the time and form of payment prior to when amounts have been earned; there is nothing prohibiting changing the distribution events prospectively as long as the rules under §1.409A-2(a) are met, you should be fine.

Yes

I asked an unrelated question about the CBR a decade ago, but the comments in response to my question back then imply putting the match into the NQ plan is fine.

I believe the employee would be taxed on the amount withdrawn if they own the policy prior to withdrawal (including the additional 10% if the employee is under 59.5) as the owner is subject to the tax consequences. If the employer owned the policy, it's generally accepted that insurance isn't subject to UBIT (no citation though), so other than the employee being subject to tax on the transfer of the cash value post-withdrawal (and of course the policy is still a MEC), there isn't any tax consequence to the employer.

Sounds more like endorsement split-dollar, o taxation based on the economic benefit regime, so imputing would be based on Table 2001, not Table I. The final split-dollar regulations that were issued in September 2005 notes that imputing should be done based on a life insurance premium factor, which has never been defined. In the meantime, unless there are carrier term rates that are lower, Table 2001 is the de facto table to use. In this situation, the death benefit would be income tax-free to the beneficiary. If the insured only has the right to name the beneficiary, then the arrangement is treated as only providing a death benefit and is exempt from 409A.

Based on the September CPI, Tom's numbers still didn't change. Gone but not forgotten. Now we wait for the IRS bulletin to confirm (released 11/1/2018 last year). As an aside, the Social Security Wage Base is 137,700 up from 132,900. https://www.ssa.gov/news/press/factsheets/colafacts2020.pdf

Just to confirm - this is a qualified plan, right?