Draper55

Thanks Effen for your comments...I had not thought about this before either. It would seem a possible strategy in some circumstances where maybe you only have a small number of employees for a short period after db termination and a relatively young owner(62-65) who wants/needs to allocate away the 415(c) $ annual max beyond seven years assuming the sponsor entity and the owner comp exists to facilitate the allocation.

One other issue regarding the cash balance plan would be, depending on the date of the calculation and the plan document, have the account balances received the appropriate interest credits to the date of the calculation before determining a FT or FT+NC.

It depends whether the actuary is going to do test case calculations...is your valuation report etc being accepted as good or is the reasonableness and quality of the numbers in that report being scrutinized ..you get what you pay for...

Does Internal Revenue Code section 4980(d)(2)(C)(iv) ("Unallocated amounts at termination" of a replacement plan into which assets have been transferred) imply that if the amount of the transfer is not allocated by the end of the 7-year period referred to in 4980(d)(2)(C)(i) that it can continue to be allocated, until the termination of the replacement plan? For example, in an owner-and-spouse-only scenario, if you need more than 7 years to allocate due to the 415(c) limitations, you could continue this for additional years as necessary as long as the plan is open and there is participant compensation to allocate it against?

In a topic on this board at some time in the past, I recall a couple of users chiming in that it was possible to rescind a plan termination by corporate resolution. Assuming this is true, is a distribution to a pre 59.5 active employee after the termination date too problematic such as to preclude the rescinding action? The employee is an NHCE;I doubt that has any bearing from a qualification standpoint. Any input is appreciated.

Suppose a 5500 shows an unpaid minimum for one year(2018). If the unpaid minimum is not corrected by the time the of the next 5500 filing(2019) and thus is reflected on the schedule SB line 40 and on the 5500SF line 11a will the 10% excise tax be experienced again on the yet unpaid amount? I know in theory a 100% tax can be imposed but can the initial tax be imposed more than once similar say to prohibited transactions?

DO we think that the pension contributions made after 9/15 but before 1/1/2020 will be deductible for the 2019 year? I haven't seen anything yet indicating this to be the case Or will those contributions need to be posted on the 2020 return but be used to satisfy the 2019 minmum?

How old is the person..please show your math as well..

Situation is as follows: 1.Three solo PAs(A,B,&C) that equally own another PA(D) that does billing and clerical work for all three PAs. No common ownership among A,B&C. A has a 401(k) plan;B and C do not. D has one NHCE employee. If the NHCE of D is a full time ee he/she will need to be covered under A's Plan as it would seem to be an ASG. Are either of the following acceptable to avoid covering the NHCE in A's plan. i)Put the NHCE on B's payroll and just have A pay B for clerical work, ii)have the NHCE part time on A's payroll and part time on B's payroll so that A does not have to make employer contributions for the NHCE provided the NHCE works less than 1,000 hours for A. Any thoughts or possible solutions are appreciated.

Perhaps they delayed due to 199A; they may have wanted to be on the same page as the IRS regarding a service professional.

End of year valuation for cash balance plan. Document requires 500 hours for a pay credit. Interest is credited through the ASD. For people who left during the year(fully vested), is it reasonable/required to value them independent of where their distribution is in process. I think I have heard this argued as a requirement for traditional db plans, but not so sure about a cash balance plan. The rule would be if no distribution has been reported, I value them similar to an active life..that is with projected interest to NRA discounted back at the relevant segment rate. Whether one would generate benefit statement on this basis is perhaps a separate issue.

What does the document say is the requirement for a pay credit? Is the effective date 1/1/21019?

I have seen in presentations that a participant stuck at the 415 comp limit post NRA will suffer an impermissible forfeiture unless a suspension of benefits notice has been timely provided. If this is true what are the acceptable corrections. If the Plan contains a RASD feature can this be uses? If not can the Plan simply self correct by paying the forfeited annuity payments with interest?

Generally, plan termination resolutions will state that plan participants become 100% vested on the plan termination date. If a termination is later rescinded by the plan sponsor or falls through due to say PBGC disapproval, is the 100% vesting locked in? Has anyone seen or used language in a plan termination resolution stating that should the plan revert to an "ongoing" plan status such 100% vesting will be inapplicable and the vesting schedule under Section x.x will apply?

Suppose we have three members of a controlled group cos X,Y and Z. All three have a standardized prototype profit sharing plan; the adoption agreement states that all employers participate in the plan . Each plan has a different allocation formula, one is prorata, the other fixed and the third integrated. Can each employer X,Y and Z allocate a discretionary amount to just its employees based on its plan's allocation formula and then general test all the employees together for coverage and nondiscrimination?

Suppose you have a typical db/dc combo but with the db 21 and 1 and the 401(K)/profit sharing immediate entry across the board. The two plans are a required aggregation group that is top heavy..Do the general rules that not allow you to restructure to avoid the gateway apply even if the restructuring is only to carve out the otherwise excludables….?

In terms of nondiscrimination testing going forward, how do I get from the cash value distributed to a prior accrued benefit ? I assume for 415 that I would have to use the applicable q and 5.5% to translate the cash value to an accrue d benefit, i.e., apply a MASD approach...

Ernie thanks for your response. If a successor plan without insurance were started how would the accrued benefit of the fully insured plan be determined..the actuarial equivalent of the cash surrender value(on what basis) or some other method?

no need to restate in A. or C. Advisable to restate under B. and D.

they are standardized prototype plans so I believe the employer definition automatically sweeps the other spouse into their respective plans on a coverage basis...

Can a plan termination be undone by a simple sponsor resolution? If it's a db plan could it also be unfrozen in the same resolution?

(1) how does one convert a 412(e) plan to a non fully insured plan? Can it be accomplished simply by not making premium payments? (2) if a fully insured plan is frozen for a year can it be resumed or does it lose the level premium requirement by doing so? (3) what are the options for getting the life insurance out of the plan?

Husband and Wife each have their own 401(k). They are a controlled group do to minor child . In completing their Ezs, the participant count should be 2 since the other spouse is eligible to defer but I do not combine the assets since they are separate pools. Correct?

The owner/hce is at about a 20% deferral rate..Hard to imagine that a 3% or 4% QNEC is going to let this fly. It would be like saying you can have a safe harbor plan in arrears by using the SCP 50%*0 and then covering 410(b) with a 3% or 4%QNEC. It troubles me that I could get the same result as a safe harbor plan without having a safe harbor document and satisfying the safe harbor notice requirement. The safe harbor nonelective SCP contribution would be 1.5% in this situation yielding a total of 4.5% for the year. I think it should be at least this much. Thanks for your input on this one.

The SCP program suggests for a non safe harbor 401k plan that an acceptable correction for a missed deferral opportunity is a QNEC equal to 50% of the ADP for that group. If the only two eligible NHCEs were left out in the first year of eligibility then my conclusion is that the ADP% for the group is 0 and the QNEC is 0. Hence, the ADP test is failed and the HCE deferrals must be returned or recharacterized. Does this seem a reasonable interpretation?