Calavera

Person terminated in 2021 and his required distribution date is 4/1/2022. The form of benefit taken is a lump sum. The amounts not eligible for a rollover should be calculated for 2 years, 2021 and 2022. Generally to calculate the amount of RMD that is not eligible for rollover under the account method, you would divide the lump sum amount by the distribution period taken from the Uniform Life Table. The two distribution periods will correspond to the age of a participant as of 12/31/2021 and as of 12/31/2022. Effective 1/1/2022 the IRS amended the Uniform Life Table with longer distribution periods, and therefore smaller RMD amounts. So question is: Will you use both distribution periods from the amended table, or will you use the distribution period from the old table when calculating RMD amount associated with 2021, and the distribution period from the new table when calculating RMD amount associated with 2022?

I am with pmacduff on this one: Yes to PS allocation, and Yes on active status.

Not saying it makes it right, but this was exactly my point. If I need to have anything for potential arguments, I would use signed SB as "certification", it has all information and it was delivered to the plan sponsor by their actuary. Taking into consideration the recent ARPA guidance where signed and filed Schedule SB serves as the deemed election by plan sponsor, it should work.

Does client have copies of Schedules SB for all years?

If accrued benefits were not frozen at plan termination date - $245,000. If accrued benefits were frozen at plan termination date, it depends on the language of the freeze amendment: no special language - $230,000; allowing increase in 415 dollar limit post benefit freeze - $245,000.

In this case the plan year is still the calendar year. The plan year-end date remains the same and all filing and contribution due dates remain unchanged. The valuation date is still 12/31, but the minimum funding requirements are calculated as if it is a short plan year, prorating the normal cost and amortizations. The valuation date could be changed to the beginning of the year, and it is a method change ( rp-17-56.pdf (irs.gov) )

Was val date changed to the beginning of the year? Also was 9/30 the plan termination date or the date of final distribution?

Yes

Can they deposit their contribution before 9/15/2021? In this case they can open 2020 calendar year plan and deduct both contributions in 2021.

As I recall, you would calculate the lump sum payment using plan's definitions and administrative practice for age (complete, nearest, exact, etc.) and interpolation . Then you would convert this lump sum amount to a single life annuity and compare with the 415 $ limit, which is the same between 62 and 65. So to convert the lump sum to a single life annuity, I would suggest to be consistent and use the same practice for age and interpolation.

1. Yes you need to do 110% test 2. You test it on a post-distribution basis as remaining asset over the estimated liability for the remaining owner HCE 3. As long as you apply consistent method, I believe it is ok to use ARPA-21 rates as long as you are planning to use ARPA rates for your 2021 valuation.

Lets break it to separate points ignoring W2, since there is no information how W2 is related to his sole proprietorship: 1. Since you supported contribution amount with your BOY valuation, Schedule SB and the 5500 are correct to show contributions. 2. Since he had no Schedule C income, he could not deduct it. 3. So he needs to file the amended tax return that will show no contribution, which will result in additional tax with interest and possible penalties. This has nothing to do with his business account. 4. If he has personal funds to pay these additional taxes, you will not need any in-service distribution. 5. Having in-service distribution to pay taxes is the worst case scenario. The money were not deducted, but you will pay income taxes on in-service distribution. 6. And yes, any sole-proprietor should not make any DB contributions during the plan year, unless he is 200% certain, his net Schedule C income will cover the amount.

1. Since your accruals are larger than the actuarial increase of previous benefits, uniform or non uniform NRA has no difference. 2. I think when regulations say you can ignore actuarial increases, it is for DB only. So 65+5 is the uniform NRA.

To make it more comfortable, a participant may have 2 different commencement dates (month or two apart). Second lump sum will be limited.

Then you are not missing anything.

My take on this that for the PBGC purposes, you have 1 person with benefits as of 12/31/2020. Instruction says that "Beneficiaries and alternate payees are not counted as Participants. However, a deceased Participant will continue to be counted as a Participant if there are one or more beneficiaries or alternate payees who are receiving or have a right to receive benefits earned by the Participant." I would apply the same logic. The cashed out participant is not in the plan, but as of 12/31/2020 there is one alternate payee who has a right to receive benefits earned by the participant. I will not count this alternate payee for the 5500 purposes.

If you are not worried about MRC, why do you need 15 year amortization?

For automatic approval it's either 1/1 or 5/31

=(MIN(D3,3%)*C3)+IF(D3>3%,MIN(MIN(D3,5%)-3%,2%)*0.5*C3)

I may be wrong but, I have a feeling that this post and SEP + Profit Sharing or Cash Balance - 401(k) Plans - BenefitsLink Message Boards are related. If I am correct, note that 6% limit is not applicable for PBGC covered plans.

Just my opinion: If the QDRO language along with the plan document language are not clear whether the AP is entitled to the ER subsidy, I would go with the intent. If in the calculation of death benefits for a participant's beneficiary, the ER subsidy is or would be included, I would give it to the AP as well.

Looks like there could be two different elections: One - to use 15 years amortizations that could be applicable for plan years after 12/31/2018 or 12/31/2019 or 12/31/2020. In absence of election, it will be applicable for plan years after 12/31/2021. Two - not to use new segment rates for any plan year after 12/31/2019 and before 1/1/2022 for either all purposes, or just for AFTAP under Section 436 of the IRC. in absence of election, it will be applicable for plan years after 12/31/2019

I would disagree, and will not treat it as SOB at normal retirement. So plan document states to proceed with late retirement actuarial increases year-by-year For late terminated vested, you should either use "missing payments with interest" or "actuarial equivalent increase", depending on some language in the plan document related to payments, claim procedure, ability of terminated employees to defer until RMD date, and prior practice.

I agree with David that in real life it is subject to "facts and circumstances" The only official reference that I am aware of is coming from EPCRS https://www.irs.gov/pub/irs-drop/rp-19-19.pdf - See section 6.02

I agree with CuseFan that rules are the same for traditional DB or CB plan. Whether you can offset employees benefits to $0 or not depends on whether offset applied to everyone (owners included) or not. https://www.irs.gov/pub/irs-wd/201810008.pdf