Lou S.

Someone who is a 5% owner in the current or prior year is an HCE. I don't see an exception for attribution but maybe I'm missing one. Therefore, assuming a calendar year plan. The sister would be HCE for 2022 and 2023 but not 2024.

How important is that the right person have authority over the account?

IRS testings rules limited the deferrals of HCE like you in your Plan to $X. You deferred $Y. You are receiving a refund of $Y-X. IRS requires earnings to be allocated to refunds. Your earnings were Z%. The earnings on your refund is (Y-X) * Z.

Cash Balance Plan freezes all contribution credits and new entrants into the Plan. The Plan is top-heavy. The Plan is covered by the PBGC. The question I have is when it it considered underfunded for the exception to 401(a)(26) to apply? Does the AFTAP have to be less then 100%? If the AFTAP is greater than 100% but assets are less than the sum of the notional accounts is that sufficient to be considered underfunded? If the assets are less than what is required for the Plan to complete a Standard Termination under the PBGC rules is that sufficient? To throw out some hypothetical numbers assume Plan Funding Target (@95% corridor of ARP stabilized rates) $510K Plan Funding Target (@105%corridor of ARP stabilized rates) $490K Plan Assets (MV @ valuation date) $500K Sum of Participant Account Balances $530K PVAB for PBGC Premiums $600K

I'm not a CPA but that's my general understanding. That said what does the Partnership do if the Partner says I'm not making that or I don't have the funds right now? To avoid a Plan Qualification issue if I'm the Partnership I'm pretty sure I'm making that contribution on the partners behalf and working out the financial accounting of "charging back the partner" or whatever the technical accounting term is afterwards if I have to.

Ultimately the Partnership that sponsors the Plan is responsible for making the top-heavy contributions. How they make individual partners come up with the money to fund the contributions for employees and partners would likely be governed by the Partnership Agreements.

Assuming all companies have adopted the plan and the plans definition of compensation is total comp, yes the sum of his comp from all 3 companies is what you would use for allocation compensation, subject to the 401(a)(17) limit.

Qualified Plan Roth money is subject to RMD rules, so yes RMD required. Assuming he meets the 5 year rule it's a qualified distribution so no taxable (and not eligible for rollover) but it needs to leave the Plan. If he has less than 5 years then the gains would be taxable but basis not. Unlike IRAs it's not first in first out, it's ratable. To avoid future RMDs, roll the ROTH potion from the Qualified Plan to the ROTH IRA (after taking this year's RMD) and before December 31.

I've been accused of talking to myself before but in this case no. I was responding to your "first time I..." question.

Why wouldn't you include it? It's part of the on going plan benefit formula. The fact that is was forfeited due to non-vesting is irrelevant to it being accrued in this case. Now if you failed testing and do an -11(g) amendment to pass you have to give a "meaningful benefit" which includes some form of vesting on those corrective accruals/contributions to include that in the testing. I mean think about it is the person terminated January 2, 2022 would you even be thinking about their 0% vested benefit for 2021?

How costly would it be to give 2% annual v 2% per payroll? Then you'd actually be following the terms of Plan B. You don't need to increase to the Plan A 5% for 2021, they were unrelated plans, right? As for retro active amendment if it is cutting anyone's benefit I'd think that would be something that you'd need IRS approval in VCP.

So for 2021 Plan B was doing 2% match per payroll but document says annual discretionary match? Sounds like you may have a possible true up contribution for B for 2021 where you'd deposit to the contribution to the surviving merged Plan A. That is if you do need a true-up, treat it as a receivable as of 12/31/2021 that was transferred to Plan A on January 1/1/2022.

I don't think you have a problem if the new DB Plan saying T-H minimum will be make in PS. The PS T-H minimum is 3% and you are going to give more than that, presumably 5% (and maybe more with gateway). I mean I'd amend the PS plan to conform going forward but I don't think it it would violate the plan rules. However, I don't think it is some thing that has definite guidance from the IRS so what I think is a common sense solution may not agree with the IRS views. I'd have to give some more thought to the second but if safe-harbor 401(k) has to be aggregated with the other plans i think you lose your deemed not top heavy or as I like to call it your "get out of top heavy free card".

I think many small CB plans like to match the deposits to the contribution credits as long and it's in the MRC and max deductible range.

It sounds like you have a safe harbor 401(k) plan with an automatic enrollment feature. I'm not seeing a problem. Am I missing something?

If it's over $5K in a DB or CB plan you couldn't do a rollover, you'd need to buy an annuity based on the Plan's normal form. If the Plan is a terminating non-PBGC DB Plan, see PBGC Form MP-300 and Instructions - Missing Participant Program Plan Information for Small Professional Service DB Plans

From first principles or spitting it out of your actuarial software? Pretty sure I had to do the first one once upon a time for exams but now I just put the relevant Mortality Table and interest rate(s) in my valuation software and it spits out a list of APRs by age. As C.B. Zeller notes you make want to talk to your pension software folks and they should be able to point you in the right direction.

I'd think you've been around long enough to realize what should and what does happen are not always the same. That said I'm just a poor pension actuary, things like reasonable compensation for services I'll leave up to the client and their professional tax counsel to determine.

If he pays himself a W-2 salary or he has earned income such as a sole proprietor reported on Schedule C, sure he can establish a qualified plan. If it's K-1 income be careful. If that is pass through S-corp K-1 (I'm not sure the technical term) that can't be used; if it's general partner K-1 income subject to self employment taxes, that could be used.

The owner can make deposits greater than their income. Sure. But as has been stated they can not make elective deferrals that are greater than their earned income. By definition any dollar that is above 100% of their income can not be elected to be deferred because you can only elect to defer income, you can't defer what you don't have. That is elective deferrals can never exceed income. Now if you've deposited too much the question becomes can you correct it under EPCRS as a deferral in excess or the 415 limit through a refund or do you have nondeductible employer contributions subject to an excise tax that needs to remain in the plan.

Not that I'm aware of. There was a provision in the reconciliation bill that I don't believe passed that would have mandated auto ROTH-IRA enrollment with annual escalation for employers with 5+ employees beginning in 2023. Some states, like CA have a mandatory auto IRA enrollment unless you offer a qualified retirement plan. I'm not aware even of a proposed bill had mandatory 401(k), though Secure (that did pass) and Secure 2.0 that has not yet passed both effected or would effect how 401(k) plans will operate going forward.

ESOP guy, it sounds like a collectively bargained multiemployer union plan that they are withdrawing from which is a whole different animal. And there is usually a reason that there is something called multiemployer withdrawal liability and not mulitiemployer withdrawal credit. But I agree with Effen this is probably something they want an attorney familiar with withdrawing from union plans to negotiate any questions concerning the withdrawal with the union and plan.

why not just file a corrected 1099-R with the correct accrued interest and move on? Assuming we are talking about a 2021 deeming of the loan.

Yes.

You could probably do that in administrative procedures. I mean what if they change payroll systems and and "Regular" becomes something else?