Lou S.

3 year cliff is still allowed and does work for Top Heavy. 5 year cliff and 7 year graded are still available for traditional DB plans. There was a change a number of years ago to Cash Balance Plans that required full vesting after 3 years whether the plan is top heavy or not. So 3 year cliff can be common is some cash balance plans. At least in my experience. EDIT - fixed due to Zeller post - forgot about the DC change that 5 year cliff and 7 year graded no longer allowed.

I don't believe that it is. As I understand it from our document provider there are 2 types of In-Plan conversions of Pre-Tax money to Roth money. The first is an In-Plan Rollover. This is available when the participant is eligible for a distribution under the Plan but choses to do an In-Plan rollover converting pre-tax to Roth. In this case the new funds are treated like a Related Rollover account in the Plan with Roth tax characteristics attached. The second is an In-Plan Transfer to Roth. This is done when the Participant is not eligible for a distribution from the plan (unusally pre-59.5). In this case the the funds are converted to Roth, but the source retains all the other charateristics of the source from which it was converted. So if it is 401(k) money subject to the pre-59.5 restriction on in-service distributions, that remains. If I'm wrong I'd love to see a citation because otherwise it seems like a loophole to avoid some restrictions.

He owns all 3 100% correct? Controlled Group.

Do I understand that you have 3 corporations A, B and C. Parent A owns 100% of sub B and sub C? They want to have B be the lead sponsor and C be an adopting employer (or the other way around)? If that's the fact pattern I don't see a problem doing a single employer controlled group plan. If I misunderstood the fact pattern, my apologies. If A also has employees you'll need to decide if they are adopting too or not and whether your document pulls in all members of a controlled group. If A has employees and you are excluding them, you'll want to make sure you still pass coverage.

I am not a lawyer but I tend to agree. If the beneficiary designation is in order and the Wife submits all the correct paperwork for a death benefit distribution I don't see why the Plan wouldn't pay it.

Does MP = Money Purchase in this case? If so the MP percentage needs to be in the SPD but the SPD you give to each group only needs to desrcibe the allocation that group would receive.

Unfortunately it appears the IRS treats the 5-year holding period of Roth-401(k) as separate from the ROTH-IRA holding period. Seems like you should get credit back to the year of original ROTH 401(k) deposit if you rollover to ROTH-IRA but unfortunately that's not how the rules are written. Maybe there will be some future correction to this but doesn't seem like an issue that is at the forefront of congress attention.

I agree with Jakyasar. The allocation from the QRP goes against the 415 limit but but doesn't effect the deductible limit or the sole-proprietor's comp as that is all money that was deducted in prior years. While not 100% analogous I like to think of the QRP allocation similar to a reallocated forfeiture.

Why? If you reduce the $92,935 by the $18,587, 20% of gross, then you are left with a net comp of 74,348 which if you take 25% of the Net comp you get the same $18,587 of 25% of eligible compensation. No?

Mike laid it out very well. A few minor correction though is that the Maximum Annual addition is the lessor of 100% of Compensation of the 415(c) dollar limit for the year, which for 2021 is $58,000. I get a maximum deductible employer contribution that would be 20% of $92,935 or 25% of 73,880 = $18,470. Also if the participant is age 50 or older the elective deferral could be $6,500 higher with the catch-up. The catch-up is also not subject to any plan limitation including the 415 limitation.

As Bird said, what is the election? But for a Sole-Prop you are probably going to have a net income on Line 31 of Schedule C which is what it generally going to go on Form SE for calculating the SE tax half of which is deductible as the Employer portion, I believe all contributions on behalf of the Proprietor are then deducted on Schedule 1 Line 15. The portion of the contribution that is Employer contribution will reduce the Proprietor's income for pensions, the portion that is elective 401(k) deferral will not. But I'd always suggest double checking with the CPA.

For 2021 Partnership deduction limit is 25% of eligible pay for partcipants. As long as they are under that in the aggregate you should be able to do what you are describing. However as I understand it, since the deduction for the partner is taken on his personal return you might still be able to deduct it for 2020, you should discuss with the accountant.

8(e) would be the correct line.

Bill I think you hit the nail on the head head and I'd love to know the answer. Because if the answer is yes than the answer to Jakysar's question is yes, but if the answer is no then the answer to Jakysar's question is also no. It's not something I thought about previously when considering SECURE. That is if you can do it then the the funding deadline and deductible deadline for the for his 1/31/2021 PYE would both be 10/15/2021 assuming the 2020 SP tax return is on extension and he elects to deduct the contribution in the fiscal year for the plan year that begins in the the fiscal year. At least I think I have that right, if I shifted something I apologize.

You can absolutely add it for 2022. I'd probably want to do it before 2022 starts but as long as you do it before anyone works 1000 hours in 2022 you could still do it then.

I'm not sure if you've provided enough information but it sound like you are merging SubPlan into ParentPlan with all that would entail.

So many questions. Why does the paritcipant have a life insurance policy past NRA? Do you mean the Cash Surrender Value is $0 or the value of distributions paid to her exceed the Cash Surrender Value of the policy?

Does he have a court order stating he is an abandoned spouse or legally separated?

Isn't the answer find someone to do an annuity even if the Plan has to pay a premium to do it?

I'm not aware of needing HCE or Key EE data to complete Form 5500. I seem to recall there was a time period is recent history that the IRS tried to add some questions to the Schedule R that dealt with nondiscrimination testing that would have required some HCE data at least but it became optional and then dropped in subsequent drafts of the Form. HCE and Key data would be required to perform certain non-discrimination tests but not necessarily the 5500 or related schedules itself.

What is a frozen 401(k) plan? If it a 401(k) plan that was amended to a profit sharing plan by removing the elective deferral component of the plan?

No adjustment to W-2. The 1099-R will be the reporting of the income to the Participant.

It should be paid from the Plan to the Participant and reported on a 1099-R. Presumably with Code E indicating an EPCRS correction.

Voluntary AFTER Tax are not deducted. Hence the name after tax. The employee pays tax on them. The employer gets a deduction as they are part of the employee wages. They are not required to be reported on a W-2, but they can be reported in Box 14 for informational purposes.

That sounds like a question that should be referred to the Plan Administrator's or Plan Sponsor's attorney or bankruptcy attorney, if applicable. I'm not a lawyer but if the Plan Sponsor is the Plan Administrator and fails to perform the duties I think the IRS could probably go after the officers or owners of the company, but again I'm not a lawyer and suggest referring that question to qualified legal counsel. And you already know that not filing will trigger a letter from the IRS.