Lou S.

Yep - Relius and got 2 more this morning another EZ and a SF. All 4 are DB plans. 3 of the 4 Plans also filed a DC Plan on the same day and I have not yet received any notification on those Plans. Maybe they got around to checking the SB was signed and attached and someone at EFAST updated something wrong or their system auto generated these? Guess I'll be calling EFAST at some point to see what's going on unless there is a notice that this is a known issue and I can ignore it.

I just received 2 e-mails from EFAST that the filing status of 2 plans were updated as "filing received" but the files were sent in April & June respectively which both had good ACK files and the new e-mail has the same ACK file as the old. I did not re-file either plan myself. There were 2 warnings - one is basically "filed after due date with no cause or amendment" and the other is "matches another filing in database" I'm trying to figure out if it's a general problem with the new electronic filing system for EZ plans or specific to 2 of my plans. Anyone else get one of these?

From the fact sheet https://www.cdc.gov/mmwr/volumes/70/wr/mm7034e5.htm Assumed commencement date: On what date will the annuity payments begin? Plan administrators must calculate monthly payment illustrations as if the payments begin on the last day of the benefit statement period. Assumed age: How old is the participant on the annuity start date? Plan administrators must assume that a participant is age 67 on the assumed commencement, which is the Social Security full retirement age for most workers, or the participant’s actual age, if older than 67. Assumed Spousal and Survivor Benefits: What is the SLA benefit? Plan administrators must illustrate a Single Life Annuity, which will pay a fixed monthly amount for the life of the participant, with no survivor benefit after the participant’s death. What are the QJSA spousal assumptions? Plan administrators must assume that all participants have a spouse of equal age, regardless of a participant’s actual marital status or the actual age of any spouse. What is the QJSA survivor benefit? Plan administrators must use a Qualified Joint and 100% Survivor Annuity, which will pay a fixed monthly amount for the life of the participant, and the same fixed monthly amount to the surviving spouse after the participant’s death. Assumed interest rate: Plan administrators must use the 10-year constant maturity Treasury rate (10-year CMT) as of the first business day of the last month of the statement period to calculate the monthly payments. The 10-year CMT approximates the rate used by the insurance industry to price immediate annuities. Assumed mortality: How should life expectancy be determined? Plan administrators must use the gender neutral mortality table in section 417(e)(3)(B) of the Internal Revenue Code – the mortality table generally used to determine lump sum cash-outs from defined benefit plans. The use of gender neutral mortality tables is consistent with Arizona Governing Comm. for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983).

Did they sign the document? If so the IRS thinks they have a plan.

I have not come across that question but it looks like the answer is yes, you can use the number issued from the W7. https://www.irs.gov/forms-pubs/about-form-w-7

I'm not sure I follow your question. If the NHCE ACP is 6% the HCE ACP could be 8%. And the HCE is probably also getting the match in addition to any VAT.

In 2020 it was line 5500-EZ - 7B 5500-SF - 8a(2) 5500 - Sch I - 2a(2)

Then assume he accrues a benefit.

What are the conditions for accrual in the document and does the participant meet those?

If he's an employee of the PC he should receive a W-2 and the PC could adopt a Plan. If he's an independent contractor he would file a schedule C for earned income and could adopt a plan for the that. There are a number of adjustments to his Schedule C Net income to determine his pensionable income such as reducing it for 1/2 his SE tax as well as any employer contribution he makes for himself. And as Bill mentions, both entities may have to adopt the plan. You might want to have a talk with his accountant to see what he is doing.

Nothing needs to be prorated for this individual. If that is $350K salary in 4 months he will hit the 401(a)(17) limit of $290K. If his salary is $350K annually and he's being paid 4 months he'll be under the comp limit and HCE limit in 2021 and not an HCE for 2022. If $350k w-2 salary, unless they are an owner, they will be a NHCE for 2021 and HCE for 2022 which could have implications for your 2022 test if you test statutory exclusions separate. I suppose it's possible he's not an HCE because he's not in the TPG and the plan applies that election though it would be unusual.

Forfeitures should be disposed of annually. I'd be shocked if the plan doesn't have some direct or indirect mechinism to allocate to participants as a profit sharing allocation. Like simply have the company declare a profit sharing contribution equal to the forfeiture balance and then reduce employer contributions by the forfeitures.

Always a good sign...

Is this a PBGC Plan? If not don't you have combined DB/DC deduction issues? Are the husband and wife the only 2 participants? Is the wife's W-2 compensation $80K and husband Earned Income compensation $0? Would an additional DC contribution drive his earned income below $0? And if so wouldn't that just shift more of the $225,000 DB contribution from 2020 to 2021?

Even less if they get a match. 415(c) limit is the most they can be allocated. Is there some reason to not make it retro active to 1/1 to get full 415 limit? I'm sure there are good reasons why not to make it retro to 1/1 but in many cases you can take advantage of the higher limits without adding much if anything in the way of additional costs.

If they have been paid for there are certain items the actuary is required to provide to the client. You may want to remind him or her of that and hope to see these items soon or refer it to the ABCD. There might be copying costs for the past reports that were previously provided but I can't image that would be too much.

Then if you are talking about 2021 for a 3 month plan year - 415(c) is 58,000 x 25% = 14,500 401(a)(17) is 290,000 x 25% = 72,500 Max match in your example is 4% of 72,500 = 2,900. With the $6,500 catch-up your maximum allocation for the short year would be $21,000. So if they are getting the full $2,900 match (and no other employer contribution) they could defer up to 18,100 without exceeding the 415(c) limit.

Do you have a short plan year from 10/1 to 12/31 or do you have an effective date of 1/1 to 12/31 with the 401(k) componenet effective 10/1? In the first case you would prortate your 415(c) and 401(a)(17) limits, in the second there would be no proration.

They bought the stock so Plan B is now a plan of Company A with all its history and Company A now has two 401(k) Plans at the same time. To have allowed distributions to Participants in Plan B the Plan would have needed to be terminated prior to to the sale on July 15. Typically you need to make safe harbor contribution up to 30 days after you notice participants but you may qualify for a shorter period as part of bonified business transaction.

If his earned income is $0 for 2020 his 415(c) limit for 2020 is also $0. Also assuming a combined plan limit where he can deduct 6% of his pay a DC contribution (since the minimum required contribution is more than 25% of pay), 6% of $0 still equals $0.

It seems like there should be an easy way to do this internally like just designating $x for 2020 and $y for 2021 but that doesn't seem to be how the IRA custodian is set up. And while it is a pain and more a form over substance thing it does appear you have the mechanics and tax implications correct. Since the "over contribution" was in 2021 and being corrected prior to the dute date of you 2021 tax return, there should be no additional penalties which respect to this transaction.

Ask them if they have a form for removing Excess IRA contributions. Since the deposit was made in 2021, it shouldn't be too hard to removed the excess plus earning timely to avoid the 6% excess tax on excess IRA contributions.

If they want her to participate and she's the only part time employee, why not just drop the eligibility to enter to 0 hours? Why wait for her to be forced in under SECURE?

In your example if those are the only 2 participants in the plan and there are no other contributions in the ACP test then HCE ACP = 10%, NHCE ACP = 0% and 2 x 0 = 0 so you would refund 100% of the after tax contributions plus earnings. As to why you are getting a lot of questions, I think there was Wall Street Journal article about mega backdoor ROTH somewhat recently.

Under the SECURE Act the part time eligibility rule only applies to elective deferrals. The Plan can be more generous and extend it to Employer contributions but it does not have too. Presumably if you have an eligible part-time participant who elects not to make 401(k) contributions you now have a participant with a $0 balance but a participant and unless the IRS releases some additional guidance on the subject the plan would no longer be able to file an EZ. They would have to file the full 5500 or SF if they qualify.