Dinosaur

Thanks Lou S. and C.B. Zeller The information was helpful.

I have a question regarding the calculation of the cushion amount under 404 for a cash balance plan since the plan was amended to freeze and then to increase benefits (for HCE’s). The facts are as follows: - only 2 participants in plan are HCE’s - cash balance credits; 85% of salary for both participants; salaries for both participants have been in the 240K range. - plan was amended in early May 2020 to freeze benefit accruals (contribution credits); There is a 1,000 hour requirement and neither participant received an accrual in 2020. - plan was amended effective 1/1/2021 to unfreeze benefit accruals (adopted at the end of 2021); new contribution credits are a flat 250K for both participants. Since the plan was amended to increase benefits in 2021 for HCE’s, the cushion amount in the maximum contribution calculation cannot reflect the increase in benefit formula for 2 plan years. This would affect the maximum contribution calculation for the 2022 and 2023 plan years (the funding target for the 2021 valuation used the frozen accrued benefit). Please correct me if I’m wrong. With respect to the cushion amount for the 12/31/2022 valuation, my inclination is to use the 85% of salary formula through 12/31/2021 for the funding target (for the cushion calculation) with $0 cash balance contribution credit for 2020. My confusion comes from the fact that the plan was frozen before the increase in benefits to the HCE's. Any thoughts?

Thank you Calavera!

Thanks for your help in advance. A DB plan terminates on December 31, 2021. The distribution for the owner (only participant) will take place in early 2022 (will be age 63 or so). Highest 3 year average = 285K so benefit will be based on 415 dollar limit. Is the calculation of the maximum lump sum benefit to be paid in 2022 based on $230,000 (in effect on plan termination date) or $245,000 (the new limit for 2022 since will be paid in 2022)? Thanks

W have a client, dentist, who is selling his practice as an asset sale. He intends to start a new practice in a different part of his state (not actually his state but the state where he practices). He maintains a cash balance plan which he intends to continue to maintain in his new practice after he pays out the four participants who will terminate from his corporation at the time of the sale and go to work for the acquiring corporation. In the year of the sale, he would like to contribute $500,000 which will put his plan assets $500,000 over the value of all cash balance accounts which consist, likely, of just his account. Are there any issues I should be worried about? 415 is not an issue. What lurks in my mind is that if the plan is terminated with excess assets reallocated within some time limit of the sale of the old practice, that the old practice employees should be included in the allocation of excess assets.

Thanks everyone.

That's a good point. I wonder if other people agree.

Thanks, I did review the instructions for the codes but it didn't specifically mention a Roth conversion rollover in them so that is why I posted my question.

A terminated participant in a 401(k) plan elected to receive her distribution from the plan (all non-Roth 401(k) pre-tax salary deferrals) as a Roth Conversion Rollover (to her Roth IRA). I understand that this money will be taxable income for the year so I assume that box 1 and 2 will both be the amount of the distribution. What would the distribution code be? I'm thinking a code 1 since it's taxable income but it's a Roth conversion rollover so it's confusing me. Don't see how it can be code G for a rollover since it's taxable income. Any thoughts?

New DB plan effective 1/1/2015, only employee (owner) turned 70 1/2 in 2014. Assume 100% vested. Required beginning date is 4/1/2015 not plan not adopted until after that date. When must the participant receive their first RMD? I can't imagine it would start in 2015 since the benefit won't be calculated until after the end of the plan year when we get the final salary (I assume it could be estimated). Would the accrued benefit start 1/1/2016?

David The plan paid the cost of the annuity to the insurance company for 100% of the participants' benefit in the plan. So, I guess it makes sense that the insurance company will provide the 1099R as the participant receives his benefit.

A DB plan terminated and all participants were paid out in 2015. One participant chose the joint and 100% survivor annuity option and an annuity contract was purchased (from an insurance company). My questions are as follows: 1) Is the purchase amount of the annuity included in #7d (benefits paid) of the SF? I assume yes since where else would you put it. 2) Is a Form 1099-R prepared for this participant? I assume no since the insurance company received the benefit and not the participant.

I thought I read somewhere that if you have another qualified plan you couldn't exclude years of service for vesting prior to the effective date of the plan. Or maybe it was something with a terminated or predecessor plan.

We have a client that established a new DB plan effective 1/1/2015. The plan will be adopted this month. The only employee is the owner and she turned 70 1/2 in 2014. Vesting is 100% since she has another qualified plan. Her required beginning date is April 1, 2015 but she has no accrued benefit on that date. When must she receive her first RMD as an annuity? I couldn't find anything in the RMD regs. I can't imagine it would start in 2015 since her benefit won't be calculated until the end of the plan year when we get her final salary (although since she is the owner we probably already can calculate her exact accrued benefit on 12/31/2015). Would her benefit start 1/1/2016?

DB plan not covered by PBGC. No DB contribution for year since close to being fully funded. For the 401(k) PS plan, client can deduct 25% of compensation or 31%?