Bill Presson

Aren't all cash balance plans defined benefit plans? I wouldn't worry about it too much. But it would have been easier to just name it XYZ Retirement Plan.

I think this is the section that Bird is referencing. this is from 1.410(b)-6 Excludable employees (f) Certain terminating employees - (1) In general. An employee may be treated as an excludable employee for a plan year with respect to a particular plan if - (i) The employee does not benefit under the plan for the plan year, (ii) The employee is eligible to participate in the plan, (iii) The plan has a minimum period of service requirement or a requirement that an employee be employed on the last day of the plan year (last-day requirement) in order for an employee to accrue a benefit or receive an allocation for the plan year, (iv) The employee fails to accrue a benefit or receive an allocation under the plan solely because of the failure to satisfy the minimum period of service or last-day requirement, (v) The employee terminates employment during the plan year with no more than 500 hours of service, and the employee is not an employee as of the last day of the plan year (for purposes of this paragraph (f)(1)(v), a plan that uses the elapsed time method of determining years of service may use either 91 consecutive calendar days or 3 consecutive calendar months instead of 500 hours of service, provided it uses the same convention for all employees during a plan year) Essentially, if you have a requirement that someone complete 1000 hours OR be employed on the last day in order to be eligible to receive a contribution, then you get to exclude terminated employees with less than 501 hours of service from 410(b) coverage testing. This is irrelevant to the grouping method. But, if you don't have those requirements and instead just use the individual grouping to not make a contribution to this terminated participant, you have to include them in 410(b) coverage testing.

DeltaRat, depends entirely on the plan document. If you have a copy of the Summary Plan Description, it should outline your options in the distribution section. Union plan rules have some quirks and you might have some restrictions if your career change is just a move to another job, but still covered by the same collective bargaining agreement.

Lay it all out and give them the fees required to fix everything. Don't skimp. And then let them make the decision. Help a client that wants help all day long, but don't make a client's problem, your problem.

To add to Alonzo's answer, generally a sole proprietor has to make the deferral election prior to 12/31, but the deposit can be made as late as the tax filing deadline or as soon as the schedule c is finalized.

That seems to be outside the scope of this board's expertise.

It's a combo plan so the gateway is higher.

No. The deferrals have to be allowed for 3 months.

They're just giving you their operational requirements. There's nothing in the regs requiring that. Pretty sure providing the notice on date of hire for immediate eligibility plans is deemed timely.

That would be interesting. Would practically never have to deal with RMDs if that was the case.

Well you can't force out participants with more than $5,000 unless it's a plan termination.

https://www.irs.gov/pub/irs-drop/n-05-05.pdf

Peter, say it ain't so! ?

Jak, the deadline to set up a new SH plan for 2021 is 10/1/21 because it has to be in existence for 3 months. For a SH match, you have to include it in the document and provide advance notice. For SH nonelective, you can include it from the beginning or add the provisions later. There's no notice required unless you have discretionary match that will satisfy ACP pass. No maybe notice required at all, that's baked in at this point.

Blue_Sky, the problem is that many of these questions CAN be answered in a conversation, but it's incredibly difficult to walk someone through all the permutations via a message board. Talk to your CPA or do a search for a local Third Party Administrator (TPA) to assist.

Make sure he signs/dates an election form prior to doing that.

Peter, I've not found a good reason NOT to have everyone in their own group for allocation purposes.

Agreed with the possible exception that I would tread more lightly if the plan was a safe harbor plan.

Are the employers large enough to be QSLOBs?

I don't mean to seem like an @$$, but why is this happening many times?

Ms Janice was a real sweetheart.

Very interesting. I've never processed a 5500 without the phone number or had anyone request it not be included. I looked at the instructions and it doesn't even suggest that it's optional.

Thanks John!

Austin, we've done some of these before. We usually use the Vanguard/Ascensus plan set up. Just be careful you don't get pulled into doing things the advisor would do. We consistently had to push back on the sponsor about employee education and answering participant questions, etc. They tend to lean on you as the expert in all things without that additional body around.

Peter, I have always used the stance that once a participant has satisfied the conditions to receive a contribution under a current allocation method (if one is made) then that allocation method can't be changed. Historically those included a single allocation group (like for a pro rata allocation) or last day employment or 1,000 hours of service. The restrictions on amending safe harbor plans in general has caused me to be a bit more cautious. But I find in most cases if the benefit is significant enough, the new plan for one year method works pretty well.