ConnieStorer

Great points..... thank you all.

So would you all agree that the attorney should have argued that the deferrals were excess annual additions and not subject to the double taxation rules?

I recently reviewed a VCP submission where the attorney stated in the application that the Participant exceeded both the 402(g) limits and the 415 limits for five years. Basic facts: Schedule C Employer who sponsored both a defined benefit plan and a 401(k) Plan. The Participant, who was over age 50, deferred up to the 402(g) limit each of the five years in question. This individual made contributions to his defined benefit plan each of the years in the amount of his Schedule C Income less the Self Employment Taxes. The net affect is that he deferred more than 100% of his Earned Income. He obviously exceeded 415 limits and has excess contributions in his 401(k) Plan. However, I did not think that 402(g) was limited by wages. I always thought it was a straight dollar limit. The 1099-R instructions state that Excess Deferrals not distributed by 4/15 of the following year are subject to double taxation. This same language is not included when you are dealing with excess Excess Contributions. I realize that the only contributions to the 401(k) Plan were employee deferrals. However, if they did not exceed the 402(g) limit are they still considered Excess Deferrals or can they be considered Excess Contributions. Thanks for any insight.

I have had several plans recently switch went to Fidelity for record keeping. In every case Fidelity insisted on changing to elapsed time method for vesting from hours of service.

We took over administration of a small defined benefit plan. The Plan covers Husband and Wife who each own 50% of an S Corp. The Plan also covers a son and his wife, both well over age 21. All four individuals have been in the Plan since it was effective. The prior administration firm indicated in both the Plan Document and Form 5500 that this was not covered by the PBGC. The Plan Sponsor is not a professional service corp. I believe that this plan was covered by the PBGC from its inception in 1998. We would like to know in advance what sort of penalties might be applied to the Plan for not filing PBGC Forms since 1998. I am assuming that we will receive an inquiry from the PBGC when we file a 2021 PBGC form for a plan that has been in existence for over 21 years. Any comments would be appreciated.

Thanks Mike.

No, they have not adopted the Plan.

This may be a little (or a lot) off track but what if instead of two Schedule C's there was one Schedule C and two K-1's. I have the necessary prior years' earned income from the Schedule C to calculate a large DB contribution. This contribution would be in excess of the current year's net Schedule C income. The plan sponsor is the Schedule C Employer. The Schedule C Employer is an Active Partner in the two Partnerships; 20% ownership in one and 25% in the other. My first thought is that the maximum deductible contribution would be limited to the Schedule C Income (less the 50% SE Tax). However, I do not want to limit his contribution if it is permissible to include any of his K-1 wages for purposes of calculating the maximum deductible contribution. Any thoughts!

Has anyone successfully uploaded PBGC Forms after the update on PBGC's website. We can log onto the site with no issues. We can even see all our Plans via "List Plans". However, when we select "Upload Filings" the Schema Validation - Select XML File button does not appear. We sent an inquiry to PBGC and they think it is a problem with our web browser. We have logged onto the PBGC site using Internet Explorer, Google Chrome, Microsoft Edge and Fire Fox and we have the same issue with every one. If anyone has had success what web browser are you using? Thanks,

Thanks Everyone for weighing in! I agree with the consensus that separate plans are the way to go.

Thanks Lou, I want to go the Cash Balance route in order to get a larger contribution. The Schedule C Income is over $300,000.

I was hoping the experts on this message board could provide me their opinions. I have a client that sponsors two Plan; Cash Balance and 401(k). These plans have been in effect for several years. The Plan sponsor is a Corporation owned 50/50 by two brothers. The W-2 wages the brother receive from the Corporation are well below the annual wage limits and the contributions are well under current year allocation limits. Their accountant called me yesterday asking about setting up a Keogh Plan for one of the brother for his Schedule C Income. This was the first I ever heard about any Schedule C income. In fact, both brother receive Schedule C Income from a sideline business. I would like to include the wages from the Schedule C Income in their current Plan without going to the expense of setting up another Cash Balance Plan and/or Profit Sharing Plan. Since the SECURE Act allows for the adoption of new Plans after the end of the Plan Year do you think this would include becoming an adopting employer to the already existing Plans? I would like to add both brothers as adopting employers to their Corporate Plan. What do you think... is this possible?

Long ago.... when pooled accounts were the norm it was not uncommon for employers to reimburse the plan for administration/Trustee fees. It was my understanding that this was not a problem. I have not seen any reimbursement in a very long time but did I miss a change in the regulations.

Just a heads up. Within the last two hours I received emails from two different TPA firms with a link to a Share file document. I do not deal with either of the TPA firms so not sure of the source of the emails: Bush Retirement Plan Services and BDS Consulting Group Has anyone else received odd emails.

I am not sure of the cost but I have one client that uses Travelers to cover all the Non qualifying assets.

Thanks for the confirmation. I just wanted to be sure I was not overlooking something.

I have a Cash Balance Plan that provides a substantial benefit for most of the NHCE's. The Average DB Allocation Rate for the NHCE's is 3.5%. At least one of my HCE's has an Allocation Rate in the Profit Sharing Plan of 15%. The Average Benefit Test and Rate Group Tests pass with no problem when I provide a Profit Sharing Allocation of 4.5% to the NHCE's. Is the minimum gateway for the Profit Sharing Plan still 5% based on my one HCE at 15% in the PSP. I understand that the DB/DC gateway minimum increases from 5% to 7.50% but can my DB offset drop what would have been a 5% Profit Sharing Gateway to a 4.5%. Sorry if this question has already been answered. Thanks for your help.

Thank you all for your responses. We will definitely recommend getting legal counsel involved.

Hoping someone out there has also experienced a DB plan termination (covered by PBGC) where the investment firm has refused to cut checks to participants who are on the US Treasury's OFAC (Office of Foreign Access Control) list, presumably due to drugs or terrorists involvement. In our client's case there are two participants, total lump sum = $110K. The participants are working with an attorney who has signed distribution election forms on their behalf. One or both of these individuals are no longer in this country. They both have elected a lump sum payment. Not sure that the PBGC missing participant program is a viable option since they are not missing. In addition, the client is not happy that the cost under the missing participant program = $135K rather than the 110K lump sum amounts. Does anyone have a suggestion. The client wants to close out the plan as soon as possible but does not want to end up with a legal nightmare.

Thanks for the information!

I thought that if the Parent owned more than 50% of the stock then their shares were attributed to an adult child.

Does anyone have the name of a Company that could help facilitate the merger of an overfunded sole proprietor plan with an unrelated company that has an underfunded plan? Thanks for any suggestions. We cannot increase benefits for this sole prop and he has no employees that can be added to the Plan. He really wants to avoid the huge tax liability with a reversion.

Thanks for all the responses. We did set up the remote desktop suggested by Gadgetfreak but ran into issues with Relius not working properly.

Please excuse the typos.... should have proofed prior to posting

This is somewhat of a comment and question. Like most of you out there in the pension community our firm has had to change our way of operating due to CO-VID 19. We are a TPA Firm of 7 individuals. Currently 5 individuals are trying to work remotely. Our IT person set us up so that we can log in at home and access our work computer and our network. We use the in house FIS/Relius system for our pension and document software. Trying to get run Relius remotely was not working and we reached out to Relius about the issue. They indicated that we would need to purchase a 12 month WAN license in order to run the pension system remotely. I explained that working remotely was a temporary situation and that we only needed access for one or two months. The Relius salesman reached back out to me and said that they could offer a 10% discount on their full 12 month license. This would drop the annual fee from $3,000 to $2,700. He also added that they could apply the $2,700 fee to the cost of the ASP service if we signed a new contract by May 31st. Maybe other individuals out there feel that this is reasonable but to me this is a horrible response on the part of FIS/Relius. We have been a client of theirs from the point that they bought our FDP. I am seriously considering looking into other software systems once life returns to normal. Does anyone have suggestions for a work around for the WAN license. We cannot justify spending $2,700 for a one to two month fix. Thanks for any comments or suggestions.