Bri

The safe harbor match rules limit how much you can apply the match to (i.e. deferrals past 6% of pay) so I don't think it would work fully.

And then a rank and file guy says, hey, use 5,000 of my account balance towards your 500,000 investment.

Sounds like you should check the plan's definition for compensation. It's probably just like when someone new starts being eligible for a plan on July 1, the document may or may not to include pre-participation compensation for plan purposes. This is similar inasmuch as the employee's job classification makes him ineligible at various points, so the document will tell you whether to include "only as a participant" wages or not.

Sounds absolutely smart to set it up with a 2-year wait. And it buys you time if there's someone later hired to replace whoever that other person was. I suppose, make sure the owner has 2 years herself in this enterprise.

If she had a deferral election in place when she was still unincorporated, that should still carry over after the change in tax structure. And since unincorporateds are allowed to pre-fund deferrals before the EOY "income declaration day", I think that it would still be reasonable for the funds to stay in the plan as subject to the (if it does exist) proper election. Of course, I'm no lawyer....

Well they could take the rest of the deduction on the 2023 return (if depositing after year end) and hopefully fix the problem so they can still get the rest of their 2023 allocations to fit under their deduction limit for 2023.

That language is ignoring any prior loans in determining the maximum. If I have a 100,000 account balance, I could borrow 50,000 and then borrow 50,000 immediately again since that's half the account balance. As for why loans are done as dollar amounts, that's because the dollar amount needs to be certain in the actual promissory note and fixing that eliminates the need to update paperwork on the fly if the alternative 50% value fluctuates. Plus I would borrow 8,000 if I knew I needed 8,000 - I wouldn't back into a request for 7.193% of my account balance.

so it's already out of blackout?

Because 72(t) doesn't authorize it. Let him enjoy a warm freshly-printed page or two of Code and regulations. (or have him take the last bit of these needed funds as a loan which I'm suspecting may not be readily doable either...)

It's the actual asset value as of the beginning of the year, most likely nonzero.

No, there are separate 401(a)(4) tests for nonelective contributions such as profit sharing. Your text suggests you want to throw safe harbor and profit sharing contributions into your ADP/ACP tests.

Will the asset providers receive more than $1,000 in compensation from the plan cumulatively during the arrangement?

Well, different 5330 reasons have different filing deadlines, and you're instructed to report all those with the same due date for the same plan on one form. But as each year of the pyramid gives rise to a new PT, you might indeed submit a filing with "the new PTs for 2022" along with the "carried over (new) PTs as of 1/1/22 from 2021" on the same 2022 form.

No, the "highest in the last 12 months" only reduces the 50,000 branch of the either-or tree, the 50% branch is unadjusted.

agreed - the document language may allow the HCEs to be SOL, so to speak.

I was going to suggest there was Schrödinger's prohibited transaction in play. As of 12/31, they are still within the 7-business-day safe harbor to make the deposit. But once January comes with that 7th day, it then becomes a prohibited transaction back to the regularly-scheduled deposit date (since you don't count late earnings only back to the end of the safe harbor period).

I think I've seen separate pre-approved documents do it differently (PBGC method for a non-PBGC plan, majority owner forgoes receipt - or a pro rata for all method)

Her primary residence is "THIS half of the house" but after he moves out she will live in the other side of the house 51% of the time. (Sorry, I'm slap-happy here, vacation next week!)

Well, if they have no income, their 415(c) limit for after-tax contributions is gonna be pretty small.

Probably. What became of the prior benefits? - the "easy" way would have been to just spin off "their sub-plan" into its own and carry on from there for their employees.

in for a penny, in for a pound - if they get 3% then that has to be ramped up to cover gateway

How about setting up the already-taxed funds into the same sort of "default investment IRA" except it's maintained as taxable funds by the custodian? i think a place I worked at did that with a local bank - IRAs for over 1,000 as required by the plan, and taxable accounts for those under 1,000 who didn't cash their checks after trying to be forced out.

Sounds like he's not benefiting, which would mean he's not in the compensation total for the deduction calculation. Of course if they're not funding profit sharing the deduction maximum might be moot (barring some astronomical match formula or a DB/DC combo)

And, while not trying to be sexist....we need a MAN DeLorean.

I don't recall any discussion about it, but why would a higher ICR for NHCEs be a BRF that fails? Tongue-in-cheek, I can't imagine the IRS position is "Oh no, not enough NHCEs get a crappy ICR"... Was it a way the plan was trying to "justify" a larger principal credit?