Bri

The freezing of the plan would have had to freeze eligibility for participation, too, as opposed to just new contributions. I think you've got an actual participant there in the employee. Did newly freezing the plan also put the employee into an ineligible class?

So, we all know the SAR is typically due 2 months after the 5500 deadline. But is that 2 months from the "real" deadline of 7/31, or is it 2 months from the 8/1 date that came about from 7/31 being a Sunday? And hey, 10/1 is a Saturday so now can we go up to the following Monday 10/3? 💣 (blow your mind!)

I'm peeking at the instructions, and I am deducing that they don't go on 4a, because that is for participant contributions. But 4d looks like the right call, since it's still the same kind of prohibited transaction when the employer is holding onto plan money. And if that's the case, I think you do a 5330 very similarly to one for late deferrals.

He probably should, even, just to avoid the successor plan issue. If he's 100% owner of both entities they're clearly related.

Come to think of it, does "consistently" in the 5500 instructions imply that the method stay consistent from year to year? Or do they just mean to be consistent within each single year, not reporting some assets one way and some the other.....

I always thought you should be able to make a QNEC on 12-29 if your YTD payroll is done, you test using prior year, and you know you're about to fail.

This might be simplistic, but I look at the "standard" determination as being under the 417 lump sum segment rates, and the "alternative" as being under the "maximum deduction" 404 segment rates. The PBGC sets the month for you on the standard calculation, while the month under the alternative calculation depends on the funding lookback month you might be using.

Yeah, if that last six percent is going to be offered in March for the CODA election, then that's going to be 2023 wages and so that year's W-2 to report any deferrals on.

Well, I'd start with figuring out what year's test has failed 🙂

I would suspect the rest of the backdoor Roth conversion would be for the 25% profit sharing contribution.

I see this in the instructions (2021 SF): Part III – Financial Information Note. The cash, modified cash, or accrual basis may be used for recognition of transactions in Part III, as long as you use one method consistently. So......do you even GET to change if you start off with a cash basis?

Possibly. But your plan document can't have any overriding failsafe language, where if you end up less than 70% then the terminee automatically gets swept in for a contribution. And it's not that everyone's in their own group, but just you would use the amounts the "normal allocation formula" (integrated) would give everyone, and do the cross-testing from those.

Because he's not excludable under the coverage and nondiscrimination regulations, I suppose. But seriously, though - Does your plan allow 410(b) to be passed via the average benefits test instead of the ratio percentage test? I'm getting the vibe that you've got 2/3 NHCEs against 1 HCE. Although that's less than 70%, you could potentially be okay perhaps with a cross-tested rate group.

I'd make sure your plan allows assigning individual expenses against individual participants, but if so, you'll just assign that fee to everyone affected, see what that does to their account balances - seems like it would zero many out - and then since you have a pool, you can compare these adjusted (after the fee) balances against the assets to figure out whether the trust has a net gain or loss to then spread across the remaining balances. Of course, if you're assessing a fee, you actually have to pay that fee out of the trust assets. You can't just "say" there's a fee to drop the balance to $0 if no such actual transaction was levied against the trust, I suppose.

What part of "we" are you? The TPA, the sponsor, etc.?

Who sang that. (not a question)

Well, you used to be able to file one-participant plans on an SF, though. Checking the "one-participant plan" box was supposed to prevent it from showing up on the public disclosure site. In which case maybe the plans shouldn't be viewable, but probably that doesn't rise to a real "issue". Under penalties of perjury, the sponsor didn't say it was a one-participant plan on the return. Gasp!

I will say, if you've got just the owner and two children, you don't really have nondiscrimination/coverage to worry about. Ha, what's the worse sin - backdating the document or backdating "I'm not interested" election forms from those kids who still want to share in the inheritance some day? 😈

Bird, where is that 25% limitation on employee deferrals indicated? I'm peeking at 408(k)(6) which seemed like the obvious spot, but didn't see it.

Isn't that saying just that the annual additions limit is 100%? So if the person defers 90% of pay to the SARSEP, the employer contribution will be capped at 10% for 415 purposes....

Only the excess transferred over is a "real" transfer for lines 8j and 13 purposes. The rollovers are treated like you'd do for normal 5500 stuff, on the benefit payments value line 8d. Look at it as, you're presenting the financial summary, all the gains and payouts and contributions net to the final 100K, and you show that as a transfer out on 8j so that the assets balance to zero. Then on 13c you show where that 100k went.

CBZ, I noticed you avoided being RATIONAL with your sample percentage. (Better than assigning (1+i)/(2-5i) as a fraction of one's retirement benefit to a beneficiary.)

Any thoughts on adding a line to the election form that this election will apply to any subsequent 401(k) plans sponsored by the Plan Sponsor or any member of its controlled group?

I had a client like this - Had a top heavy 401(k) plan with a safe harbor match. (Imagine HCE owner and spouse, then 50 employees doing no 401k for themselves.) Then had a huge influx of Davis-Bacon jobs so that they wanted to allocate those amounts as plan contributions. I suggested those go to a separate plan with no HCEs in it. 401(k) with SHM kept its TH exemption while some of the 50 employees had prevailing wage plan contributions of varying levels. No other nonelective contributions to either plan.

Too bad the actuarial costs for a second plan just for the pizza folks would probably outweigh the savings in PBGC premiums by not covering the doctor's office. Now please tell us the doctor's specialty is as a heart surgeon, selling pizzas on the side! Bonus points if one is in the building next door.