Bri

Starting next year, or paying the excise tax.

I was just wondering, since I never seem to find formulas like that in any documents I review. Seems like it would be a great idea for a sole proprietor, where income could fluctuate widely, and that way they don't really have to accrue a more-than-significant benefit until after the net earnings clear some amount the person would need for living expenses. Like, a contribution credit of "5% of compensation plus 75% of compensation above $100,000" where that could eliminate the need to worry about a big obligation in a "bad year". (Okay, maybe throw in a 401a26 failsafe, too.) Plus it's been a decade-plus since I even saw a super-integrated DC plan, and always liked the term.

So it would be pay after the termination date of the plan getting excluded.....rather than (specifically) pay after the termination of employment. I've never actually seen the rules regarding exactly how to prorate compensation against 401(a)(17) if you have a mid-month plan termination date, such as if you did terminate as of 12/15....whether you can use days/365 or 11.5/12 or only 11/12 for actual full months.

So it sounds like one 1099 for the earnings (current year) and one for the excess (prior year or wait are you saying it was paid after 4/15 so it's also a current year amount?)

Does the guy's W-2 show all 20,500 that was deducted? There's a 1,000 over-deduction which is then offset by the issuing of the 1099-R. (As opposed to "fixing" the W-2 to show just 19,500 in the first place...)

Does the plan include severance in the definition of compensation? Gotta be sure on what that "severance" really is, too. And if you're excluding a portion of eligible compensation, but not that of the doctor's, will you have a 414(s) issue?

Sounds like the -11g amendment is getting adopted more than 2.5 months after the end of the plan year, so you would indeed not see it in the valuation results for year X.

If they're legitimately assessed fees, the money should leave the plan to arrive at your office. (Why use a suspense account for it, other than maybe to collect them all at once and write one bigger check at the same time for you?)

Hopefully you've got enough flexibility in your document, and demographics, that perhaps cross-testing a 1% "PS" allocation to one NHCE would be enough.

If your taxes were on extension, you might be able to rely on that extension to also extend the 5500 deadline. In that case you could tell the IRS you neglected to check that box on the 5500. (But it's gotta be true, of course!)

Isn't it "in the year you turn 55", rather? Similar to catchups before your 50th birthday..... Ah, indeed, my Sal book says: IRS Notice 87-13, A-20

Sometimes I like to throw around legal terms randomly if they feel even slightly relevant, and see if those more in the know can take it from there, and the one popping to mind is "constructive receipt". (In terms of when does B or C count as being paid...) Realizing, of course, that might not help.

sounds right to me, no 10% penalty.

Daily rather than annual coverage testing perhaps?

Start the deferrals January 1 and park them in a plan checking account until you can transfer the assets to the new custodian. Have the self-direction effective 2/1 instead.

I'd be surprised if there wasn't *something* but I suppose the Plan Sponsor could adopt an amendment addressing it as they wish then.

They do have to clear their minimum funding requirement for the year determined as of the valuation date, which could be changing as a result of the termination. If they do that, then the plan document itself may address what occurs in a termination with insufficient assets. (Possibly the plan says to pro-rate, or perhaps if one of them is the majority owner then that person alone forgoes receipt.)

Oh I gotcha - I misread that the rule of parity provided there was from a Basic Plan Document (illustrating what "could" be chosen) as opposed to being the actual text of a document (so inserted as a result of an election to include said provision), one not coordinated on an adoption agreement.

My web browser (Safari on my non-work laptop) tells me "The password for your 'benefitslink.com' account has appeared in a data leak, putting your account at high risk of compromise." I'm not super worried because A) I don't use the password for anywhere else B) I've used the same password since 2000 with no issues C) You'd have to put forth at least some effort in digging to figure out who I am from my profile D) Who would want to come on here and pretend to be me anyway? Being me is not a profitable endeavor. But anyway, seeing the message today for the first time was a bit surprising.

Aren't 2017-2021 5 Breaks, though?

Plan document might have a section regarding folks with 5 consecutive breaks in service for eligibility purposes such that the person gets treated as a rehire. But your document may vary on that.

Wasn't that option officially kiboshed a few years ago, with a default IRA the alternative?

Ooh, just in time for everyone's 2 hours of Ethics CE for the year! "The fact that you're even asking...."

One thought I had was to double-check your plan document to see if it has any leeway on the HCEs, like if the plan says the sponsor may make an additional SH for the HCEs up to the same level the NHCEs are getting.

I threw a comment out on the regulations site pointing that out - A missed deferral from March won't get caught until year-end work starts 10 months later, especially if it's a 5 salaried person company where the 401(k) total every week is the exact same $1,200 so that you can't easily match up your bank records, either, if one week is missing.