Bri

I would think (and I will freely admit I haven't done MEPs in years) that if the NHCE testing population consisted of 0 NHCEs for 2022 that 2023's ADP prior-year test will automatically pass.

What if the sponsor plans to update spousal consent from 5k to 7k with the SECURE 2 amendment?

sounds right, aside from the usual caveats (like I pretend you would have deliberately omitted whether there was a profit sharing component to this as well, or if there's no real way to prove the employees actually chose their 0% rates)

I know what you mean - as an allocation, owner might get 96%. As excess assets pro rata, she might get 98%. I am getting the suspicion there aren't "established guidelines," huh?

It was "may" in the text, and it did just occur to me, as long as it's not allocated as a new accrual, then the excess can go in proportion to the summation of benefits which I suppose were already deemed nondiscriminatory in past years. Ha, actually the BPD for the Cycle 3 differs from our BPD for the PPA document. The C3 "may" allow the reversion, but it's not been adopted yet - the PPA (original) version still is set to reversion but that WILL be amended.

It sounds as though you have non-resident aliens earning no U.S. source income. As long as your plan affirmatively excludes people like this, you can exclude them from coverage/nondiscrimination testing.

So, what counts a non-discriminatory basis? I've got a CB plan terminating at year end (owner retiring, so no QRP possibility) and have to think it through as well. The document allows for reallocation of excess if nondiscriminatory, and it looks like there will be some. Pro rata to CB account balances? Pro rata to accrued monthly benefits as of plan termination? How about as of the plan's NRA? And what if the plan only passes 401a4 when combined with a DC plan? Include "some version" of the value of the benefits from the DC plan when prorating? Someone's gotta have done this before, curious what they did....thanks!

1.415(a)-1 and go from there? 402(g) is a "per person" limit, 415 is a "per employer" limit.

I agree with Paul, you'll have anti-cutback issues. As justanotheradmin had brought up, is changing the comp definition in an "individual allocation class" plan, actually "going to do much"? Especially if the gateway happens to be 5% of 415 pay anyway. It "feels" like maybe you'd be reducing how much counts as SH, versus PS, out of the same overall floor total allocation for folks.

So a midyear change to a safe harbor plan that only is going to affect how much of their gateway minimum has to be fully vested?

So, HCEs such that the plan can't just amend via -11g to increase the allocation? (Was it 415, or just the wrong comp being used for a pro rata allocation?)

It wouldn't be forced to an outside IRA in that case? Is it under $1,000?

Isn't the withdrawal from the pooled plan basically an instruction for a trustee-to-trustee transfer to the new plan? Rather than a distributable event?

Nothing smelly, though. The plan will retroactively be amended so that currently your guy can get the 6K upon his termination of employment without the need for either the annuity options or spousal consent.

I think the underlying thought there to Cuse's point is that why would/should a company get a deduction for some OTHER company's ordinary business expense. One tax return blurs it all together, separate ones would not.

This is the right place. A cross-tested PS formula means that there will be different contribution rates to different employees. (Thinking, the IRS typically would expect a plan to provide some uniformity to the contributions.) But if the contributions can be projected to retirement age, perhaps the eventual benefits from those contributions will be closer to equivalent. Especially if the people getting more are so close to retirement age that there's not much of a projection, relative to a 30-year-old who could start with a lot less but let the time do the work of growing to a comparable benefit. Anyway, that's the "cross" to the definition - instead of testing contributions, we're crossing it up and instead testing the eventual benefits. Okay, so now the IRS came up with "gateway" rules to try to put the kibosh on just hiring 16-year-olds, giving them $100, and saying hey 50 years of time should even things up compared to the company owner who's 65 and wants $69,000 in profit sharing *currently*. Basically the gateway rules force a guaranteed floor on how low the $100 to the youthful staff can be, and it's typically a percentage of pay that depends on what sort of amounts the highly compensated employees are getting from the company. Not all plans like this, where the plan does not provide a uniform rate to all employees, are subject to gateway rules, but most are. The ones that aren't could potentially include your hoped-for design. There are regulations which spell out what kind of designs may get away with this. Typically they involve bands by age, so that all employees have the chance to "age into" the higher rates. A common approach is to age-weight the contributions so that every single age ends up with an equivalent benefit rate at retirement age. (Basically each person the same age gets the same rate, and that rate goes up by an identical 8.5% a year as you age.) If you do get a plan that fits the exceptions, then it's okay if certain individuals' contribution rates are smaller than what these "gateway" rules would require. Anyway, I suspect your PEO wants no part of making sure your subset's allocations can fit into such a design, so they're telling you just to go with the more-common approach where you do guarantee a gateway floor rate to the staff employees.

Yeah, but he's still holding "plan money" later than he should, regardless of whether there's DOL oversight, though. Otherwise why bother to fund your deferrals at all, just take the tax deduction 😀

Actual W-2 wage or a draw from an unincorporated entity? The prohibited transaction rules still apply but the deferral deposit timing might adjust if this is someone for whom all the income is actually realized only at year-end.

If you can log on at the DOL EFast site, you should be able to create 5500 filings. I do it once a year for a client.

I think as soon as you mention to a CPA that you're inclined to reduce K-1 income by splitting by the total cost by the partnership ratio (rather than along the lines of who actually got what among those partners), they tend to indicate the partners have something along those lines in place to better align the deductions for each. Like their DC plan would.

"Rocky VII: The new RMD regulations"

If only withdrawal fees worked like PT excise taxes.....

At that age wouldn't a DC plan get him a higher maximum?

oooh, I'll start with the easy one: Failure to follow the plan's written terms. Hopefully that triggers the "we don't have to be your TPA anymore" clause in the service agreement!

Well we haven't figured out if the guy would qualify as Key under the 1% owner test.