Bri

That's one of the gotchas in the maximum deduction calculation. Another variable that might be causing variance could be the interest crediting rate you're using versus the other firm.

We have contribution credit formulas for older HCEs that routinely are defined along the lines of "140% of compensation up to a maximum of 200,000". Both would look wacky when compared to the 415(c) limit, but since prior pay should have established a nice 415(b) limit, this will often not only work, the client will love it and the 401a4 testing doesn't hurt as much as you might think, too. (Not testing on a contributions basis, though - that's for certain...practically!)

Yes, that's absolutely fine. HCE can fail the test by 7500 and that's what you're planning to recharacterize, so good to go.

You would still have the run the 401(k) test and see how much of a refund would be due - if it's 7500 or less, then you could do it that way where the "refund" instead gets recharacterized. An issue could arise if you have multiple HCEs at varying rates/amounts, because of the way the refunds are determined - they come down to a level dollar amount for all HCEs before considering whether anything could then be converted to catchups. In other words, if he's the only HCE, then 12,500 would work. If he's one of many, then it's not as clear-cut because it's dependent on the other HCEs. If there's another HCE at 200,000 doing something similar then the math does not come out the way you'd want.

I would think this would be okay when viewed as an in-service distribution rather than a loan default. He can request a 40,000 distribution of his account since he's past 59½ and the specific investment being "liquidated" to pay the benefit is the loan note itself. But I'd have to think about the withholding obligation there.....

Thanks - I was thinking along those lines, too - favoring an interpretation of "in the year" to mean "for the year" 2024 in this case since DC plan will allocate as of 12/31. There's probably enough coming over to do their whole 2024 PS allocation, but the actuary thought they might be required to start folks out at least towards their 3% THM (or eventual DC gateway) as a partial allocation before the calendar flips over now that those remaining funds have been transferred over from the DB. (And do the rest of the allocations based on full census after year-end.)

Had an actuary ask me about Code 4980's text of: (I) allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or (II) credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer. and whether or not that means if the final transfer of excess assets occurs today in mid December, that at least one-seventh of the money has to be posted to accounts by 12/31. I suggested that the allocation date is going to be 12/31 even if that means waiting until the 2024 census is ready and the PS allocations determined some time over the winter. As opposed to actually being posted to accounts for participants in the DC plan by 12/31. I think (II) covers the issue, even if (I) didn't. But "allocation" includes as a receivable, no? (Whether or not (I) would be enough argument....) --bri

Generally each vesting schedule is a benefit, right, or feature that would be subject to coverage testing. So you may have it, if you pass. (And consider how union employees typically are considered in coverage testing)

Naaah, the receivable rules are laid out clearly enough.

for the 5330, my guess is it's when you've fixed the prohibited transaction, so (2) for the 5500/DOL and fiduciary liability, I'd suspect it's (3)

Imagine how joyful things will be here if the "tribe of Guardians" comes through in October just one time, too!

Why wouldn't you want the participant to know what they're in for ahead of time, unless you're worried about a one-time irrevocable waiver of plan participation prior to becoming eligible for any company plan?

I think you should check exactly when those "forfeitable" amounts are supposed to be forfeited. If that date hasn't occurred, then your amendment could then fully vest those previously not-yet-vested amounts. I'd be more concerned if you tried to un-do forfeitures processed before the effective date of the change.

Could always look for a loophole in what they executed for the adoption after the end of the plan year. Maybe they didn't check a box they should have about it applying as a retroactive adoption, that kind of thing. (Checks open palm, no sign of straws affirmatively grasped.)

Just to throw the idea out there - I'd like to find out how such a scenario aligns with the new benefit overpayment rules of secure2. (Yeah I know, I could do a bunch of reading, but maybe someone else already knows for sure.)

Are you looking to change how to pro-rate excess assets upon PLAN termination, or is it a case where you're looking to only pay the 12/31/23 hypothetical account balances and not 11 months' worth of the interest crediting rate for 2024 (for the participant's termination of employment)?

I vote for 8/22, since as of his rehire date three months had elapsed and his normally scheduled entry date of 6/1 had also.

Aside from showing enough in wages to justify the 415(c) level, the amount contributed as after-tax prior to Rothification wouldn't typically also be listed.

Simplified Employee Pension, funded with IRAs

This sounds like the plan's fine but her take-home pay was done wrong.

Should we pile on some "are there any LTPTs?" while we're workshopping this?

Your plan document will also say whether or not everyone can be allocated "something different" compared to a uniform formula (same percentage, typically)

Hey, if the taxes were extended until 10/15/2024 it's still not too late yet to allocate annual additions for the 12/31/2023 plan year. Also, the types of contributions already made might provide a little more into what he's on the hook for, relating to the employee.

Changing Schedule H upon their request immediately takes the "independence" of the audit to the woodchipper, doesn't it?

Reference the definition of compensation as spelled out in the plan document. See if the guy's then *officially* full of poo.