scarabrad

HI folks, Need some help from the experts. I had two employers last year in 2017 and mistakingly overcontributed around $5200 in employee contributions across two distinct unrelated 401k plans. My second employer originally told me that I could not remove the excess from their unmatched account, so I removed it from my previous employer's 401k. In doing so, I lost out on an identical match from my old employer. My current employer now tells me that I may, in fact, be able to remove the excess from my unmatched supplemental retirement plan. Is there any way to reverse a distribution of excess contributions from my previous employer? The distribution to me occurred about a week ago and I still have not cashed the check. Is this an allowable transaction? If so, I'd like to undo it and take the funds from my current employer's unmatched plan. Thoughts? Thanks in advance. SR

https://www.businessofbenefits.com/2018/03/articles/403b/a-403b-psuedomorph-the-irss-gradual-shift-on-applying-415-limits-to-403b-plans/ SpiritRider...you've chimed in on this issue time after time and have been very helpful with respect to this issue of aggregating 403(b) contributions with non-affiliated group retirement plans. Do the details in the above article change the rules somewhat, such that there is no longer concern about having to aggregate the total employee + employer limit for a 403(b) participant. In prior discussions, you have stated that I am considered an "owner" of my hospital-based 403(b) plan and, as such, would be limited with respect to solo-401k contributions I could make from my side income to a total of $55,000, due to aggregation rules. Does this no longer hold true? Anyone else have an opinion. Thanks, in advance, to the very smart and informative folks on this board (especially you, SpiritRider!) Scarabrad

Solo DB plan (one participant). Assume plan docs do not limit the window. Thank you all for useful and erudite input.

That was precisely the scenario about which my original post was trying to address, perhaps confusingly so. Thank you very much for your input!

My 2 cents, Thanks for the response (worth at least 4 cents, IMHO!) So, if the section 415(b)(1)(A) limits increase in the future to $240,000 (from current $210k), does the benefit at age 62 adjust to meet that increased benefit under future 415(b)(1)(A) or is it limited to the 415(b)(1)(A) limits in place at the time the 415 high-3 average was earned (and thus would be limited to ~$210,000 currently in place.)

I'm confused. I thought the maximum annual benefit payable by a defined benefit plan was $210,000 for 2014, $215,000 for 2013, $200,000 for 2012, etc? Where does the $160,000 limitation come into play?

But, hypothetically speaking, what if the benefit amount rises (adjusted for inflation) to, say, $255K in future years (ie, 2025, c/w $205K in 2013), when the plan participant is still earning income and the plan remains active? Would the fact that the 3 highest years averaged $255K were from 2012-2014 prevent one from capturing the higher benefit amount in the future? In essence, if the 3 highest years (current, 2012-2014) of compensation reach the maximum annual compensation limit for 2012-2014, does that "protect" or allow for benefit increases in the future, as the maximum allowed benefit rises, adjusted for inflation? Thanks in advance.

For 2014, the maximum amount of compensation taken into account for plan purposes will increase from $255,000 to $260,000. If one has net schedule C income of $250k for 2012, $255k for 2013, $260k for 2014, does this allow annual adjustments to the maximum plan year annual benefit payable through a defined benefit plan at retirement (currently $210,000 for 2014). Anticipated retirement date is 2033 at age 62. For example, if the maximum annual benefit adjusts upwards to $255k by 2025 (hypothetically speaking), will the fact that net schedule C income for 3 consecutive years (2012-2014) averaged $255k allow the annual benefit to adjust upward to the new max of $255k, even though the 3 highest year net Sch C income was accrued in 2012-2014? Appreciate any input! SR

Wholly unrelated.

Folks, Let's say I have 3 employers, from all of whom I receive W2s at year-end. These employers offer different match arrangements for their 401Ks. For assumption sake, let's say I can put away $10,000 with employer A and they contribute $32K (match) to my 401K. For employer B, I put away $5000 and they put away $8000 (match) For employer C, I put away $2000 and they put away $5000 (match) By year end, I will have made 17K of salary deferrals and my employers will have put away $45K on my behalf. Is this legal, given that the total contributions on my behalf (my own and my employer matches) equals $62K, which exceeds the $51K limit? Any input would be greatly appreciated. Numbers are hypothetical, but generally accurate. SR

If one is making a maximum allowable DB plan contribution for plan year and intends on making a 6% net schedule C income profit sharing contribution to a DC plan, as well, can that 6% additional contribution be made to a previously established SEP-IRA that hasn't been funded for the past 2 years or need one set up a 401(k) plan to make that 6% contribution? Thanks in advance! SR

GeerTom, I am simply a W2 employee of both institutions which are entirely unrelated. I have no ownership interest. How does that affect my situation? Thanks for the input thus far!

Folks, Have found the input on this site invaluable and hope you can help me with my particular situation. I have done extensive research online and spoken with my accountant and benefits manager and no one can seem to give me a final, definitive answer. I have two employers, one of whom offers a 403(b) and an unrelated employer who offers a 401(k). Because I am transitioning between jobs, but still working at both employers, I am contributing a sufficient amount to both plans that will guarantee me an employer match. My separate salaries support the amounts contributed, described below: For 2012, I have contributed approximately $10,200 to the 403(b) plan with a $7600 match from my employer. I have contributed $6,800 to my 401(k) plan and have received matching funds of $27,000k under a special arrangement my particular group has (match is based on overall salary, not on my particular contributions). Thus, I have personally contributed $17,000k, the maximum allowable for 2012. That would leave $33,000 of employer matches to get me to the total of $50K maximum total contributions (under section 415 limitations) for 2012, if it was only for one employer. But because I have two separate employers and the matches were not coordinated, I have gone over the $50K limit with total contributions of ~$52,000K. Because these are two separate unrelated employers, have I violated (inadvertently) the section 415 limits and must I do a corrective distribution or am I ok? Again, I have not exceeded the $17k in personal contributions...it is only on the employer match side that limits have been "exceeded". Any advice I can get would be greatly appreciated! Happy Holidays to all.

ESOP Guy, with all due respect, I have grown frustrated trying to seek out this specific advice, particularly from those who are supposed to have answers. I have already spent a fairly sizable sum for actuarial support to establish my plan (yes, I know I can contribute 6% after DBP contributions, deductions and SE tax to a safe harbor 401K, but this will be a small amount relative to the amounts I have already sheltered in my DBP and can shelter in my employer sponsered 401K) and don't relish spending thousands more for scant additional advice. I have made myself informed through years of hard work seeking out this information and doing my own due diligence. I am very financially savvy and have managed my own investments for years, beating the market by 10% annualized over the past 5 years (+9.98% relative to -.18% on the S&P500 according to Fidelity...yes, even during the dark days of 2008 when I was up ~30%...that was a very good year, as other years I trail the market by several percentage points). It is for this reason that I turned to this incredibly useful board, not necessarily to freeload, but to get a general sense as to whether I am proceeding correctly or whether it is indeed time to hire a financial planner. The problem is, most I have talked to have reviewed my plan and my performance and have little to add. When I applied to 4 different actuaries for assistance with my defined benefit plan, I got 4 wildly different responses including one stating that it would be of no benefit for me to start a plan!!! (and I managed to put $100K this year!). Hope you understand my frustration and why I turn to this board. Do appreciate the input. SR

Yes, it's duplicate, but I think it might be more relevant to this board rather than the defined benefits plan board. But I don't wish to run amok of board rules!!! SR

im not an expert but you didnt mention having your own company. You only mentioned two jobs both of which you are an employee. You cant just create a defined benefit plan unless you have a 3rd source of income and are not an employee. Only income from your "own company" could be used towards the defined benefit plan. Rex, I do have sizable self-employment income ($175,000 +/-) from consulting contracts and have my own sole-proprietorship tax ID and a tax ID for my defined benefit plan. Sorry if I did not make that clear. SoCalActuary, thanks for the commentary. The 401K plan starting in July, 2012 actually provides full match to to the $49K (? now $50K) fully funded level set by the IRS, while the 403b comes up 9 or 10 thousand short because of the funding formula (you can't max out until you reach age 50). So, I think in July, I will jettison the 403b in favor of the 401K. I intend on starting the 457b now! Belgarath, I do fund a flexible health savings account but am provided full health coverage by 1 of my employers, so the HSA doesn't apply here. Any other comments are greatly appreciated. Because my situation, I think, is somewhat unique, I have not been able to get clear cut answers from most (Fidelity, my accountant, financial planners, etc). But this site has gotten me closer to an answer than any of the other sources I've tapped. Thanks! SR

Folks, Incredibly useful site. Would appreciate any input one can provide on my situation. I am in a very fortunate situation of having two employment contracts with distinct employers and sizable self-employment income as well. I am prone to save as much as possible in retirement plans, mainly to achieve as much tax deferred investment as possible. Thus far, I have the following plans established: 1) Employer 1 (<100K income): 403B. I contribute the maximum (was 16,500, now 17,000) and my employer contributes ~20K (capped at this for my age group). 2) Employer 2: 401K, to start this upcoming July, 2012 after 1 year of service. I can contribute $17,000 to this with a full match to 49 or 50K (whatever the maximum is). I assume I will have to cease contributing to my 403B with my other employer so as not to exceed maximum employee contributions across plans. 3) Employer 2 also offers a 457B, to which I have not started contributing, but would like to. I assume I can make these contributions exclusive of the 403(b)/401K contributions (I will not be contributing to both the 403 and 401K starting July 1)? Is this assumption correct? 4) Self-employment: I have established a defined benefit plan for myself with target income of ~130K at age 62 and contributed ~100K for 2011. Actuarial assumptions not available for 2012. 5) I also contribute each year to a non-deductible traditional IRA for me and my homemaker wife, which I assume I can make. Are my assumptions correct for the above scenario and am I taking maximum advantage of retirement plan contributions? Am I overlooking anything or in violation of any IRS rules? Any advice you sages can provided would be most appreciated. Many thanks in advance! SR

Folks, Incredibly useful site. Would appreciate any input one can provide on my situation. I am in a very fortunate situation of having two employment contracts with distinct employers and sizable self-employment income as well. I am prone to save as much as possible in retirement plans, mainly to achieve as much tax deferred investment as possible. Thus far, I have the following plans established: 1) Employer 1 (<100K income): 403B. I contribute the maximum (was 16,500, now 17,000) and my employer contributes ~20K (capped at this for my age group). 2) Employer 2: 401K, to start this upcoming July, 2012 after 1 year of service. I can contribute $17,000 to this with a full match to 49 or 50K (whatever the maximum is). I assume I will have to cease contributing to my 403B with my other employer so as not to exceed maximum employee contributions across plans. 3) Employer 2 also offers a 457B, to which I have not started contributing, but would like to. I assume I can make these contributions exclusive of the 403(b)/401K contributions (I will not be contributing to both the 403 and 401K starting July 1)? Is this assumption correct? 4) Self-employment: I have established a defined benefit plan for myself with target income of ~130K at age 62 and contributed ~100K for 2011. Actuarial assumptions not available for 2012. 5) I also contribute each year to a non-deductible traditional IRA for me and my homemaker wife, which I assume I can make. Are my assumptions correct for the above scenario and am I taking maximum advantage of retirement plan contributions? Am I overlooking anything or in violation of any IRS rules? Any advice you sages can provided would be most appreciated. Many thanks in advance! SR