Mike Preston

For now. And don't forget discrimination issues. If the reason distributions are not required is because older hces want to leave the money in the plan you can't force out rank and file but fail to force out the owners.

Pique?

Not surprising when one recalls the true name of the enabling legislation: Every Rotten Idea Since Adam.

411d6 is an issue.

While I agree the plan has to pass the ADP test (it will), the PS allocation is a safe harbor method and no 401a4 testing applies. Which is a good thing because unless there is a significant age difference between SIL and daughter it won't pass a4 testing, will it? I can't quite tell but maybe it would satisfy 401a4 by testing statutorilly eligible separately. If so, SIL and boss are tested separately from daughter and everything passes. But since it has already been established that the design is a safe harbor it never has to run a 401a4 test of any kind.

12/31?

So do plans that cover nothing but NHCEs. So does that make this doubly fine?

What advantage do you see to the grandfathering?

If they want to allocate exactly 25% of total compensation so as to not leave anything on the table they need to increase daughter's pay from $24,000 to $24,333.33 or cap SIL's deferrals at $19,250.

Fair is a loaded word. The limitations are what they are. Yes, the $62,750 would be allocated pro-rata to the SIL and daughter.

True dat.

He already said plan is starting today.

I don't see anything that comes close to a problem.

The 25% is measured against the total compensation. Assuming max for owner, the owner is getting 13.2759% and would therefore have to allocate at least that same percentage for both SIL and daughter ($12,081.07 and $3,186.22, assuming SIL comp is 91k and that daughter is a participant in the plan). Max to SIL and daughter would be 25% * ($290k + 91k + 24k) = $101,250 - $38,500 = $62,750. This would end up getting SIL to $38,500 and daughter to $24,000. Assumes daughter has no 401(k) deferral and that SIL defers max.

What is the reason that they want to make it effective 1/1/2021? Just so they can potentially decide to make a contribution for 2021 at a later date? If so, then I think it works. If it is for some other reason, maybe yes, maybe no.

The $130,000 is measured against comp earned in the prior year, not the current year. How much does daughter make? What is the allocation formula? Straight comp to comp? Everybody in their own group? Something else?

I had a mistake in my spreadsheet. Thanks for pointing it out. If I get a chance, I'll edit my long post so that it properly reflects the maximum of $18,587.

There are requirements specified in section 11 G3. If you satisfy those requirements you're good to go. Those requirements do not include a requirement to fail a test. So you could even use an 11 g amendment on a plan that covered n h c es only.

Yes.

I wouldn't describe it as starting anew. It just simply starts at that point.

Run, run for your life. You will believe in that solution right after your firm bears liability when you could have scampered away. At the very least, go in with an ERISA attorney so your firm can say that the attorney was calling the shots. If you can't find an attorney who is willing, what does that tell you? It has been a few days since I've read the new EPCRS but at some point no later than 1/1/2022 the IRS will allow an anonymous conference call to discuss alternatives. I forget the precise parameters but what do you have to lose if you present your alternative as a take it or leave it concept? If it is that important to you then offer to eat the EPCRS filing fee.

It is impossible to answer your question since there are so many possibilities. Generally the plan must follow the original qdro. What does it say to do? The new spouse is entitled to any death benefits provided from the plan that haven't already been spoken for in one way or another in the original qdro.

No. You must reduce the higher number by the actual contribution before multiplying by 20%.

I made the $ limit change that you pointed out. I think your 20% of $92,935 is correct only if the actual contribution is $0.

I think it has to be A.