Mike Preston

I've never seen a mix and match approach. It is usually a greater of the two approach.

Yes.

https://www.irs.gov/pub/irs-tege/epn_2012_1.pdf See page 7.

This question has been answered a gazillion times in this forum. Have you tried searching for past threads?

Full. $18,000 is the result.

The good folks at bogleheads know everything. And if you don't believe me, ask them. They will tell you so. For example, try posting over there with the intent to have an intelligent discussion about investing options. You will find, as did I, that the moment you mention a possibility that is not part of the mission of bogleheads, you will be banned from future participation in their forum. So, people who frequent that forum have a distorted view that is not weighed down with thoughtful analysis. I am disinclined to participate thoughtfully in a thread that will, in all likelihood, find its way to an area of the internet that is closed off to civil discussion. I"m sure there are others here that do not share my distaste and will no doubt attempt to help you. I certainly don't wish to dissuade them from doing so.

If it is one plan the non-discrimination test for 2016 will take into account the entire year.

Doesn't it basically say that if the missed deferral is with respect to an HCE you look to the plan to see whether the corrective contribution is modified (lowered?)?

Not to be a buzz kill, but I don't think the regs contemplate segregation of different types of deferrals. If the employer wants to discourage Roth the employer should remove the ability to make Roth.

No, but the seller will be and the purchase agreement no doubt allows the buyer to claim only the net. If it allows the buyer to claim the full amount but leaves the tax liability with the seller then the buyer had a better attorney than the seller!

I'm not sure the fix is anything other than using different descriptions. I could easily create a spreadsheet that puts everything in the right "buckets" and doesn't run afoul of the deemed CODA rules. In general, there is nothing wrong with compensation levels being set such that there is a recognition of employer costs specific to that individual. You have a wrinkle with the 3 non-shareholders but that is just another variable (what's three more when you are leaving things to a spreadsheet?). Comments to your questions: 1) No. 2) I'll bet they aren't actually funding those amounts. I'll bet the plan sponsor is properly funding the amounts and you are confusing that with the fact that their W-2 is affected by the direct cost associated with that funding. 3) What does whether they are HCE's or NHCE's have to do with this discussion?

I agree with the self-correction of refunding the $9,000. After that, everything kind of breaks down because I think you are thinking that because the plan will become a MEP on 7/1/2016 that will somehow change this participant from an HCE to an NHCE. I'd have to double check but I thought the definition of an HCE in a MEP is that if you would be an HCE if the plan were a single employer plan you continue to be an HCE if the plan is a MEP. That is, if you are a participant in a MEP and are an HCE with respect to ANY adopting employer you are an HCE as far as the plan goes.

I don't think that is what the OP is saying at all. He definitively said the ratio as of 12/31/2015 was less than 60% but that was based on the interpretation that the ex-owner was still key. And while it isn't the same reasoning the OP used, the conclusion is the same: the ex-owner's account balance is used as key in the 12/31/2015 TH ratio. So, it looks like that ratio is less than 60% and the plan is not TH for 2016. When the TH ratio is determined as of 12/31/2016 the ex-owner's account balance will neither be in the numerator nor the denominator and, in all likelihood, the TH ratio will be even less than what it was as of 12/31/2015.

I vote that you can't do it, but I wouldn't resign from a case where the client decided to go ahead as long as the client was getting advice on the issue from ERISA counsel.

Don't have time to research it today, but it sounds like somebody is reading something wrong. In general, there is only one ABPT. There is an exception for otherwise excludables and there is an exception for the special rule that says you run the ABPT separately for DC/DB if testing DC/DB separately. But there is no exception for SH 401(k) plans. It may turn on something as difficult to pinpoint as the meaning of a comma, but I'm pretty sure of the result.

jpod, you are kidding, right?

No, if I understand that LDP means "last day provision". Does it mean something else?

My 2 cents is showing his lack of understanding as to how many DC plans work. There still are thousands of DC plans that are pooled and valued annually. Maybe not all of them, but certainly most of them are that way intentionally. There are still many advisors who fundamentally disagree with individually directed accounts and believe that pooled, professionally managed investments are best for participants. And contrary to My 2 cents' make believe world, due to cost considerations, annually valued plans rarely process distributions independent of annual administrative work and therefore you will find that distributions take place not on or near the valuation date, but after the 5500 has been prepared, which can be as late as 9 and 1/2 months after the valuation date. The characterization of "shortchanged/overpaid" is pejorative. While an annually valued plan does have to consider when it is appropriate to perform an interim valuation, that minor issue doesn't justify throwing out an administrative framework that has withstood the test of time.

I am confused by your question. It seems like you are pre-supposing individually directed accounts and then assuming something other than daily valuation. Curious combination.

SEP's, in some ways, are not as forgiving as qualified plans. I haven't read the EPCRS Rev. Proc. with this particular issue in mind for a long time, but as I recall it requires a filing in this circumstance. Could be wrong.

The IRS is much better now than it has been in the past viv-a-vis dealing with this issue. *IF* they decide to inquire about a missing form the form they send allows one to check one of the canned reasons there was no filing and send it back. It really isn't a big deal.

What is your concern?

There is still a group of folks and plans (miscreants?) that believe in professionally managed plans. I have several. Many of them are annually valued. Two of them were recently "attacked" by those seeking to implement individually directed accounts. The participants wanted no part of individual direction.

I see no problem with individual annuities as long as the owner remains the plan. Think of the named annuitant as the measuring life for liabilities and conversions but otherwise all payments and rights of conversion remain with the owner. It has been done for years in traditional DB plans. Nothing special about doing it with CB plans.

See the highlighted section of the previously quoted reg. [Message #25]. That language is also in the document provision you yourself posted. Isn't this horse dead?