Cloudy

Thanks Tom.

Looking at a takeover CB/DC plan. The CB has immediate entry, 0 hour req for a pay credit, 1000 hours for vesting. The owners get a large pay credit and the rank and file get a flat $1000 pay credit. So you have employees with very low compensation getting a very high testing EBAR (and in fact they may never get a benefit from the plan due to the vesting schedule). My personal feeling is that using these low paid employees to help pass nondiscrimination testing is too aggressive.Opinions?

I am newly involved with a CB/DC combo plan that has the following problem: The 2011 and 2012 PS contributions required to pass nondiscrimination testing were not deposited until December 2013. I am wondering about compliance / disqualification, deductibility, etc. This was an issue of communication/disorganization rather than financial issues. The plan sponsor is getting back on track and for 2013 all CB and PS contributions for 2013 will be depsoited timely - in an amount that is just slightly less than the 404(a)(7) limit for 2013. I have limited experience with this sort of problem but it seems like this is an issue for VCP since plan contributions were not made in a timely manner. In addition, I would think that investment gains may have to be restored. Since the contributions were not made in a timely manner I'm not sure that a tax deduction is available even with a VCP submission(?). If that's the case is there an excise tax on nondeductible contributions? The contributions made in December 2013 was only the amount necessary to pass nondiscrimination testing for 2011 and 2012, does that change the the excise tax situation? For now, I just want to advise the plan sponsor that they have some issues we have to follow up on, without being too specific or too open-ended. Any input would be appreciated.

I have seen terminating plans allow participanis in pay status to change their benefit election and elect a lump sum cashout. Can a plan that is not terminating allow this? If so, is there any reason that lump sum would not be eiligible for rollover to an IRA?

I agree. I just saw that. Thank you. Also, my original post was incorrect, the prior actuary did show the full participant count on the 5500 and SB.

I'm looking at my first floor offset DB plan. This is a takeover. The company has 30 employees and the plan does not exclude anyone other than non-owner HCEs. Eligibility is 21 & 1. Spreadsheets show offset calculations for the entire eligible group (all 30 eligible ee's), however only the 3 owners end up with a DB accrual after the DC offset. The prior SB and PBGC filings have shown a participant count of "3". I would have thought that the others are participants, it's just that they get completely offset. What is the correct way to count participants in a floor offset plan?

I nominate this quote for an award: "I don't know how you EA's keep this garbage straight!"

How would this situation be different if the owner that wants to be excluded were to waive participation in the plan rather than being excluded either by name or some other identifier in the plan document? Assume he could waive prior to the effective date of the plan, which would be his eligibility date.

Thank you AndyH I knew I remembered something like that. But, the 401(a)(4) rate groups can still pass based on the NCT%, correct?

There are other employees. It passes 401(a)(26).

A corporation is starting a new plan. There are two 50% owners. One does not want to participate. Is there a problem with excluding that owner by name under the definition of Eligible Employee? (As opposed to finding a way to not name names.)

Dr. is 12.5% owner of a business that sponsors a CB plan and he owns 100% of a sole proprietorship which may start a DB plan. Does he have a separate 415 limit under each plan?