AdKu

Than you K2retire, My understanding has been the same as yours until I got involved with this case. Since I consider myself new for the retirement industry (or lack real time practical experience), I started researching in great detail to make certain I'm following the correct correction methods. I checked many places on the issue, including ERISA Outline Book, Cornell University Law school on the web for IRS codes, DOL and Treasury Regs. as well as each individual authorities websites, some ASPPA Conference Handouts and this benefitlink board. What drove me to post my question was what I read in the Spring 2010 Retirement News for Employers, link and excerpt below: https://www.irs.gov/pub/irs-tege/rne_spr10.pdf "Generally, this failure can be corrected by reallocating all forfeitures in the plan’s forfeiture suspense account to all plan participants who should have received them had the forfeitures been allocated on time. The plan sponsor should revise prior plan year allocation reports to reflect the forfeiture allocation and pay any amounts due to terminated participants. Depending on the plan terms or the facts and circumstances of a particular situation, it may be appropriate to take the non-current-year forfeitures and use them as employer contributions for the current plan year. Plan sponsors should apply the correction principles in Revenue Procedure 2008-50, section 6 when making correction."

Just to make a distinction between the two matches, the original post referred to SH Match, and in my case it is not a SH Match. And also to indicate the possibilities that the client could have used the forfeiture to reduce the Match, which was payroll by payroll in my case.

I run into somewhat similar situation with a takeover plan. The only contribution allowed in the plan are pre-tax deferral and non-safe harbor match, and in fact rollovers. In the absence of non-elective contribution provision in the plan, the forfeiture originated from the match never been used since the plan inception in 2005 (although at this time I don't have full information when the first forfeiture occurred). I am planning to file VCP amending the plan to allow non-elective contribution. This plan is in process of termination and most of its employee were terminated before 2014 except the owners. Is this permissible to allocate the forfeiture to the owners only? I appreciate if anyone can share their experience and the correct way to rectify this forfeiture issue.

As of 12/31/2009: Active vested participants 11 Active non-vested participants 13 Terminated vested participants 3 Retired participants 5 On 1/1/2010, the only employees of the company are the active vested and active non-vested participants in the plan. Given the above data, when calculating the VRP as well as FRP do I have use 'Active non-Vested Participants' count in my calculation and how does that translate to UVB?

Thank you BG5150! I totally understand the confusion and I apologize for not making my question as clear it should be. As far as the sole prop 401(k) plan goes, I don't think there will be any top heavy issues as the owner intended to contribute the $6,000 Age-50 catch-up contribution.

mrslappywhite, Which part of the plan provision did you include your emphasis? It will make a big difference in the interpretation of the ECP. I agree with the plan sponsor. ERISA Outline Book Chapter 2 Section V. clearly addressed the question of a rehired employee when there is no BIS rule in the plan, here it is: If there is no break in service rule, and the employee had already satisfied the eligibility requirements, the employee must re-enter the plan on the date of re-employment. If the employee had not satisfied the eligibility requirements before his termination, the employee will first have to finish completing those requirements before becoming a participant in the plan. If the eligibility conditions have been amended during the employee’s absence, and an employee who satisfied the prior eligibility conditions does not satisfy the amended eligibility requirements, he will have to complete the new eligibility requirements before re-entering the plan unless there is a plan provision "grandfathering" him as a participant. Thanks, AdKu

My original question was about the salary deferral timeline for S-Corp. But, most recently I received a proposal request for sole prop with similar issue. Following Mr. Preston prior friendly advice to one of my postings, I refrain from posing the same question when entity under discussion changed. Sorry if you find it offending.

I do run a similar situation to a new Sole Prop potential client in addition to the s-corp.

Yes, it is a sole prop.

What is the salary deferral timeline for a new plan for the owner? My client finally decided to establish a 401(k) profit sharing plan for the 2015 plan year (January 1 to December 31) last November. Since there will be the last two payroll to defer from and 100% of the owner final two payroll check doesn't add up to get him to the 402(g) max that he wants to contribute, will he be allowed by law if he write a personal check to make-up the remaining amount to get him to the maximum deferral amount. What is the salary deferral timeline ramification for the other non-owner participants? Thanks!

Thank you Mike for your friendly advice and I'll try my best applying it. Thank you LANDO, too.

LANDO & Calavera, Provided the below ownership chart and assuming no family relationships, do the three companies X, Y, & Z form a controlled group. Companies X Y Z Shareholder 1 49.00% 51.00% 75.00% Shareholder 2 1.00% 48.00% 24.50% Shareholder 3 50.00% 1.00% 0.50% > 80% Control 100.00% 100.00% 100.00% Another scenario would be if Shareholder 1 has the same 51% ownership in X, Y & Z and the rest of the ownership somehow divided between Shareholder 2 and Shareholder 3, is there going to be controlled group. Finally, is there any Controlled group rule that dictates to determine the Identical Ownership that we should be checking first that no shareholder should have over 50% in each company that will form controlled group.

Thank you LANDO & Calavera, I was wrong about the 80% test.

BG5150, thank you. This will be my first time to sit for the ERPA exam. I'm planning to sit for both parts of the Exam in January. Well my company has ERISA Outline Book, which I have been using to get some answer to some of the challenging questions I came across in administering qualified retirement plan. In addition, I'm using some sample exam from 2010 that someone from my organization have used to pass the ERPA exam couple of years ago. After reviewing the 2010 sample exam, I felt I have the knowledge to pass the exam. But I'm not sure if a lot has changed as far as the ERPA exam goes since 2010. Thanks

Yes, there is no family relationships; therefore, no attribution rule applies to this particular case. LANDO, do you mean every one of the five owners needs to have some percentage of the share to form the CG? If Yes, I don't think I agree with that.

I'm planning to sit for the last ERPASEE exam coming January. where can I find any online free study materials? Any help appreciated! E-mail address: AdKu79@gmail.com

Did I get it right, provided the following ownership chart? Companies X Y Z A B C D Shareholder 1 100.00% 100.00% 75.02% 2.00% 2.00% 51.00% 51.00% Shareholder 2 0.00% 0.00% 24.98% 0.00% 0.00% 0.00% 0.00% Shareholder 3 0.00% 0.00% 0.00% 0.00% 0.00% 49.00% 49.00% Shareholder 4 0.00% 0.00% 0.00% 32.67% 49.00% 0.00% 0.00% Shareholder 5 0.00% 0.00% 0.00% 32.67% 49.00% 0.00% 0.00% Shareholder 6 0.00% 0.00% 0.00% 32.66% 0.00% 0.00% 0.00% TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% TOTAL EMPLOYEES 18 9 15 2 15 1 12 Based on my current level of understanding of the controlled group rules, I came up the following two different controlled groups. I'm open to learn, any insight is appreciated. Controlled Group #1 Companies X Y Z C D Identical Ownership Shareholder 1 100.00% 100.00% 75.00% 51.00% 51.00% 51.00% Shareholder 2 0.00% 0.00% 24.98% 0.00% 0.00% 0.00% Shareholder 3 0.00% 0.00% 0.00% 49.00% 49.00% 00% > 80% Control 100.00% 100.00% 100.00% 100.00% 100.00% 51.00% Controlled Group #2 Companies A B Identical Ownership Shareholder 1 2.00% 2.00% 2.00% Shareholder 4 32.67% 49.00% 32.67% Shareholder 5 32.67% 49.00% 32.67% Shareholder 6 32.66% 0.00% 0.00% > 80% Control 100.00% 100.00% 67.34%

Does the regs. or the code requires a db/dc combo plan to provided TH Minimum for terminated participants (whether worked over 1,000 hours or not) at all?

Please help me understand the rule for Funding and Deductibility. The October 13, 2015 IRC 415(b) Examining Guidelines states, "Benefits in excess of the IRC 415 limits for any year may not be taken into account in determining the deductible limits under IRC 404 for that year. https://www.irs.gov/irm/part4/irm_04-072-006.html If the calculated Max. contribution is a little over $300,000 and correctly applying the above statement means the deduction is limited to $210,000 for the 2015 plan year. Please include any section of the Code or the Regs. that go over with examples in handling the situation.

Hi Ed F, Your answer to JPitcl question is still helping many pension professionals like me after 15 years. You only had 9 posts back then but was able to provide exact solution to the problem. I hope all other forum participants learn from you reply when they respond to other forum participant questions. With all due respect, we should refrain from posting discouraging reply to some inexperienced pension professional questions. Regards, AD

Thanks! I did not know a single person plan with no employees was subjected to the top heavy schedule. I would appreciate if someone can help with the actuarial increase and maximum contribution calculations so that I don't play foul providing over the allowable maximum deductible contribution.

Clarification The plan in discussion will be a single self-employed person tradition DB plan with no employees. The sponsor is trying to postpone the RMD to reduce tax liabilities due to the high level of income in current year. For the vesting schedule will be 5 years cliff in order to postpone the RMD to later age with lower income. If I remember correctly, sometime ago I read on this forum that there will not be RMD for zero percent vested owner participant over age 70.5. However, when the participant become vested, he/she will begin RMD for that year plus a make-up RMD for prior plan years up to the extent of the vested account balance.

To All Pension Professionals and Actuaries, A potential 71 years old self-employed client with current year income over 1 million and anticipated future years income under 200, 000. 1- RMD - Reg. 1.401(a)(9)-6 RMD for DB Plans and annuity contract Q-6, Q-5 & Q-1, is not very clear as it refers back Is there any additional guidance how to deal with RMD for the un-vested portion of the account balance when it comes 100% vested in 3 years when the potential client turns age 74? 2- Max. Contribution what does the initial plan year Max. contribution for Funding purposes looks like? Many thanks to All PPA AD