mefrancis1729

I have a combo 401(k) PS/CB. Owner died unexpectedly in December 2022 while in his 50's. He has no spouse, children, or completed beneficiary forms. His parents (in their late 70's) are the beneficiaries for both plans. There was some up in the air, but now both plans are being terminated. My question is on RMDs. Are the parents required to take RMDs from the plans due to their ages or not since the owner was not of RMD age? The plans should be paid out by the end of 2023 or early 2024. There will be required payments from the inherited IRAs, but that is outside the plans. I am more concerned that while the plans are open, the RMD rules are being followed.

If a plan purchases an annuity for a participant to remove them from the plan, does the plan still have to issue a 1099-R? Would it show the annuity purchase amount and that it was not taxable? I know the annuity company will issue a 1099-R for the payments the participant receives, but what about on the plan's side?

I have 2 plans that are sponsored by the same company. They want to merge the 2 plans to make administration easier. One plan has a funding shortfall in the year before the merger and the other plan did not have a funding shortfall. Based on Rev. Proc. 2017-56, it seems like due to the fact that one plan had a shortfall and the other did not, that it does not qualify for an automatic approval. Therefore, we are requesting approval for a change in funding method. Does anyone know if this is required? As of the merger date, due to the assets in the 2nd plan, all shortfall amortizations are wiped out and the plan is over 100% funded. From what I can find in Rev. Proc. 2017-4, the user fee is $10,000. This seems excessive given the fact that one company sponsors both plans and the only reason they did not qualify for the automatic approval was the funding shortfall, which is taken care of as soon as the merger takes place.

Cash Balance Plan with in-service distributions at NRA allowed. Owner is going to start taking an annuity form, then convert to a lump sum when the plan terminates. While they are taking this annuity, are they able to take the full yearly amount once per year to satisfy? Or do they have to take monthly payments?

There is no controlled group or affiliated service group. From everything i have researched this qualifies as a truly multiple employer plan. They currently have a 401(k) profit sharing plan. They are looking at adding on a cash balance plan. As I did not set up the PS plan, I am stuck with what has already been established. Then I believe I should be testing this owner 2 times- once with company A and their compensation there and a second time with company B and their compensation at that entity. They can get an allocation in both companies under the one plan. And their 415 limit (on the CB side) is determined by a combination of all income from company A and company B.

I have 2 companies that have a multiple employer plan. My question has to do with the compensation for the owner. I have an owner who owns 100% of Company A and 50% of Company B. This owner receives W2 compensation from both companies. I am wondering how I actually test the plan? Do I have this owner in both companies' separate testings and give them an allocation in both? (They want to do the max) Or am i allowed to aggregate the compensation and only have the owner in one company's testing? I am leaning toward the first way as I feel they do need to be tested under each employer, but I cannot find a definitive answer anywhere. I do know that the 415 limit is based on the compensation the owner receives from both employers.

you are correct. it is only waived for missed quarterly payments.

It is a small plan, so the form 10 notification is waived.

I have cross tested Profit Sharing and Cash Balance plans. The plan sponsor did not make the minimum required contribution by 9/15, so they will be paying the 10% excise tax on the unfunded minimum. Now, the plan sponsor is also saying they are unable to make the minimum required profit sharing contribution for their employees- safe harbor, top heavy, and gateway. What happens if they do not make this? Are there penalties like the CB plan or is the plan disqualified??

I am designing a new 401(k) profit sharing plan. I have a terminated participant who is young and has low compensation. They enter the plan and then terminate in the middle of the year. I want to use this participant to pass 401(a)(4) as it would be the cheapest option. I end up having to give him about 90% of his compensation. If i design the plan so that there is no hour requirement or last day requirement for discretionary profit sharing, I believe I can give him this large amount. But how should I handle vesting? Does he need to be 100% vested as I am using him so heavily to pass testing? Could he be only 20% vested? Or could I even leave him at 0% vested? How would you handle the vesting if he needed to be 100% vested, but you didnt want any other employees to be automatically 100% vested?

I have an employer who has a 401(k)PS and DB plan. There is only one person in the plans- the owner. They are currently maxing out the 401(k) deferrals, doing 6% of compensation in profit sharing (combined deductibility limit) , and 5% of average annual comp per years of service in the DB. The owner takes Schedule C compensation. The owner wants to make voluntary after tax contributions to the 401(k) PS plan up to the max limit. I believe they can make these- http://www.nytimes.com/2015/09/23/your-money/401ks-and-similar-plans/irs-ruling-makes-after-tax-contributions-more-attractive.html?_r=0 The issue is whether these after tax voluntary contributions count toward the PS deductibility limit or not. I would assume no, since any employee in a PS plan can do this with their own contributions. Also do the voluntary after tax contributions have to come out of her Schedule C compensation like the DB and PS costs do? Or are they counted like deferrals and not taken out?

I have a husband and wife with multiple companies that both want to be in a cash balance plan. They are both physicians. The wife owns 100% of of a management company. The wife also owns 100% of her MD, LLC. Her husband also owns his own MD, LLC. Both MD, LLC's pay management fees to the management company and the wife receives compensation from the management company. I believe the management company creates an affiliated service group with the 2 MD, LLC's. Can it also be a controlled group? The management company is shutting down and will cease to exist. Can I set up a plan under the wife's MD, LLC and include compensation from the management company as long as it is still around? After the management company shuts down, can I maintain the plan as a controlled group between the 2 MD, LLC's as they have attributed ownership due to their marriage?

I have a take over plan that is a single member LLC that is taxed as a sole prop. The owner pays himself W2 wages in payroll throughout the year and then also files a Schedule C reporting his net income. For plan purposes, is his compensation W2 or Schedule C or a combination of both? Everything I have found states you cannot pay yourself W2 wages when you are a Schedule C filer, however this is how the CPA is doing it.