dan.jock

I think that if the NRA is age 65 and the plan has an unreduced early retirement benefit at age 62, then the 2.8M is distributable. 415: step 1 - calculate the plan benefit ($2.8M)) step 2 - compare to dollar limit (2.8M) 415 dollar limit is unreduced from 65 to 62. I'd suggest merely amending (or designing) the NRA to be 62 to avoid this moot complication since for testing, you'd have to use the age 62 unreduced benefit anyhow in the MVAR. -Dan

Attached is a comprehensive description of how to solve this issue. This is mostly difficult for the CPA/bookkeeper. If $0 has been made so far, I think you situation will be easy enough to resolve. Correcting a bad SIMPLE.pdf

1.401(a)(4)-5 prohibits amendments (including adoption of a new plan) that would discriminate in favor of HCE's. The conventional wisdom here is that your client should only count years of service and compensation from 1/1/18 forward. If salary and service with the predecessor employer are used to get a large DB contribution, that would be discriminatory since all those employees were around in the predecessor employer and are not getting anything.

When answering yes to this question, it asks us to enter the MyPAA filing confirmation number. I didn't do the PBGC filing yet. How do I get by this short of just doing the PBGC filing? For 2017, it is a new plan and the PBGC filing was due therefore 90 days after plan effective date, mid-March. Since we are busy with contribution numbers in the spring, we usually just let the first filing be late and pay the very small penalty (1% of the unpaid premium is peanuts) Since 6c is new, it is throwing me off. Any feedback?

Converse question: What if I apply for an extension for 8955 but then discover I actually don't need one this year. Does that trigger a compliance check?

Ownership is attributed between parents and adult children if the ownership % of one is greater than 50%. https://www.irs.gov/pub/irs-tege/epchd704.pdf page 12 So Dad owns 100% of a business with 50 employees. He starts a 50/50 partnership with his son and takes some clients there and is smart enough to keep the entities very separate in the clients they serve, maybe even a different line of business. Assuming the comp is there to support it, Dad has big qualified plan contributions in the side business and since it's less than 80% common ownership, it's not a controlled group and he doesn't have to cover his 50 employees. This seems like a scenario ripe for abuse. Where's the catch?

OK, Sorry I didn't mean to check out on this. I agree with Mike, that coverage AND NON-DISCRIMINATION need to pass on it's own. So yes, I am not using the SH match plan at all for ABPT part of the general test. SH match plan has no keys in there. This is the actual life scenario: Employer has a SH match plan for 2018. In 2019, he wants to do a DB/DC combo plan for a select group and leave the SH match untouched for the rest of the staff. If the select group passes 410b and 401a4 on it's own, I think I can do that. So the next question, Keys in select group have a SH match balance but won't benefit under that plan in 2019. I think it's blown because 416g2 says we aggregate each plan with a key participant. not a key benefiting participant. So if we set it up that way initially, we are ok, but I can't see a path to conversion.

Employer has a safe harbor match plan, top heavy not required. If they added a profit sharing allocation, they'd be blown and have to provide a 3% NEC. Say they had a second plan with an exclusive group of HCE's and HCHE's that passes coverage testing on it's own. The non-keys in that second plan get at least 3% for TH. Top heavy rules indicate that each plan needs to satisfy TH, so is the SH match plan still ok?

The accountant is the A-org. The mfg company is the FSO. Since mfg is not a service org, they are off the hook

If a doctor is a 79% partner at a surgery center and regularly performs service there as a sub-contractor, he is an affiliated service group and can't have a 1-man plan on the side. If an accountant is a 79% partner of a manufacturing firm and regularly performs services there as a sub-contractor, he can have a 1-man plan on the side since the manufacturing company is not a service organization. Seems unfair but legitimate. Am I misinterpreting?

It's a 4/1 plan so I can restate 4/1. On the 5500, I now uncheck the box that says it's a 412(e) plan and start doing SB's? Keep annuity contracts as paid up contracts. Check that insurance still satisfies incidental benefit rules. Seems too easy to be true.

I have a prospect that wants to convert their 412(e)(3) plan into a traditional defined benefit. I've never done this and the only way I can see when I read the ERISA outline book is to ask the IRS to treat the plan as if it was never a fully-insured plan. I calculate funding minimums and maximums back to plan effective date. If the contributions fall in the range and I do everything else the examining agent asks, then it would be "converted" or in other words, it was never a fully-insured plan. Anyone ever done this? Please share your experience, strength, and hope.

Thanks MIke. So my client made an ill-advised (more like non-advised) investment decision and he is about $8M overfunded. What should I suggest?

reversion taxes are described in the context of plan termination

Not according to this https://www.irs.gov/retirement-plans/tax-consequences-of-plan-disqualification