CuseFan

If you bring in an NHCE to Plan A such that it passes the RPT of 410(b) on its own then there is no reason to test A & B together, A's PS is safe harbor so no further testing and no gateway. If the NHCE you bring into Plan A is also in Plan B, be mindful of the aggregation for 415 limits.

Do not understand your second bullet, on aggregated basis does not Plan AB satisfy coverage at 70%+ w/o further action? PS allocations happen in each plan per each document but then cross-tested as Plan AB together, which creates a gateway under A where there wasn't one before.

You can do an in-plan Roth conversion provided the plan document allows for it, which may mean an amendment from the sounds of it.

Agree - either get the distribution back, contribute enough to make the plan 110% funded, or satisfy one of the other exceptions (which I have actually rarely seen in practice).

Post-severance compensation has specific defined meaning(s) under the IRC and should be covered in the plan document as to what is and is not included. True severance pay - money paid upon/after termination of employment on account of such termination that would not have been earned/paid under continued employment is not plan compensation in the eyes of the IRS and cannot be considered for retirement benefits or contributions.

OMG - thank you SO much for creating and maintaining this forum which has proved invaluable for many practitioners, not to mention entertaining at times! Echoing Peter, you should be very proud and never hesitant to promote the impact you've had on our industry. Doing the math (it's much of what we do LOL), that makes you a young and not ready to retire age 66 so we can all rest assured BL will continue for years to come, right? Truly, thanks for all you and Lois have done and continue to do, it is greatly appreciated.

I think you can only change NRA for compensation deferred after the amendment.

Looks to me like Plan A does not pass ratio percentage (I get 55%). If the CG can satisfy average benefits then you could test A separately on ADP and the PS appears to be a safe harbor (depending on comp definition). If you do not pass average benefits then you MUST aggregate A with B to satisfy coverage and then must also aggregate to satisfy nondiscrimination (ADP, 401(a)(4)). Since B is cross-tested, you may very well have to run average benefits for the CG anyway, so you'll have your answer on the above. Note if you do not HAVE to aggregate, you may permissively aggregate and do so independently with regard to 401(k) and 401(a). If you want hasenpfeffer sometimes you have to go down that rabbit hole!

Whether the employment relationship has terminated or not is based on all the relevant facts and circumstances. You don't say what type of plan. If DC, is he working enough hours and considered employed 12/31 (if necessary) to get an allocation? Are there other benefits that he could get if retired or is precluded from unless retired and, if so, how are they treated?

I thought by rule that a safe harbor 401k is required/deemed to use current year testing. Or is it possible to be deemed current year for ADP under SH but elect prior year w/o SH for match? Do pre-approved documents even allow for that? Looking in our document, you can elect current or prior year testing independently for ADP and ACP but then each has their respective note below: NOTE: If the Plan is a 401(k) safe harbor plan, the current year must be used for those Plan Years during which the Plan is subject to the 401(k) safe harbor requirements. NOTE: If the Plan is a 401(k) safe harbor plan and it is intended to satisfy the ACP safe harbor, the current year must be used for those Plan Years during which the Plan is subject to the 401(k) safe harbor requirements.

You and 401(k) provider are correct that new hires with lookback year pay below the HCE threshold are NHCEs initially and, if other eligibility criteria are met, if any, they should be eligible to enter that plan and defer until the first plan year in which they become HCE. Unless eligibility for the NQDC plan specifically excludes any employee eligible for the 401(k) plan, it is determined independent of that plan. Also, the determination of "highly compensated" for the NQDC is different and independent (I'll use HC). HC for that purpose is someone considered highly paid in the context of the employer, and someone could be HCE for 401(k) but not HC for NQDC, or vice versa but that is less likely. There is the 20% top-paid group election that can be made for 401(k) HCE. For NQ, there is no formal 20% rule but there has been IRS opinion (I think) that to be predominantly for the benefit of HCs a NQDC cannot cover more than 20% of employees. Your NQDC provider is correct in saying the employer must determine who is or is not in the top-hat group (select management and HC). If you use generic definitions, be sure that any management or compensation thresholds are not too low/too broad. In summary, new executives could be eligible for both the 401(k) and NQDC for their first (partial) year or two of employment. I hope this was helpful.

Fully agree ESOP Guy, that's how I learned and now how I share that knowledge with others as well. You just tell someone an answer and they're asking the same question sometime later. You teach them how to arrive at the answer then chances are better they've learned and won't need to ask again.

Also, some plans require (which is permitted) the person to be married for one year prior to death for the spouse to be treated as surviving spouse with respect to death benefits under the plan.

Yes, 5% of $345,000, the 2024 comp limit. The plan document should specify all that.

The compliant correction, if I recall, is to adopt all the missing pieces to bring the plan up to date and do a VCP filing. Whether the parties agree to simply do a current update and sweep prior issues under the rug is up to the attorneys. What about the recordkeeper(s) and/or TPA(s) that have serviced the plan, have they been contacted for copies of plan documents?

415(h) affects 415 limits for those who own more than 50% of multiple entities that sponsor retirement plans. That is, the control group is created with respect to the individual for purposes of their 415 limit(s), it does not create a control group for other purposes. 402(g) is an individual limit regardless.

Yes, but she would have one aggregated 415 limit on like plans (one DC limit, one DB limit) so there would be no advantage to her business adopting its own plan. Depending on her pay in husband's business, there could be an advantage to having her business adopt his plan as a participating employer, or adding a new DC or DB to the CG if there is currently only one plan.

VATs may but need not be reported on W2. Just answered this for a client this morning. Google is a wonderful thing. Generally, according to the instructions to IRS Form W-2, Wage and Tax Statement, an employer may, but is not required to, report non-Roth, after-tax contributions on Form W-2 in Box 14.

You have different issues at play here. You need to be considered an employee or self-employed and have "compensation" or net earned income upon which to base a contribution. Assuming you have that, the source from which the business funds the contribution does not matter although should consult with accountant regarding deductibility from certain sources.

This is an accounting and tax planning question first and foremost (including whether the proceeds are capital gains) after which the retirement plan question could be answered.

I have seen those arrangements over the years, but not recently as I don't consult in that space any more. I remember seeing it particularly in colleges and universities, where they had the ERISA plan with a mandatory employee deferral and a very generous match plus a non-ERISA plan that allowed voluntary deferrals beyond the rate of the mandatory deferrals. Although, as I remember, the investments/RK structure was often the same (TIAA-CREF and/or Fidelity) so there was some question as to whether those second voluntary plans were truly non-ERISA (especially if solely T-C or Fidelity). These arrangements may have been combined into single plans now because of all the new rules, as I noted, I'm not in this space any more. The ERISA plan document should state the 4% deferral cap as should its forms, and there should be a "document" (at least items of documentation) for the non-ERISA plan.

There is also the requirement for no US-source income, so I don't see how this person could be a statutory exclusion from any qualified plan, but the tax-exempt 457(b) is NQ, so they can include/exclude any top-hat type employee they want.

If this is a governmental, which is the only situation I could see this being permitted, you shouldn't be filing a 5500. Otherwise, what is the basis for moving qualified 401(k) plan money to a nonqualified 457 plan?

Seriously, other than maybe looking at a national average of birth and adoption costs, I have no reasonable thoughts as to how they arrived at those other amounts.

or what I said in response to Peter's subsequent question.