CuseFan

Thanks, and that certainly leads to one interpretation over the other.

DBP with limit on lump sums (PVAB < $50k) In a separate interest QDRO, would this apply individually to the participant's and AP's respective portions or to the pre-split benefit in total? Checking if the plan's QDRO provisions have any exceptions to that LS limit, but looking for opinions in case there are no exceptions. I can see both sides - AP is treated as a separate participant with separate benefit, so apply separately, but the flip side is if total PVAB is >$50k, say $80k for example and participant can take a $45k LS and AP a $35k LS, then the plan will have been forced to pay a LS total on the one (albeit split) benefit in excess of the plan's $50k limit.

1) Yes, there could easily be ASGs between his SE business and the other entities in which he has an ownership interest. Assuming yes likely means no solo DB/CB on his SE income unless none of those entities has employees (unlikely, otherwise no need to ask your questions). Before jumping to the desired outcome of no ASGs and the ability to do a solo plan, I agree that getting a legal analysis and opinion is the smart thing to do and I would not, as a practitioner, to proceed in implementing such an arrangement for him without that. 2) Assuming no ASG, a solo DB/CB would not be aggregated with 403(b) for 415 as different plan type, nor deduction because there is no "employer" deduction in 403(b) attributable to the employee.

correct

This is not an official opinion but I tend to agree with you. I cannot remember ever doing an SMM for compliance provisions on an accelerated for basis for a terminating plan. Usually if anything that impacts administration and a participant's benefit - timing and/or form - there is some other place where that gets communicated, such as a notice of plan benefits and/or a distribution election package. The relevant provision affecting participants are the RMD ages, and if you're dealing with only DC plans or small DB plans that are likely only paying out lump sums then those don't matter at the plan level - they'll get all that from the IRA provider.

https://www.nfp.com/insights/what-is-the-real-deadline-for-making-plan-contributions/ Here is a great article on all those rules. For-profits have 30 days after the tax return due date including extensions for a deposit to be considered an annual addition for the prior year. Tax-exempt entities have 9 1/2 months after their fiscal year end, which is 10/15 for calendar fiscal years (be careful if plan and fiscal years are different, and which is your limitation year). In your situation, an August deposit poses no issues if your relevant years (plan/fiscal/limitation) align.

Is there an election required? It doesn't have to be through payroll withholding, I thought for VAT the person could (if desired) actually just write a check and give to trustee and/or PA saying "here is my VAT contribution for PY XXXX", provided 415 is not exceeded.

NQ plan distributions from an employer for which he continues to work? If plan permits he could defer receipt of payments not due within the next 12 months, providing such complies with 409A. This is compensation to him, not self-employment income for which he could do a solo plan - unless he was not an employee but a contractor service provider (then and now) with deferred compensation from the service recipient.

Congrats & Enjoy!

Exactly, that sort of issue occurs very infrequently in my experience.

DBP could allow in-service commencement at age 59 1/2 but document had to provide. Also, there is no 30-year annuity - there could be 30-year installments if such period did not exceed life expectancy (or joint life). If the person was not 59 1/2 then you have operational defect, correction of which is restoration with interest. The "annuity" does not circumvent in-service restrictions.

A DBP requires 1000 hours for a year of credited service. However, final average earnings (FAE) is determined monthly through end of employment. Therefore, someone who terminated and worked less than 501 hours in a year could nonetheless experience an increase in their accrued benefit by virtue of an increase in FAE despite not earning credited service. Are we able to statutorily exclude these participants for 410(b) testing or are they considered benefiting or could benefit (i.e., term < 501 hours NOT being the reason they fail to benefit)? I know we would have to include or exclude all such participants on whichever basis whether they experienced a benefit increase in actuality or not. I did a little digging but couldn't find anything right away so am turning to very small colleagues in the forum. Thank you in advance.

Peter, the issue is that minimum required contributions to defined benefit plans must be satisfied by cash contributions. You cannot satisfy funding obligation by contributing property.

Agree w/CBZ 100%

You aren't confused, just sounds like they want to avoid taxes on the gains on the VAT account without rolling out the VAT account and steering to two IRAs - Roth and traditional.

If the plan says 8% annually w/o conditions then everyone gets 8% for 2024 and cannot change that until 2025. However, if the allocation period is not annual and the plan says each payroll period is 8%, then you may have a case for amending future payroll periods. It's the plan language that is important here, not their payroll/deposit/allocation practices. If you are able to amend, I think you need to provide ERISA 204(h) notices to those seeing the future reduction, which must be done 45 days (large plans) or 15 days (small plans) in advance.

Congrats Andy, enjoy for yourself what you've spent a career helping others attain - I'm jealous!

Effen and Peter, as you see, provide excellent input and your subsequent attainment of the facts now give sense to the situation. The plan could certainly have allowed a life annuity with period certain for the AP and allow the AP to name a beneficiary for any remaining guaranteed payments after his death. The plan could not have provided for a survivor life annuity to AP's beneficiary (i.e., APs cannot elect a J&S with a new spouse or other beneficiary).

Your question is not clear, are you asking when does the deferred compensation become taxable and subject to income tax withholding rules or when the actual tax on the income is due? If it's the former, the income is taxable as compensation when it is paid or otherwise made available to the recipient, which is the 6 month delay date, and subject to withholding at that time. If it's the latter, the tax is due on the recipient's tax return due date as the amount is contingent upon the person's total tax situation.

The provider is claiming that the those different lines asking for different numbers are in fact asking for the same numbers, which makes no sense, otherwise there would be one set of beginning/ending counts. And clearly, collecting counts for both eligible participants and participants with balances would be a metric of interest to IRS/DOL.

Agree with Bird, we rarely see small plan clients on pre-approved documents submit for plan termination determination letters. On permanency, I think you can craft an early termination excuse out of just about anything.

I have not seen an IRS challenge to any client's early termination, but that doesn't mean there is little to no risk for an unsubstantiated early termination.

The IRS presumption is that 10 or more years is deemed permanent and won't be questioned. I suggest anything less than that have a reason other than "changed our mind." I use the 3-5 year period for changes, so as not to have a pattern of frequent amendments that create a discretionary arrangement that is not a "defined" benefit. That said, there are a lot of business reasons that could substantiate earlier termination, just be careful you do not have a blatant short-term tax deferral.

Not sure, but when you use prior year testing you assume 3% ADP for NHCEs, right? So wouldn't that be a reasonable level here? For CBP, owner and spouse are 40% (2/5), so you don't HAVE to include those NHCEs unless they should have been included under the terms of the plan. Is this a last year situation or a multiple year situation?

Yes, I remember the discussion. I think there are potential 415 and deduction issues as noted in the prior thread and there is a better way to accomplish (individual allocation groups). Also, if that is language modification to a pre-approved document and has not been submitted, you may not have reliance on opinion letter.