CuseFan

My position is that you need a current amendment to go from $1k to $5k to be able use the SECURE 2.0 jump to $7k and 2026 amendment. My reasoning is if the plan only has $1k then does have the default IRA rollover provision? (certainly there is no IRA provider) I don't know if the anti-cutback rules give you that. Maybe basic plan documents are generic enough in that regard that it's covered. Anyway, I'm in the conservative camp with B, especially for DBPs where the plan's cash out threshold also ties in to QJSA requirements.

Or, if there are non-owner HCEs and want to provide SH to them, you can also limit SH to non-Key employees.

I'm fairly sure #1 is no. Not sure about #2. Saw some ASPPA presentations that say compensation from all related employers is used for testing, HCE determination and deduction limits. But IRC 404 says for self-employed compensation is net earned income from the trade or business upon which the plan was established. I think the safest way to proceed is establish DB retro to 2023 with both entities adopting, determine DB NARs and MVARs using total eligible compensation from both, determine EBARs using compensation from just the adopting employer, and apply 6% limit using the same. Then have owner adopt DC for SE business in 2024. It is not optimal but still likely substantial opportunity retro for 2023 and better than waiting until 2024.

I understand Roth is ultimately taxable, but if profit sharing at first, is it not subject to the 25% deduction limit that would otherwise apply? Or are you assuming based on the numbers above that it's an issue in this case? I think the simplest way (and what gets done the most? opinions?) is contribute VAT and then do immediate in-plan Roth conversion before any investment experience, leave in the plan as Roth and not even bother with IRA.

What both our esteemed colleagues said - plan document must accommodate, subject to testing unless HCEs plan only, and too late for 2023.

Agreed. Once we got to "not treated as a separate participant" that all fell in line.

Love navigating the gray! The early termination for a business transaction such as selling the business should not be a concern unless the transaction was foreseen at the time the plan was established. That is, I would not start a plan effective 2023 if I had a contract to sell the business in a specific year in the not too distant future. Retirement is a trickier situation, as people plan to retire at a certain age all the time but then keep working for various reasons. Is having employees a positive or negative factor where the owner has plan for 2-3 years and then retires? Was it just a short-term tax deferral for the owner or did employees actually benefit? A lot of sides to the arguments and a lot of angles from which to approach accommodating the objective. If no employees to worry about, why not start the plan for 2023 and then freeze after 2024 or run it active another year or two at minimal earnings/compensation before ultimately terminating after 5 or more years? It doesn't get you to the presumptive 10 years but gets you closer - I intended longer but income dropped after 2 years so I froze and then after a few more years I decided to retire. BUT, your responsibility is to communicate the rules and various options and let client decide how to proceed given the risks.

The answer is yes, one DBP can cover them both, but the question is whether you have a single employer plan of a control group or affiliated service group (in which case you HAVE to have one plan covering both) or a multiple employer plan for which your reporting is a little different. If you don't have a CG under the new rules or an ASG, but want one, have one make the other an employee for a nominal salary.

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!