CuseFan

Related employers are treated as a single employer and you must aggregate compensation from all when applying the limit. You don't calculate a 415 limit separately under each employer or a separate ADP for the employee under each employer, or apply hours of service separately, so same with applying the comp limit.

When the match was made/allocated in part of 2020 it was a safe harbor match and required to be fully vested at that time. Subsequent events may have taken the plan out of safe harbor status but I don't think they change the nature/vesting of the contributions previously accrued. Regarding 2022 treatment, I would see what the VCP filing and amendment says. For example, say a 3% SHNE plan is amended effective 7/1 to suspend the SH contribution. The plan is no longer SH and must do ADP testing, but that doesn't magically shift the fully vested 1/1-6/30 3% SHNE to profit sharing subject to vesting.

First, as always, check the plan document to see if it says what to do regarding incorrect contributions (it may have general instructions as opposed to specific match-related issue). Absent plan instructions, I would forfeit the incorrect excess match and any related earnings, leave in the plan and use according to plan instructions.

Agree 100% with the above: #1 - NO, #2 - YES.

Unless two-year wait, which = full vesting, how was this person not eligible 7/1/2014? With a 4/2013 hire, 1/2015 entry would violate 18-month maximum hold out.

RBG is spot on, compliance testing is accrual basis and aligns with corporate and individual tax reporting. Cash basis accounting just impacts how it all is reported on the 5500.

I think you're OK and do not need to employ the same method. Conversely, you could determine rate groups based on allocations but do your ABPT using benefits.

I don't think state has anything to do with it, and agree with Just. Below are excerpts from IRS website. I have seen people use W2 inappropriately as an easy avenue for payroll taxes and income tax withholding because they don't want the hassle of doing correctly. Also agree you should "punt" to accountant to give you plan compensation. Reporting Partnership Income A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" profits or losses to its partners. Each partner reports their share of the partnership's income or loss on their personal tax return. Partners are not employees and shouldn't be issued a Form W-2. The partnership must furnish copies of Schedule K-1 (Form 1065) to the partner. For deadlines, see About Form 1065, U.S. Return of Partnership Income. Is a partner considered an employee? Are partners considered employees of a partnership or are they considered self-employed? Partners in a partnership (including certain members of a limited liability company (LLC)) are considered to be self-employed, not employees, when performing services for the partnership. (Jun 15, 2023)

I agree it's a very rare occurrence for a small business owner not to provide some service to their business, but there are people who simply own businesses they let someone else run. The better example, and more relevant to initial question, is where a minor daughter is given a partnership ownership share but provides no services for the entity.

There are worse words for your fingers to be on autopilot!

Darrin Watson did a webinar on earnings from self-employment a few years back. He stated that net earnings from self-employment (NESE) come from a trade or business in which the self-employed individual's (SEI) services are a material income producing factor. He then gives the following examples: Janice owns and operates a bookstore as sole prop Janice has never worked in the store Instead, she leaves everything to a hired manager Janice pays SE tax on her Schedule C income She can set up a plan for her employees, but she can’t participate she isn’t an SEI Sue has a successful internet consulting business Sue wants to make her 3 year old daughter a partner The daughter receives a K 1 and pays SE tax on her share of partnership income Daughter isn’t an SEI her services aren’t a material income producing factor Just because a person is a partner in a partnership, that in and of itself does not make them a self-employed individual for retirement plan purposes. So I think not only CAN you exclude that person but that you MUST exclude that person as not an employee of the business.

And these are not wages, they are retirement benefit accounts, subject to ERISA and IRS rules (law) and must follow the formal plan document provisions (legal obligation) as noted above. FYI, I suspect that delay in paying out 401(k) accounts is to avoid someone quitting Monday, getting their 401(k) by Friday and wanting their job back Monday. Finally, if you're not planning to roll over your 401(k), 20% will be withheld for Federal tax liability, and your ultimate taxes will include Federal, CA state and if you are not age 55 there is an additional 10% Federal tax.

If 2022 reporting is still fully open (corp taxes, 5500/SB, etc.) and the haircut was agreed to by a generic "to the extent unfunded" then if economically advisable (Paul's questions) I think you're OK. The employer has the discretion to fund and make the "extent unfunded" less or zero. If there was a 2022 amendment and a hard-coded agreement for the haircut, then as previously noted, an HCE-only amendment could be problematic.

100% correct. If retired/separated they'd be eligible for distribution - which they are not. They simply wend from an eligible class of employee to an ineligible class of employee, but they are still employed by the employer (or any control group member) maintaining the plan.

Makes sense. The compensation was made available to the person on 9/29, a date before the effective date of participation which is the earliest date any salary deferral could be effective.

Great explanation Luke. I wasn't 100% sure about the spouse's survivor benefit amount being unaffected by when the retiree claimed, thanks for the clarification. As you both stated so well, then it's a matter of "doing the math" to see where the breakeven point is and then deciding what makes sense for the particular situation. Here, where the retiree may be terminal, it sounds like a no-brained to commence ASAP. I like it when I continue learn things from this forum or confirm things that I thought but wasn't sure. Thanks everyone!

Also note the maximum LS changes depending on when it is paid - and with CBPs that is usually the concern, the maximum lump sum as opposed to the maximum benefit. Effen gave the correct general stock answer and that is the starting point but unless you check all the boxes - 10+ YOP, FAE >= $265K, NRA 62 and distribution at age 62, then you're looking at something different. And if you're looking into the future, then IRS limit increases come into play, as could post-65 actuarial increases. Assemble all the facts and future expectations of the situation you're dealing with and then you can craft an answer/approximation/range that applies most appropriately to that situation.

It does not appear so to me, it looks like the cross-references are for deduction purposes only and nothing refers to minimum funding.

Looks like her benefit is a percentage of his basic amount (full benefit) based upon her commencement age, but like I said, delve into SS website as it has lots of great info. When a husband dies does his wife get his Social Security? These are examples of the benefits that survivors may receive: Surviving spouse, full retirement age or older — 100% of the deceased worker's benefit amount. Surviving spouse, age 60 — through full retirement age — 71½ to 99% of the deceased worker's basic amount.

You should go to SS website and research because it has lots of great information. In general, it looks like a surviving spouse can get survivor benefits no earlier than age 60 (50 if disabled) and there is a reduction based on the recipient's (spouse) age. If your client commences at 62, I don't know if his spouse's benefit calculation would be based on his age 62 reduced benefit further reduced based on her age (which I think is punitive) or his full benefit reduced based on her commencement age (which makes more sense). If/when the spouse claims her own benefit, she gets the larger of the two, not both - so either the survivor benefit continues for her life or it goes away and is replaced by her primary benefit.

As a control group all participating employers are deemed a single employer so I do not think a different formula for one or more employers works. Also, I think that any discretionary match must preclude the possibility that any HCE could get a higher rate of match compared to any like NHCE (i.e., one who defers the same percentage), which would prohibit participating employer(s) from having their separate discretionary matches unless such employer(s) have only NHCEs. If I'm wrong on any of this, I hope one of my esteemed and more knowledgeable colleagues with respect to this subject matter will set us straight.

The reason they ask for date of DL is that distributions are required to be completed by the later of 180 days after expiration of PBGC's 60 day review period or 120 days after date of IRS DL (if submitted to IRS before submitted to PBGC). The PBGC Form 500 shows the date of IRS submission, if I recall, so they already know if plan was or was not submitted to IRS before PBGC. They don't care one way or the other, just need to know for enforcing their requirements on timing - to which they are very stringent unless you ask in advance for and get extensions.

There was cutback relief from upping NRA to 62 for a couple of years after that was enacted, but that was quite a while ago now so I agree it would be a cutback and think a VCP would be needed in this situation. Accrued benefits and funding were never the issue for artificially low NRAs, it was a situation where NDT could be manipulated and/or participants could get in-service NRA distributions very early. A successful VCP application on this might be contingent upon neither of those IRS-perceived abuses occurring in that plan.

I just watched a recorded webcast where it was said the IRS could (would?) waive excise taxes if self corrected within 180 days. Given you're within that time period (and still the same tax year) I would do that. Worst case, I believe, is a 10% excise tax if corrected timely.

That responsibility is satisfied through these requirements being spelled out in the SPD, which we all know every participant thoroughly reads, understands and remembers - LOL! The legal responsibility is satisfied, but it would be a good employee relations practice to remind such participant of those provisions.