CuseFan

Correct - either apply a plan failsafe that is in place (which must be done if there is one) or do an 11g amendment within 9.5 months of PYE.

Agree that B's former employees that are now in A can continue to be excluded through the transition period provided A's plan is not amended to change coverage or benefits, which you state the Cycle 3 restatement did not alter coverage. Therefore, if the contribution structure hasn't changed, I think your transition period is safe.

7.5% is the maximum gateway required in any combo situation - the gateway can never be higher but a greater contribution may be required to satisfy the nondiscrimination testing. Also be careful if your DB is a CB - the normal allocation rate is NOT the contribution crediting rate, so 3% SHNE + 2% PS + 2.5% CB does NOT equal 7.5% gateway.

Yes.

Yes, you need to have a detailed conversation with the client. Plan sponsors say things incorrectly all the time using retirement plan terminology that they do not understand. I still have many a client that refers to their safe harbor non-elective and/or profit sharing in their 401(k) plan as a match. The only thing that comes to mind for this is quarterly vesting computation periods, for example, you vest 5% for 250+ hours in a quarter rather than 20% for 1000+ hours in a year? Doubt pre-approved plan has specific accommodation, don't know if such a modification would cause it to lose reliance. Regardless, I think you would have to have a 1000 hour annual vesting provision override, so if someone was +250 for only three quarters but still +1000 for the year, they would have to vest 20% rather than 15%. Interesting concept if that's what they're thinking, but have fun administering!

If owner doesn't want to contribute for employees and employees don't contribute enough to let owner benefit much then why have the plan? Dump the plan, have owner do an IRA max and move on. If you wanna dance, pay the piper or get off the dance floor.

Agree w/CBZ. We had similar client with per diem exclusion but it was such a hassle to track and in the scheme of things was much simpler and not a material cost (relative to total ER DC & CB) to include these people, so they eliminated that exclusion. Although my opinion was that it was a permissible exclusion, I think I've seen others opine that this might be a disguised impermissible exclusion of part-time employees regardless of hours. My experience with per diem (on-call) type employees is that they are different than standard part-time employees, but acknowledge this could be a gray area - so safer to include for that reason as well. The weird thing with my client is they had short elapsed time eligibility, so their per diem exclusion was simply because they didn't want to provide benefits to those employees.

Especially the younger the owner(s) compared to NRA, as the difference between the (low) ICR and (higher) funding rate compounds over a longer period.

If the benefit is a J&S where the beneficiary must be a surviving spouse, then I think not, as the ex is no longer the spouse. In this case, I think there would need to be a QDRO stating the ex is still to be treated as the spouse if survivor benefits for the ex are to be preserved. If the form of benefit as defined by the plan simply allows contingent annuitants (spouse or non-spouse) then I think the ex may be locked in and entitled to survivor annuity. Regardless, I don't think the participant can change the form of payment or the beneficiary of the survivor benefit - so that possibly could have been leveraged in the settlement.

Does the plan document not say how to (present) value benefits? If any benefits could be paid as a lump sum there should be a provision stating how such lump sums are calculated, or there may be reference to (and possible offset from) an existing pension plan and such plan's actuarial equivalence may be the proper method. If none of that applies, then I think your NQ plan needs to be amended upon plan termination to provide the basis for determining lump sums.

1. Read the plan document to determine the definition of plan compensation. 2. Determine if the type of new compensation/pay code item is included in that definition or excluded, either categorically or specifically. Since this is a new pay code, it's doubtful it is explicitly excluded. You may need to look up IRC sections or compensation terms to get your answers.

Although SECURE 2.0 may change that.

Employer contributions that are not includable in taxable income of employee as compensation are not subject to FICA. Same for employer contributions to a cafeteria plan (125 et al) - and neither are employee contributions toward those benefits, for that matter.

Agree this should be OK. I mean owner (company) could pay directly outside the plan so why not incur the entire cost to herself inside the plan? I can't see a DOL auditor insisting that the owner has to spread the fee to NHCEs as well, but one never does know what rigid irrational rule applications lurk in the minds of labor laborers!

Correct. As far as I understand it, this is not permitted. In my nearly 40 years (boy I'm old, when did that happen?) I have never seen a QDRO that allows A/P to elect a J&S and all that I have seen specifically prohibit it. The reason is the plan ends up paying a benefit based on 3 lives - participant, A/P and an A/P beneficiary, and I have yet to see a plan that pays a joint & survivor & survivor's survivor benefit.

That is the right answer. People get paid out pensions based on estimated/initially reported compensation (and hours) all the time, only to have actual data subsequently reported that requires a correction and adjusted payment - whether an additional lump sum (which we treat as part of the original lump sum) or a revised annuity payment with a makeup adjustment.

It's interesting that you are the person asking about this Peter. Of all the people on this forum, you would be the one I expected to most likely have assembled those statistics. It would be interesting to get everyone's honest (no Googling) guesses to see perception versus actuality (but then someone has to do the legwork/research, which is probably more than a Google otherwise Peter wouldn't be asking). My guesses: dismissed 20%, plaintiffs 10%, defendants 10%, settled 60%

First, all terminating plans must be fully up to date with the law regardless of deferred amendment due dates, so at a minimum the plan would need a SECURE, CARES et al amendment if that hasn't been done. If it's a defined benefit plan, then there might also be an amendment needed to allocate excess assets or pay immediate lump sums. As Bird noted, we're kind of just guessing here as what might be needed, so as suggested go to the horse's mouth (legal counsel) to get your answer. I agree, we also in general rely simply on the board action to terminate and only do a formal amendment if needed for something other than to simply say "the plan is terminated" - we never amend solely for that.

Agree with Lou, you cannot statutorily exclude from coverage and nondiscrimination testing but whether they must be covered/benefit depends on the terms of the plan with respect to their employer, which you said did not adopt and is not automatically covered.

If both plans - PS & CB - have two-year eligibility, but NHCE gets a TH because of earlier 401(k) eligibility, could you not parse out the NHCE as otherwise excludable? And regarding cross-testing, if the NHCE is substantially older than the owners, do not overlook cross-testing combined plans on the basis of contributions.

Correct, it is not a distribution, it must be a direct transfer to the QRP. The owner does not need to make an election as the participant but should make a resolution for the transfer as the employer unless initial termination resolution already addressed.

2a Spouse would have until RBD so can't really force out sooner, and once you start RMDs (issuing checks), she can sit on them all she wants but they are still taxable distributions to her, so that may change her mind. Disclaiming can mitigate that if possible. Why not take now, roll over, leave tax deferred for children/grandchildren/whoever upon her passing? Or take, pay the taxes on and then gift the rest as desired. Spouse should discuss with financial advisor, and plan has time for her to make up her mind.

Depends on the terms of the plan, particularly the definition of eligible employee, and if X & Y are now one company XY or still separate companies X & Y now within a control group. Plans often exclude employees related to a transaction until the end of the transition period referenced by Bill and often exclude employees of an affiliated employer unless that employer adopts the plan for its employees. Agreed, and it still amazes me how retirement plans continue to be ignored during due diligence and then subject to scrambling damage control thereafter - at least in the smaller company market.

Yikes. Maybe withhold extra from cash wages between now and year-end, or some other logical time frame? If document said TFB excluded and w/o the additional car allowance detail there'd be no issue, but agree this probably has to be included. Are there other TFB that are included? Otherwise, why would they get that specific on the exclusion?

If only my wife felt that way - LOL!