CuseFan

You're good, ignore the software.

only if allocation rates are broadly available, which may be your case

All the time

So each agent is a self-employed contractor. I suspect the group has some control on daily leased employee activity but any one agent most likely does not. Also, that employees are employed by the insurance company and not a PEO/employee leasing company leads me to conclude they are (still) considered employees of the insurance company. The alternative - you have a group of shared employees among a number of different self-employed agents which would be extremely messy. And in first paragraph you say agents want their own plans but then ask if these others should be included in the plan. Each presents a different premise - individual 401(k) plans or a multiple employer plan.

Set up 2022 with traditional DB counting past service.

I'd still be inclined to include. And I question the zero hours. If the person was being paid for accrued vacation that was not taken, are not those hours required to be credited? What about someone on paid leave who doesn't return and ultimately terminated while never providing services during the year but had compensation and hours credited? I'm not looking to go to the mat on this, just raising some questions.

Are you sure, and what platform do you use? Our FT William adoption agreement has the following: 6. Method to fix Code section 401(a)(26) and section 410(b) coverage failures: a. _ Corrective amendment under Treasury Regulation section 1.401(a)(4)-11(g). b. _ Apply Section 4.01(c). Personally, we prefer to use 11g amendments rather than be locked into a specific failsafe action.

If it's an owner-only plan and you want to guarantee maximum benefits all along the way, use a traditional formula as CBZ noted. Actually, even with employees who you want under a CB design, you can have a traditional DB and CB mix. Otherwise, set the CB credit at the entry age max for your defined NRA (62 or 65) and periodically amend/update the formula as desired w/o being locked into increases. The owner can always use the funding rules/max deduction range to increase actual contributions, they just don't automatically go to owner (right away). Then pick and choose optimal occasions every few years to allocate additional amount(s) to owner(s) when testing demographics are most favorable. DB/CB plans have much more flexibility than utilized by those who want them to act like DC plans as much as possible.

Isn't it the buyer who pays the sales tax? But then the hassle is for the plan to collect and remit. I know when you buy a car from an individual you don't pay sales tax to the person but have to pay the sales tax when you go to register it. Might there be a similar mechanism available here?

That was my first thought. Being young, his DB 415 max contribution won't be huge but will be better than a DC. If he has already established a three-year compensation history with his LLC around that $100,000 figure (ignoring SE adjustments for simplicity), then he could probably do $75,000+/- to a DB. However, without an increase in LLC "compensation" to increase his 415 average compensation he would hit 100% FAE 415 limit in 4-5 years - but maybe out on his own by then or a co-owner in his current employer with possible CB there. A lot can happen in 5 years and in the meantime he has saved $300k-$400k on a tax deferred basis, more than $20k (approx) DC annual available on $100k SE net income. Also, at that age and income, I'd look to maximize Roth in any way I could.

Is this a DC or DB/CB plan? If DB, be careful this is not (or doesn't start) a pattern of amendments of such nature and frequency that in practice creates what IRS might challenge as a discretionary plan and/or potential non-compliant CODA.

And Larry Starr posted this from Derrin's book. The emphasis of the relevant text for you is mine and so the answer to your question is no. Posted May 29, 2018 Derrin Watson's book Who's The Employer deals with all these issues. From the book: Q 10:21 How are the Code §404(a) limitations on deductibility applied to controlled groups? Ask the Author. Click to work with project folders. Click to add personal annotations/notes. This answer applies only to controlled groups, but not necessarily to other related employers. See Q 12:7 for discussion of deductibility in common control situations. See Q 13:24 for a discussion of deduction limits for affiliated service groups. If two controlled group members jointly maintain a qualified plan, the limitations of Code §404(a) relating to the deductibility of contributions are applied as though all controlled group members maintaining the plan were a single employer. [Code §414(b)] This differs from the other applications of the controlled group rules discussed above. For purposes of Code §415, for example, all employers in the group are aggregated, whether or not they cosponsor a plan. But for two employers in a controlled group to be aggregated for deducting contributions to a plan, they must both sponsor that plan. Example 10.21.1 Nina, Pinta, and Santa Maria are all members of a controlled group. Nina and Pinta jointly sponsor a profit-sharing plan covering their employees. Santa Maria does not participate in the plan. Chris works for all three corporations, and receives $40,000 compensation from each (total $120,000). He is the only participant in the plan. The Code §404(a) limit on deductible contributions is $20,000, which is 25% of $80,000, Chris’ compensation from Nina and Pinta. His compensation from Santa Maria is excluded because Santa Maria did not maintain the plan. Example 10.21.2 Oscar Corp and Meyer Corp are in a controlled group. They jointly sponsor a defined benefit plan and a profit sharing plan. Col. Mustard works for both companies and participates in both plans. Since they jointly sponsor the plans, Code §404(a)(7) limits the deduction to the greater of 25% of compensation or the required defined benefit contribution. Example 10.21.3 Assume the same facts as Example 10.21.2, except Oscar Corp sponsors a defined benefit plan for its employees and Meyer Corp sponsors a defined contribution plan for its employees. Since neither cosponsors the other’s plan, the two companies are separate under Code §404. Accordingly Code §404(a)(7) does not limit the deductions. This would also be true in a common control or an affiliated service group situation. In theory, the Code §404 deduction limit is allocated to the employers according to regulations. However, in the more than 40 years since ERISA, the Treasury has yet to take pen to paper (or pixels to screen) to compose those regulations. Absent those regulations, there is a single Code §404 limit that each employer uses.

If multiple employer plans then the deduction rules apply separately to each entity, so control group question is the key, I think.

This is an awesome question! Unfortunately I do not know the answer but am curious enough to look into - are they a control group or does the spousal separation exception apply to them, making these multiple employer plans? I don't know if that affects the answer, whatever it may be, but having all the relevant facts is important.

You have a 403(b) with a match, hence an ERISA plan that should also have a plan document that tells you exactly what you should do. If rules are same as 401(k) plans then you distribute excess that is vested and forfeit excess that is not but read the document.

You couldn't even provide a QNEC because their 415 limit of 100% of compensation is 100% x $0 = $0. it is unreasonable to include these people in testing. Agree w/Belgarath.

A "soloK plan" is a product with the fancy marketing moniker - are you asking if this would still be considered an owner-only plan with those ERISA exemptions and subject to 5500-EZ filing requirements? If CG, I think yes but, if MEP I'm not so sure. If not CG (yet), easy enough to get there by having one of them involved in the other's business in some minor fashion.

If not, it may be able to be permissively aggregated provided the union plan was subject to good faith bargaining AND contributions/benefits are comparable to the NU plan, T-7. I did not dig further to see if comparability was defined or explained. There was a BL discussion on this from 20 years ago that came up on Google search, but which didn't seem to reach consensus. https://www.law.cornell.edu/cfr/text/26/1.416-1

The important date is the "Annuity Starting Date" which is the date at which the benefit may be paid. Unless the plan specifically allows for a retroactive ASD, the ASD must be a date after the QJSA notice is provided (which should be 30+ days before the ASD, but can be closer). If you are doing calculations now then as Effen noted you're looking at a likely ASD of 5/1. That is the date as of which your benefits should be calculated, including the lump sum. And you will need to actuarially increase from age 65 (depending on actual retirement and plan terms) to that 5/1 ASD.

The SAR due date is specifically tied to the due date of the 5500, is it not? As there is no due date for a 2021 5500 filing as a filing is not required, I think that necessarily means there is no due date for a 2021 SAR and one is not required. The AFN due date is tied to the plan year, correct? So I'm not sure if you have a 2021 get of jail free card on that notice if otherwise required, but I'm not involved in administration at that level.

Also be careful because I've seen practitioners who implement designs that inflate the annuity benefit to get larger deductible credit amounts but where the account then exceeds the maximum allowable lump sum. If plan is expected to be ongoing for a while then you can usually get that situation reconciled, but the danger is premature death. More of a concern for a single owner plan than husband/wife or multiple owner plan, but something of which to be aware.

I think you have to do what the plan says and apply the failsafe (we always use 11g after learning tough lesson years ago). In aggregation the CB then satisfies coverage, but now you have NDT and gateway and TH et al headaches. Yes, you can empathize with the client over their prior TPA's lack of service/attention, but your job is to consult with them on how to fix their plans. Good luck

Exactly, you can test everyone or you can parse out the PS-only people. If you include everyone, make sure the PS-only get the full combined gateway in their PS. You mention 6% - is that the gateway percentage?

That is the key - good call Luke. I would have expected the plan language to say "... or is considered owning..." so this is a trap (as Admiral Akbar would say) for the unwary. Regardless, as all noted, options must be exercisable (vested) to be considered ownership. These are the types of Q&A's that provide the best value in this forum, in my opinion, getting input from very smart people (such as Luke) on issues that can't be discerned simply by reading the document (which some do last rather than first based on other Q&A's we see).

I believe the provisions that require consideration of options say "who owns or is considered owning...." Unvested options definitely do not count anyway as they are not yet exercisable.