CuseFan

Agree with suggestion and yes, expired, but if they did not not allow after a certain date where legally they could, the plan amendment (or a resolution if generic pre-approved plan amendment) should reflect that or else they have an operational defect on the flip side. Especially if employee A tells employee B that she got a CRD so why didn't B and he says he asked an denied....bad, but then not having the documentation to support, worse.

Are these real estate agents? If so, they are self-employed and can have their own plans on their own income from self-employment.

I thought this came up earlier this year, or maybe last fall, it's all a COVID blend right now, but I referenced an ASPPA recorded webcast that Derrin Watson did on earned income and he covered this. If I remember, he stated there was no clear guidance either way but thought you it would be reasonable to combine the SE income to not less than zero and then add in W-2.

Correct, just need a valid tax ID# and that does not have to be a SSN.

So if they just ignored everything and pretended they never adopted a plan, you can't really stop them and force them to take salary deferrals from employees - but you can resign from the engagement and bill them for the contracted services you performed (document and whatever else) if you haven't done so already. They assume the risk for non compliance. Maybe they get away with it, or maybe they don't because some disgruntled employee says "Where's the 401(k) plan you said we had? I have this SPD that says I'm automatically enrolled but you're not taking those salary deferrals or giving me matching contributions." and then complains to DOL and/or IRS.

Precisely

That is the answer. You can deduct up to 31% of "compensation" in total but if DB contribution lowers compensation then you have more issues to deal with. You can deduct up to the 31% combined max and then deduct the rest of 2020 MRC in 2021 and will hopefully have enough room from the cushion to also deduct the total 2021 MRC, otherwise you end up carrying forward. Make sure the SEP is 6% or less - but may want to take SEP out of equation altogether (replace with 401k to get the salary deferrals). Other SEP issue - if with Schwab, is it their SEP VS document being used? Because you cannot use IRS Form SEP-5305 and have another plan.

Exactly - so no deduction, but could do VAT up to 415 limit, do an in-plan Roth conversion (plan document needs to have Roth provisions) and then voila, you have your back-door Roth that everyone seems to be clamoring for these days. This is one of the rare instances it works (owner/HCE only plans). And at age 42, I would say there is certainly value for the owner in Roth.

You never need to restate a terminating plan but you do have to make sure it is up to date at termination. The pre-approved plan providers have interim amendments for terminating plans, the issue is knowing whether these cover everything through your termination/distribution date if such extends beyond the cycle restatement date. I deal with DBPs, and those interim amendments are usually sufficient - I expect DCP amendments would be as well, assuming you don't blow well past the cycle date. All that said, restating gives you absolute safety in that regard.

Agreed!

No, I think you have it well thought out - the double deduction design will not work. Yes, adding a calendar year PS 401k will work provided the noted 6% PS limit to avoid combined plan deduction limit. Do they not want a 2020 deduction or do they think they missed their chance? If their extension goes to 9/15 they can adopt a DBP for calendar 2020 and file an amended return to claim the deduction, we had a new client specifically do that.

If the above is not available, I would suggest a resolution adopted by the person or entity with the current authority to appoint or replace the trustee, that authorizes and names a successor/contingent trustee in the event the current trustee dies or becomes otherwise incapacitated, and have such successor/contingent trustee sign an acceptance of this. Then make sure a copy of this is kept with permanent plan records and given to vendors as may be needed.

YES - all service within the control group must count for eligibility and vesting whether earned at a participating employer or not.

What does the plan document say? Always the first source, right? Many pre-approved documents I've seen that have the under $5k default rollover provision also give the PA discretion to adopt procedures to implement default rollovers for balances less than $1,000.

The instructions are clear - they want hi-3 average for a DBP (checking 415 limit) and if the benefit is based on something different then you need to attach a separate schedule that shows the compensation upon which the benefit is based (so they can spot-check that).

Was there a service agreement and were those services paid for?

Yes. I deal with DBPs where the distribution provisions/timing for termination before retirement can and often are different, do you not have those different options in your PSP?

Tentatively I say yes but a better way might be to include such provision in an appendix/addendum.

I don't think you can ignore that prior service or start the vesting clock anew for the new CBP, at least for anyone who was in the prior plan.

Exactly - and what I am telling everyone is that this only works for two types of plans: 1) HCE-only plans that do not need to test and 2) very large plans that can pass ACP testing with the VAT contributions. If your plan(s) is(are) in between, fuggetaboutit!

You and I are partners and trustees of the plan - I terminate and initiate a distribution of my total benefit and leave you with less than your total benefit, are you happy? Is that fair? Even owners and HCEs are entitled to and afforded some protections by these rules.

I think you're OK, and if the deferred bonus does not vest until the end of the 3-year contract and is paid at timely thereafter (within 2 1/2 months or tax year-end), you have a short-term deferral and don't really have to deal with 409A at all.

Yes, your prorated 401(a)(17) compensation limit for the 10-month short plan year would be $237,500. The plan document should have language similar to this in the definition of compensation, as related to the compensation limit: If an Annual Compensation period consists of fewer than 12 months, the Annual Compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.

For a short plan year the 401(a)(17) compensation limit and 415 limit are prorated 10/12. I'm not sure, but I thought a partner's earned income is deemed to all be earned on 12/31, so you don't prorate income for a short year but you limit the income according to prorated limit.

Yes, provided coverage passes, as you note. Also, as ESOP Guy pointed out in responding to another post, such an amendment could create a partial termination. So you kick these employees out of the plan prospectively but may have to fully vest them at 1/1/2022 in whatever account they have accumulated and then track those inactive accounts until there is a distributable event.