CuseFan

Bird is spot on. The "employer" PS contributions made on behalf of partners is taken as a personal deduction on the individual's tax return and so necessarily reduces such partner's taxable income directly, dollar for dollar. PS contributions made on behalf of partners will reduce the cash available to distribute, but this in and of itself does not create a CODA. If all the partners got 10% PS or up to the 415 max, would you even be asking the question? Regarding the determination of PS, there should be clear documentation at the partnership level and, as you note, no individual elections.

I agree that it is very questionable that for-cause termination is considered a substantial risk of forfeiture. Such a provision appears to be primarily designed to defer taxation. I also agree with need for qualified professional counsel.

You can do a window - discrimination is looked at separately with respect to current employees and former employees, so no problem offering only to current employees. You can offer lump sum to retirees in pay status provide it is non-discriminatory with respect to that group, and so limiting to (former) NHCEs even if top-25 restrictions are not in play would be OK as well. I would suggest not adding a general lump sum option and, outside of any window, only allow lump sums upon termination. But LSWs in advance of a plan termination is not w/o its drawbacks. The counts you give are small - is that just for example purposes or is this a relatively small plan? Because if you offer a lump sum window, and also offer to retirees, and are left with a small in pay status group for which to purchase annuities, you could have a very difficult task in finding an insurer to underwrite and likely incur a sizeable negative selection premium as well. If you have a reasonable retiree liability, that is what attracts the insurer and helps ensure they'll write the deferreds as well. Insurers love immediate annuities, do not like deferred annuities (from plans), and hate plans with general lump sum options. Anything the sponsor can do to maintain the former while avoiding the latter as much as possible will improve their plan termination annuity purchase experience (willing providers and pricing). A good broker (we use Brentwood) can advise you all on that and (this is the mistake often made by not doing) should be consulted now rather than waiting until the formal termination process begins. If your plan is small, if it looks like you may be able to entice everyone, actives/deferreds/retirees, to take a lump sum, that would be your best outcome but it's a risky proposition if you're left with just a couple of annuities and a killer if any are deferred.

Surprised - at least on class transfers, although I don't think that's the applicable issue because HCEs are not an ineligible class, they merely have a different eligibility requirement. Most plans (although not required because not protected as Lou stated) say that upon amendment of eligibility those already in the plan continue in the plan regardless, but that doesn't really fit here either. Without seeing specific language, I would think or otherwise might interpret that the exclusion/waiting period for an HCE specifically applies to an "eligible employee" and does does not mention someone who is already a participant. Most likely, the language with respect to this precise issue is sufficiently vague enough so that the Employer/Plan Administrator can exercise its right and duty to interpret the plan as it deems reasonable provided this is applied on a uniform and nondiscriminatory basis in the future. That is, figure out what makes the most sense, document the decision and move forward now and forever accordingly.

Yes, this would only apply to 5% owners, and makes sense because (like Lou noted) you don't want an owner's child instantly eligible and potentially blowing up your testing.

That should happen with Roth deferrals, which are after-tax, and in that case I think the employer would deduct as wages rather than contributions - but these are the accountant's problem(s), not yours.

Exactly - that's why it's there.

Sorry, just wanted to emphasize that not reporting taxable income is a serious issue, and the lack of reporting potentially happened in two manners - by the account payer (which appears to be the account owner) and the recipient (same person). And ex-ballplayers have gone to jail for not reporting income from autograph selling shows. The situation above may certainly not rise to the level of tax evasion, but the seriousness of the situation should not be overlooked, that's all - and that comment from an attorney years ago have stuck with me.

I have never seen a brokerage (I expect the institution was not a bank) on a retirement custodial account do any sort of tax w/h and reporting, they'll cut checks to the account holder but that's usually it - don't know what anyone else's experience is, but that should have been a red flag from the start. Not to further alarm, but failing to report income like that is tax evasion, pure and simple, and is the kind of thing for which people go to prison. A lawyer told me long ago, you can play with deductions and if you get caught you get taxes, interest and penalties, but you hide income and get caught you go to prison. So a tax lawyer should be hired to clean this up ASAP unless it no longer matters based on account holder's incapacity. But if son wants to protect for his future benefit and sleep at night, they will want to address. Good luck.

Does plan say three years, three plan (or limitation) years or 36 months? If three years, then I'd be inclined to say $190k +$275k +$280k divided by 3 for average annual compensation.

If a participant has been deceased that long, were not items such as statements, fee disclosures, SARs, SPDs, etc. returned as undeliverable? If a family member continued to receive then yes, it surprising no one came forward with a claim. Usually death searches are done on pension plan retiree populations (sometimes including deferred) but rarely if ever on DC plans - maybe that's a practice that should be undertaken?

CBZ is spot on.

A multiple employer trust is different than a multiple employer plan - you can have the former without the latter. This is different than a master trust, where assets of multiple plans of a single employer or controlled group of employers are contained in a single trust. I do not think there are any restrictions on solo plans entering into this sort of arrangement.

If this happened say 9/15 and then was reversed with a negative deferral on the next payroll, say 9/30, would we even be having this discussion? There has been no mention of matching contributions - so it that not an issue here? Again, bigger issues, an individual's ability to manipulate data/systems w/o oversight/controls (at least in appearance) - which may not be your ex-colleague's place to bring up - and the payroll system's failure to properly limit, although that could have been due to the oddity of the payroll calendar and a last minute change. That is something your ex-colleague should bring up. I know our company was originally going to keep 26 bi-weekly pay periods for 2020 but then decided early 4Q to accelerate Friday 1/1/2021 to Thursday 12/31/2020 and make 2020 a 27 pay period year because it would be paid that day - and probably easier to do that rather than pay on 12/31 effective 1/1 and include in 2021.

If someone is questioning what a former owner received from the Plan then they can sue - if they have standing - for that sort of information. Otherwise, what has been noted above is more than sufficient (subject participant statements, plan totals and relevant calculation formulas. And, until there is an actual QDRO, I don't think the estranged non-participant spouse has any standing to sue any more than you or me.

Both? 401(k) contributions, including catch-up, are limited to the lesser of $26,000 or 100% of compensation (similar to 415), which in this case is $25,500, correct?. Regardless, the $500 must be distributed for correction.

If it's a pooled account, then accounting/valuation numbers need only include the subject participant and plan totals at needed dates - where is there any need to disclose anything concerning other participants?

From a plan perspective, was his next deferral a negative $750? Is the plan and his account square? It is unclear from your description if all the required +'s and -'s have occurred. As it was last payroll and probably the last business day of the year, I don't think earnings are an issue, no more gap period interest, right? I think the bigger picture problem is that you have an individual, especially in a large company, who was able to manipulate his W-2, payroll and 401(k) on his own without any apparent oversight or controls. If the cash does not reconcile to account and/or payroll records - it may or may not show up on plan (CPA) audit or IRS audit - but if it does, I think the issue is much greater than a compliance limit.

Per an ASPPA webcast on Earned Income presented by Darrin Watson, net earnings from self employment (NESE) is based on the total of all (so $50,000 net) for purposes of determining the SECA tax adjustment but he opines that you would use the sum of the NESE from each business, but separately not less than zero. His reasoning is that if entities were incorporated then W-2 would be $100,000. He also states that there is no clear guidance. In summary, your SECA adjustment should be made using (B) $50,000 and such should be made on (A) $100,000, BUT given the lack of guidance, would suggest you go forward under (C) "our understanding is... but there is no definitive guidance, so you and client must decide".

You can provide in-service w/d for non-restricted funds (i.e., those not restricted prior to 59 1/2, hardship or separation, such as 401k) on whatever uniform and nondiscriminatory basis. However, it gets administratively messy if you allow from partially vested accounts.

And here's hoping that all you not yet 64 (myself included) survive the craziness and make it there - and well beyond!

The average benefit percentage is calculated by considering ALL contributions to ALL plans within the CG, so the only people with zero rates anywhere should be those with zero deferral, zero match, and zero profit sharing/safe harbor/non-elective. Groups 1 & 2 are only zeroes for purposes of determining rate groups under the general test for nondiscrimination, which you should not need to do. If Plan 9 satisfies coverage and provides uniform percentage (design based safe harbor), you should be good, but you have one average benefit percentage for the entire control group that is based on all contributions. Yes, be mindful of BRFs.

I'm sure the plan has the required language that all service with the "employer" counts and then says for such purpose that employer means all employers required to be aggregated under Code Section .... (control group and affiliated service group rules) - there's your answer. Think in the other direction - I work for my US-based company for three years, am 40% vested and then transfer to a subsidiary based in Canada or Mexico or wherever. Am I terminated and eligible for a distribution? I don't think so, and so my vesting service shouldn't stop either.

A quick google brought up this, which indicates an original UK pension age of 70. A lot harder to rhyme seventy. Of course, sixty-five is no picnic to rhyme either, although "survive" comes to mind immediately. 1908 We look at the history of pensions in the UK and highlight the key changes that could affect your future. 1908 The Old Age Pensions Act introduced a pension of between 10p and 25p per week to people aged 70 or over. This came into effect on January 1st 1909, which is known as Pensions Day.

What sort of contribution(s) - 401k, match, PS - and what sort of dollar amounts? If retired and not working elsewhere, I assume they would have deductible IRA availability, so paying out side the plan but encouraging IRA contribution could get them where they would have been. Likely already rolled - or will roll - distribution to IRA so no need to establish one just for this extra nub. If plan had the flexibility and these were NHCEs, then possibly doing an extra PS contribution for them for 2020 would work. You asked for thoughts - those are mine.