CuseFan

Need to keep eye on this because if 25% ownership goes to 51% then the 415 limit is also combined - you have a CG for that person's 415 limit even though not a CG in general.

Exactly - it's not an automatic. Most pre-approved plans now have that as either automatic or as an option that can be checked, but as always, you have to see what the plan document says. If the beneficiary form has related language, the document should support because it is the document that provides ultimate determination.

Agreed - plan is bound to follow the law and the terms of document. This was not, based on what has been received, a valid waiver. I don't think sponsor "accepting" the form means anything, as it was likely a "thanks, we'll put it in your file" w/o any further scrutiny. Is it the PA's responsibility to ensure participant beneficiary elections are complete, accurate and valid? I don't know, maybe they should ask their attorney. But I would pay the spouse and risk 25% liability from child than pay four ways and be on the hook for the 75% not paid to the spouse.

Agree with the above, but the tax withholding would be my big concern as I don't recall brokerages doing that either. Their position is all of that is a function of the Plan Administrator and/or Trustee of which they are neither. But if they are withholding and remitting taxes to IRS then you need to find out what EIN they using and prepare 1099R's et al using the same otherwise you, the plan sponsor and participant recipients are in for future headaches trying to reconcile this with IRS.

From the Coverage and Nondiscrimination Answer Book, a great resource that I highly recommend. Where we find restructuring most useful is when you cannot pass average benefits because you have a young HCE with significant deferrals, even when limiting their employer contributions, and so we have our restructured plans pass the RPT for coverage. BUT, if you use average benefits you do not need to satisfy nondiscriminatory classification. How is a component plan tested for coverage? Each component plan must pass coverage testing in its own right; that is, component plans may not be aggregated with other plans or component plans in order to pass the coverage tests. Further, if a component plan uses the average benefits test to satisfy the coverage testing requirement, it must be part of a larger plan that passes the average benefits percentage test as a whole. Each component plan need not pass coverage testing using the same coverage test as the plan as a whole. Further, different component plans may pass coverage testing using different coverage tests. It is not necessary for each component plan to satisfy the nondiscriminatory classification test.

Also beware of options, which can be considered ownership.

That was my thought but was having a "discussion" with actuary who thought otherwise and a colleague also officially broke the tie (in my favor - yay!), otherwise you could circumvent 415, especially for owner-only or owner-centric plans. Thanks

If you play with your deposits and transfer between plans then you are asking for trouble, in my opinion, as that is not a legal transaction. Whoever set up your DB should have asked about your PS and its 2020 funding BEFORE adopting the new plan and informed you of that limitation. If your did not make your DB deposit in 2020, you could deduct for 2020 (deposited in 2021) up to your combined plan limit and then deduct for 2021 the remaining amount of your 2020 minimum required funding deposited in 2021. You'll need to limit all future PS to 6% of eligible pay and best to do this after year-end. The funding rules are such that your maximum DB deduction in year 2 should be significantly higher than your 2021 minimum, so you should be able to deduct some of your 2021 requirement for 2021 as well and so on, catching up eventually. You need an actuary for a DBP, or a TPA who outsources to an actuary for required functions, and the actuary and/or TPA should be able to map this out for you.

DBP participant has an annuity benefit that is less than his/her 415 limit but their lump sum exceeds the maximum allowable. Can the plan pay the maximum lump sum which, for example, converts to 90% of the accrued benefit using statutory assumptions and then pay the remaining 10% of accrued benefit as an annuity (assuming the plan document allows for bifurcated benefit distributions in general)?

seconded

We typically have the sponsor review their formula every three years or so and adjust/amend on that cycle accordingly unless other relevant business (not individual personal owner) conditions or events warrant an earlier change, such as ownership changes, major shifts in business (like pandemic response) or M&A activity. Personally, I think an annual amendment is a blatant pattern of discretion in practice and I don't think it matters whether that discretion is attributed to the individual owners (deemed impermissible CODA) or attributed to the employer (deemed impermissible discretionary profit sharing) and violates the definitely determinable requirement. Maybe if no individual owner was modified more frequently than every third year and/or the frequency of amendments was necessary to add and/or delete individual owners it would be more defensible. Furthermore, we even try to discourage clients from a yo-yo pattern with respect to individual credits even if staggered three years apart. If an owner is allowed to do $50,000 for three years, jump to $150,000 for three and then back down to $75,000 w/o a corresponding business reason for the employer, I think that's a potential issue. Probably less likely to garner attention, especially if among a larger group of owners, but plan sponsors and individual owners still need to be aware of the risk. Without some defensible business reason, I typical recommend an individual's credit amounts be amended on a trend, whether up or down. Note that ANY amendment where it could be argued by IRS that an individual had discretion with respect to their credit amount could be viewed by them as an impermissible CODA. No, it is not your place to allow or not allow amendments, but it is your place to provide prudent advice concerning the risk regardless of past practices.

1. I think the IC needs to provide services directly to the plan rather than simply helping the plan sponsor gathering data for the plan, and provide detailed invoices for such services so reasonableness can be determined. 2. Again, if services are provided to the plan and not to the sponsor for the plan. Consulting with the owner on how to maximize contributions - not service to the plan. Preparing a 5500 filing or reconciling assets - yes, but have a hard time thinking a CPA is needed for any service to the plan rather than the sponsor. 3. Absolutely no on getting paid to advise and trustee his own plan.

I believe the correction is to get the proper consent and notarization now or, alternatively repay the outstanding balance immediately.

seconded

Looking at language in a pre-approved document, it says annual 415 compensation, so I would say you need to look at the entire year, but you should check the 416 regulations for certainty.

Yes. Essentially the corporation is investing its assets in investments chosen by the NQDC participants. Taxable investment earnings should be reported out under the corporation's EIN and included in its taxable income. If assets are in a rabbi trust then I'm not sure if it's the trust itself that has a tax liability or the corporation - but there is no tax deferral/deduction for the company until there is taxable income to the employee.

So owner-only non-pbgc covered DB plan - yes, combined deduction limits apply and PS must be limited to 6% or you essentially end up with a 31% combined limit. Assuming they do not do salary deferrals elsewhere, be sure to include 401(k) provision so each can also defer $19,500 or $26,000.

Agree with above. My experience is that the employer appoints and removes the trustee(s) and so it is employer and new trustee who sign amendment but (check plan/trust language) you sometimes need the removed trustee to acknowledge they are no longer trustee - whether you do that as part of the amendment or some kind of add-on or other form is up to you and/or the employer.

Exactly. If you had a QDRO that the Plan received and acknowledged - that is, the Plan Administrator informed you that the DRO was "qualified" and hence a QDRO, and then the Plan Administrator failed to follow the terms of the QDRO then you have a legal action to bring against the Plan. You probably need to start with a formal claim for benefits and go from there. If your claim is denied, then formally appeal, and then bring suit if necessary - ERISA does make you go through a hierarchy before bringing a lawsuit, and you don't necessarily need an attorney for the claim and appeal, but may want the help just the same. Good luck!

Yes, provided the document specifies that. Note, however, if plan is top heavy that your TH minimum is based on all compensation regardless.

Correct - ALWAYS use Employer's EIN on 5500. ONLY use Trust EIN (plan's do not get EINs but trusts do) on 1099-R and Sched R. And Bird is showing his/her age by mentioning Schedule P!

Sure, why not? Fresh start on how you calculate the accrued benefit does not impact how you test (unless you also test from a fresh start date, which you would not want to do).

Kudos for working at a payroll company AND knowing how to administer a retirement plan. That is very much the exception rather than the rule at these companies more concerned with sales than service, expecting that convenience and/or inertia will retain enough clients despite generally subpar service. Anyone who thinks the likes of ADP and Paychex et al care much about the quality of service after a sale is on-boarded is deluding themselves more than certain people in a large pale house around the middle of the east coast.

CBZ is absolutely correct and you should definitely have DCP amended to match NRA in CBP.

My understanding is 3401(a) compensation is any amount upon which withholding is required, so I think this tuition reimbursement is included.