CuseFan

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.

I think you have a problem adopting a plan retro to 1/1/2020 for a business that started 3/1/2020. You don't prorate salaries, you prorate 415 and 401(a)(17) limits at 10/12 of the annual limit. For 2020 there is no lookback year compensation for anyone so your only HCE(s) in 2020 is (are) 5%+ owner(s) in 2020. I do not think you have a BRF issue.

I think there is no difference when applying the rules to traditional DB or CB formula. There was some guidance a few years back that clarified the offset is applied to CB accrued benefit and not current DC contributions versus current CB service credits.

11/30 or 12/1 on notice, amendment need not be adopted until 12/31

I think the requirement to allocate those assets to participants ratably over a specified period not exceeding 6 or 7 years, I forget which, precludes their use for anything else, including payment of expenses. Deviation from that could result in excise taxes retroactively applying to those transferred assets. I also do not think that the preparation of the initial plan document is an expense eligible to be paid from plan assets.

You could adopt any time up till then (9/30) with the SH (and PS, if applicable) effective back to 1/1, if desired, but deferrals cannot begin until after the plan is adopted.

I believe the exclusion is if they don't benefit by reason of termination of employment and worked less than 501 hours. Your situation appears that they don't benefit because the employer chose not to provide them with a contribution, and so I would concur with you.

If the plan document allows for commencement at NRA while still employed - so you may need to amend.

If they can get to where neither is an employee of the other's business(es) nor provides services to the other's business(es) and they have no minor children and they are not in a community property state, then they are golden and Betty can do a solo plan to her heart's content. But it sounds like Betty's business is serving Bob's businesses, so in breaking that chain does she even have a business any more?