CuseFan

You obviously did not get, or did not take, qualified advice from your TPA or failed to disclose all the facts to such party (already funded max PS) before going forward with this arrangement. This is a tax issue and now you need advice from a qualified tax advisor - i.e., your accountant. If you have already contributed more than 6% PS for 2020 then you essentially have a 31% deduction limit for 2020 between the two plans. Again, you need accounting advice, but my non-accountant opinion is that you'll be able to deduct only a portion of your 2020 cash balance contribution for 2020 (which hopefully you haven't deposited yet) and then will need to deduct rest on 2021 return along with as much as legally/actuarially possible of the 2021 cash balance contribution, AND limit your 2021 PS to 6% or less of your eligible compensation, depositing such AFTER year-end and your eligible compensation is known with certainty. Note, the creation/existence of the CB plan does not make your PS plan deduction limit 6%. How much you already contributed for 2020 PS drives what your total deduction limit will be. Maybe others will opine differently, but again, this is a tax issue to discuss with your accountant as they are the ones opining on your tax return deduction.

Exactly, because granting past credited service for benefit accruals does not provide any additional participation service for (proration of ) 415 limit - good call.

I'm not sure, instructions just say before 180 days following PPTD, but do not say must be after the PPTD. Not that is holds any official weight, the graphical timeline bar in the instructions do start at PPTD and end 180 days later for various compliance items including the NOPB and the 500. But if there is no problem issuing NOPB before 12/31, why would there be one with the 500 filing. If you file, what's the worst that happens? PBGC rejects and makes you refile after 12/31.

Agree no reason not to use individual groups. I believe there was conversation within the last month or two concerning documentation for allocations. I noted that in an IRS audit the agent asked for a copy of the memo that authorized the allocation amounts/percentages to each respective group. I believe a number of people noted their practice was to have the employer/plan administrator execute a simple memo authorizing the contributions as presented in the attached schedule (which shows the individual allocations as determined by the RK/TPA or whoever).

Similar to the Pirate Code - more like guidelines! LOL?

It's a per filing fee and your filing is supposed to correct all errors, so 2018 and 2019 all together. You/they should also review thoroughly for any other issues that may need correction and include as well.

Yes. Otherwise, from year to year, a group may get X% of pay as a contribution one year and then a flat $X another year - the allocation formula for the group is not definitely determinable, you don't know how you're contribution will be allocated. Think of the group - whether it's one person, 100 people or 1,000 - you must specify how you are allocating to the group. The method cannot be discretionary for the employer, only the per-group amount (or percentage) is subject to discretion.

Ditto/agreed - no reason to keep separate and file separate 5500's, maintain separate documents, etc.

Yeah, you don't want to file your first return for 2020 showing a 1/1/2019 effective date.

Probably - don't work with these so don't know for sure - but NO 5500s were extended beyond 10/15.

Non-key HCE is benefiting in both DB and DC, correct? So 5% DC for TH.

that person will need to file for an individual taxpayer identification number (ITIN) which the plan will need prior to payout https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin#:~:text=An ITIN%2C or Individual Taxpayer,NNN-NN-NNNN).

How does that happen? If ELIGIBLE for 401(k) deferral = benefiting whether defer or not. If ELIGIBLE for Match had they made a 401(k) deferral = benefiting whether deferred and got match or not. How are possibly failing coverage on K & M if people are eligible after 30 days (FT) or 1 YOS (PT)?

It's not prevalent at all. Not counting our small plan practice, probably 2% or less - maybe more if you count any who ever did a COLA, but still less than 5% I'm sure.

We have a couple of clients that will do an ad hoc retiree COLA every 3-5 years and I think one client that actually has a built in COLA, also very rare. And then there are a few more clients that have done maybe one or two COLAs over the course of our long-term relationship. I don't think you could find a publicly available resource that provides data on this - you may be able to find a survey or two somewhere that tracks but whether access to such would be free, who knows? This is something you basically have to consult on from experience and (as you've requested) the experience of others that you can glean. Good luck!

Read the document, there are BIS rules that apply to eligibility as well and which should be spelled out therein. But the first eligibility computation period starts on first hour of service (hire). Where you go from there - again read the document.

So you have two separate issues - plan compliance and DBPW compliance. If the Plan excluded HCEs from participation, w/o specific exception for those subject to prevailing wage, then they should not be in the plan and those contributions should be forfeited. That takes care of plan compliance. I expect the Plan has provisions for inclusion of ineligible employees by mistake. Now you have a DBPW compliance issue, which you need to satisfy by paying these employees cash compensation or some other permissible DBPW benefit. If the HCEs legitimately remain in the Plan and get these contributions, then you need to look at all the available avenues for passing 401(a)(4). You don't say how you are testing and failing, or by how much, so it's difficult to suggest a course of action - cross-testing, restructuring, 11(g), and whether you also have coverage issues, can satisfy gateway, etc. but you can and should look at all if necessary.

Yes, that can be done and I've experienced personally. We were part of A, and a group was spun off and sold to B. We were terminated and eligible for distributions from A but would forfeit non-vested balances if we did so immediately. However, our future service with B was credited for vesting with A (an amendment was needed I'm sure) and once we attained full vesting of benefit from A, could withdraw entire amount.

Try pricing/buying an annuity contract for the equivalent benefit that also includes the lump sum option, I think you'd find similar cost if you could even find a provider.

My understanding is that you cannot make that change mid-year.

I would say it is compensation. Consider the PPP loans which are forgivable and turn into grants - money is used to pay employees, does not directly come from employer's pocket, other than it came through on its way from the government. But to the employee it is just pay. In your case, it's extra pay, hazard pay, whatever you want to call it - but it's hitting the W-2 as wages so it's plan compensation unless otherwise specifically excluded.

Depends. If there was a compensation history that established a reasonable 415 limit, then yes.

It's in the ASPPA member education section - you need to have an ASPPA account to access and it's not a free session unless you have the ABG affiliation for free on-demand access to recorded sessions - at least that is how I came across it.

Agree - very confusing post. Generally, if an item is "earned income" and subject to SECA then it can count toward retirement plan compensation. However, just because someone counts something for SECA doesn't mean it was done properly (like rents or capital gains) and should be considered compensation. Darrin Watson has a GREAT ASPPA webcast session on Earned Income which has been recorded and which I highly recommend to anyone who deals with small plans for self-employed people.

Had a client audit a few years back that was a target audit (SH 401k plans) and they have groups as opposed to individual groups and auditor did ask for the documentation for authorizing the allocation amounts for each group. Now here is where it gets weird - this was large medical practice that also had a cash balance plan aggregated with the SH/PS cross-tested for nondiscrimination. Since this was a limited scope/target audit, the IRS agent didn't want to have to deal with the combined testing and running it past his actuary, so he asked me to show him the cross-testing for the SH/PS portion alone, which I was happy to provide and of course passed with ridiculously high percentages.