CuseFan

Bird tweets wisely.

"Adult Son" doesn't really matter here, but you do have two owner-employees (each owns 10%+) which I think allows you to file an EZ (or not file if assets less than $250k) - i.e., Title 1 exemption. I'd be wary of what the "real estate investment" was to make sure no PT issues, e.g., they didn't contribute the family lake house, summer camp, time share, etc.

GTL taxable is included in W-2 but is also a safe harbor exclusion there from. I would not exclude "pay in lieu" as a fringe - it's cash comp.

Yes, I would still say it is a fringe benefit and exclude on that basis.

So this was initially a 125 deferral that counted as compensation once already, in 2017, but was refunded as taxable income in 2018 because of a test failure? I think you have to exclude, yes on the basis of a fringe, but also because you'd otherwise be including the same amount as compensation for two years.

Based on the history, if the employee worked every January and the expectation was for that to continue, then I would say action by either party to severe that expectation - Employee decides not to work next January, Employer decides we don't need this person this year - results in separation / retirement. This issue comes up with hospitals and their per diem or on-call staff. How long not working, not being called in, turning down calls, etc. becomes a separation? Again, I think a year of severance initiated by either party, unless an authorized leave (but even those are usually limited to a year) is safe to constitute and should generally constitute a separation. Just my humble opinion. Not that is may really matter in this case, but is this person still considered eligible to defer and included in the ADP test?

Regarding coverage - if a person is eligible to make a salary deferral in a plan during any part of the year they are considered benefiting under the section 401(k) portion of the plan (and also included in the ADP test). Therefore, if there were employees who transferred between A & B and were eligible to defer in each plan at some point during the year, they benefit in each plan, that is if you are looking at the full year and not doing a year-end snap-shot.

I agree 100% of zero is zero and that is both his 402(g) and 415 limit with respect to this plan. Maybe it is helpful, and maybe not, but I always say first: what does the document say, if anything? I would think (hope) that the document would specify the order of correction.

Read the document! We just had a similar discussion. Union service counts toward eligibility. Now they go from ineligible class to eligible class and the plan should specify how they are treated. All pre-approved plans I have seen say that these employees enter the plan on the date they become eligible employees if they have already satisfied the (age and service) eligibility requirements.

Yes, if there were no exclusions to W-2 pay comp definition.

If he would have been paid that $800k in February had he remained employed, then you have to look closer at your comp definition, but if this payment is due to/triggered by his termination of employment then I don't think there is any question that it is NOT plan compensation.

I agree, if you are not required to withhold taxes at the source (which you can't because it's not cash) - GTL is another item that is not included in 3401(a) definition but is included in W2 reportable (6041/6051) definition - then it's not 3401(a) wages.

We have an older owner with a wife who is 25 years younger with a DBP that is well over funded on a lump sum basis but, if I recall correctly, is either fully funded or slightly under funded on a 100% fully subsidized/unreduced J&S basis. The liability would be even greater if they went to purchase such an annuity from an insurer. So maybe something like that is a possibility?

Yes, by going to work for the other employer, does that mean he will no longer be in business for himself and have self-employment income? If he still have material SE income, it may make sense to maintain the solo plan, and he maintains control rather than having those assets in another employer's plan.

If ERISA 403(b) then employer is responsible for monitoring compliance with that, and if non-ERISA, I believe employer is supposed to get info-sharing agreements among the vendors so that these limits can be properly monitored between them - if I remember correctly (not a 403b practitioner and know enough to be dangerous!).

Agreed, the TH minimum is a "benefit" not an account balance, and plan must pay the LSPV of that benefit regardless of the account balance. Maybe you can translate into an additional balance/TH credit and side track it along the way for the client's edification and prevent surprises.

Also, there could be a 415 control group if he owns more than 50%, even if not a control group for coverage and nondiscrimination (and don't forget affiliated service group possibility if service firms). So make sure that 50% is 50% and not 50.01%. And double check those rules, sometimes you see "considered owning" and you need to also consider options as well.

Governmental entity pension rules may be (and often are) different, but in the private sector a ex-spouse has the ability to file a QDRO after the death of his/her ex. Also, the beneficiary of any survivor annuity is determined at the "annuity starting date" - when the pension payments started. If John is married to Jane when payments begin as a joint and survivor annuity, then Jane is the beneficiary of the survivor annuity, even if they divorce and he subsequently marries Jill. If you married after he already started receiving his pension, then you cannot be spousal beneficiary. Plans are allowed to treat employees are unmarried until they have been married for one year, but this only impacts pre-retirement death benefits and a joint and survivor election at retirement, neither which seem to apply here.

yes no

There are attorneys who will review (for a fee of course) a document and give an opinion that the document complies with a Cumulative List - a pseudo determination letter. The key is that there is at least an initial or latest 5-year cycle determination letter secured.

Yes, as of that date everyone still employed has earned the right to an allocation on that (pro-rata) basis.

Lou is correct, especially when saying to check the document (which should always be the first point of reference). All the pre-approved plans I've seen specifically tell you what to do. For example, in FTW it's clear the person would enter 8/31/2017. Section 3.02 TRANSFERS If a change in job classification or a transfer results in an individual no longer qualifying as an Eligible Employee, such Employee shall cease to be a Participant for purposes of Article 4 (or shall not become eligible to become a Participant) as of the effective date of such change of job classification or transfer. Should such Employee again qualify as an Eligible Employee or if an Employee who was not previously an Eligible Employee becomes an Eligible Employee, he shall become a Participant for purposes of Article 4 for which the eligibility requirements have been satisfied as of the later of the effective date of such subsequent change of status or the date the Employee meets the eligibility requirements of this Article 3.

QDRO necessary for what? A QDRO is an optional legal division of retirement plan benefits. Even in a divorce a QDRO is not a given. If you aren't splitting benefits between two parties here, there is no reason for a QDRO. If you are, or the parties want to, then you need a QDRO.

Assuming there were no discretionary/non-statutory changes in the restatement, you should be OK.

They would if they were being cross-tested. As Tom noted - you test the OEs separately on an allocation basis, so that group does not need the gateway.