CuseFan

PSP can have in-service. A rollover to a Roth IRA is taxable but there is no 20% tax withholding because the distribution is rolled over. The taxable nature of the distribution should be evidenced by the 1099R that is issued for the distribution.

I think we use PBI as well.

Yes, thank you David, and thank you Lois for pointing that out and making the rest of us feel like rookies!

For solo plan I don't fiduciary issue is concern and would park in cash/money market. Even if plan was participant directed and had fiduciary concerns, I think investing the suspense in a non-volatile fund would be prudent - IMHO.

I seem to recall this being asked (and answered, not by me) before in this forum and thought that SEPs do not count for such purpose as they have no such annual filing requirements regardless of the amount of assets. I suggest searching.

I thought everyone who worked at least 3 years making more than a certain amount had to be covered - not the 410(b) rules. Also, if on the 5305 model cannot have another non-SEP plan, so isn't that also an issue?

Sorry Peter, I didn't even see your response as I just saw and responded to the follow-up quote/question to me or I would have just referenced your more eloquent explanation of the issue. Thank you.

Attorneys, IRS. However, the Windsor same sex spouse application is/was limited to those provisions governed by tax law rather than ERISA. Since nonelecting church plans are not subject to PRSA and QJSA rules, death benefits could be provided solely to opposite sex married couples but would have to recognize a same sex spouse for purposes of applying minimum distribution rules and rollover rules.

You can pick and choose provided the amendment has substance (likely, since all are active employees) and you are not using average benefits to satisfy coverage (likely not a reasonable classification) - but OK if your general test needs to pass with average benefits.

Plan X is not part of the Required Aggregation Group if it is not aggregated with the other plans to satisfy coverage or nondiscrimination. "Required Aggregation Group" means (a) each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the Plan Year containing the Determination Date or any of the four preceding Plan Years (regardless of whether the Plan has terminated), and (b) any other qualified plan of the Employer which enables a plan described in (a) to meet the requirements of Code sections 401(a)(4) or 410. Note you could permissively aggregate X with the other plans to make the group not top-heavy, if that is a possibility, but then you must satisfy both coverage and nondiscrimination within that group. "Permissive Aggregation Group" means the Required Aggregation Group of plans, plus any other plan or plans of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410.

Oh, Lola

I would also caution against repeating this strategy any time within the next few years for the same employer, and make sure the employer is aware of that, as you do not want a pattern of amendments that creates a discretionary arrangement in practice.

Your thoughts are correct and the employer should either stop making contributions until final numbers are provided or live with giving some employees more than they needed to pass testing, it's as simple as that.

Think about union exclusions - employees who go back and forth between union and non-union status become eligible/ineligible employees and into/out of active participation all the time. The difference here as noted above, is that you cannot statutorily exclude from coverage and non-discrimination testing if they have completed age and service eligibility requirements.

Yes, if this was a taxable entity and that limit applied, all employer contributions and all employees eligible for such would be considered for the 25% deduction limit. No, 404 does not apply.

IRC Section 401(a) is the section of the tax code that applies generally to all tax-qualified retirement plans, whether defined benefit pension or defined contribution plans. The answers to your questions are all "it depends" on the type of plan and its particular provisions. Then there are many other code sections that apply to certain types of plans or plan provisions. What you're asking is basically for an introduction to tax-qualified retirement plans course, which is too voluminous for this forum.

Best of luck for the next chapter of your life.

Yes. Since you were >5% owner in 2023, the lookback year for 2024 HCE status, then through ownership attribution your daughter is an HCE for 2024. In 2025, you are still an HCE through attribution from your son but your daughter is no longer considered a >5% owner as there is no sibling attribution nor double attribution (e.g., from son to you and then you to daughter). Assuming your daughter is not an HCE by compensation then she is not an HCE come 2025.

If you amend (if permitted) to provide contributions to terminated participants you should also vest those contributions otherwise they don't count.

Agreed, it should have been spelled out in either the plan, an underlying employment agreement, or both - if well-designed. Otherwise, you're in the good-faith/fair-dealing gray area. If some sort of supplement to a qualified salary deferral/match arrangement then adhering to that practice or statutory timing could be deemed reasonable. And, as Peter notes, this is not advice to anyone.

It is not protected. It is a feature ("F") subject to BRF nondiscrimination. The question is whether that can be considered the same feature as the Schwab brokerage window. If not, that alone creates a BRF problem and that could be the issue upon which trustees force the transfer. Does the plan have in-service and in-kind distribution options which this person could utilize to roll out to an IRA and maintain his broker relationship?

No. We have a number of those clients and they all were required to amend for the Windsor decision.

Sounds like employer (PC) and both plans are continuing, so 1/1-12/31/2024 PY on both, but all employee other than the owner terminated 2/28, correct? If so, read on, but if not then you have bigger problems. If employees did not work 500 hours through 2/28 and do not benefit because of that then I think you exclude them from 401(a)(26) count in CB. However, you still have 2024 annual (combined I presume) coverage and nondiscrimination testing, and since everyone benefits by virtue of 3% SH then you have a gateway requirement. Employee compensation for such would be W2 from the PC, for the owner it would be the applicable metric for the year - either W2 or net earned income from self-employment. For the cash balance, compensation is used to calculate liabilities (pay credits) not the actual contributions. Required funding is a function of both assets and liabilities.

??? Was this a change in how the entity was taxed, switching from S-corp to partnership? Otherwise, what is the basis for this? Anyway, yes, you handle like you would any sole prop or partnership in that regard.

Agreed, and obviously the plan provisions must support