CuseFan

How can "Buffys Redrum" not be "old school"? But correct, partner is K1 - it's a sole prop for Sched C - and as kc notes, same concepts apply to both.

True - but does anybody do that? Seems like it would be administrative nightmare.

Correct, the only terminated people you must fully vest are those that are partially vested (haven't been paid out/forfeited) and have less than 5 years break-in-service. Good plan design will also deem any zero percent vested participants deemed cashed out (and forfeited) upon termination of employment, and you don't need to vest them either.

Agree YOP is based on how the plan document credits service. Other thoughts: Getting the full 415 limit also assumes he is at or past a normal retirement age of at least 62. Also consider, in addition to potential future 415 dollar limit increases, post-65 actuarial increases. These can be extremely valuable (and generate additional tax deferred contributions) - much more than fixed income returns and many equity returns, despite the "fact" (sic) we all know that doctors are experts at investing! if he wants to invest w/o the worry of how it impacts DB funding, so a post-62/post-NRA in-service (amend plan is needed), pay out and rollover a lump sum so invest more aggressively but continue accruals as long as he's working and has the money to fund.

http://rsmus.com/what-we-do/services/assurance/employee-benefit-plan-audit/party-in-interest-transactions-controls-for-benefit-plans.html The brother is not a part-in-interest to Plan A, so i don't think there is a PT. Since Plan A is an owner-only plan, the prudence of such investment probably doesn't matter either. But if Plan A acquires 40% (41%?) of the stock in Corp B, does that then create a CG? I don't know, but if it does you need to be concerned in B has employees. Still don't think a PT because then B stock becomes qualified employer security, right?

Yes it's 2016 pay, although there was a day (very early in my career!) when accrued compensation was able to be included for the year earned rather than the subsequent year paid, for those of us old enough to remember.

also, does the plan really say the match must be deposited on a payroll period basis or that it is determined on a payroll period basis - just because you calculate it on that basis so future deferral activity doesn't affect prior match calculation doesn't mean it has to be deposited before the legal due date unless plan specifically says so.

Yeah, and I'm the optimist in the family!

I know "one and done" politics won't work because the first half of the term is learning and the second half is arguing/jockeying for your agenda, and so it's the third half when things would actually get done - and I work with enough actuaries to know there isn't a third half. 10-year scoring makes sense for a tax expenditure but, as we all in the retirement industry know, not for a tax deferral. And where will all the tax revenue come from in 40-50 years when the majority of retirement distributions are tax free Roth dollars? Who cares, we'll let the next generation of post-millennials deal with that. Sorry, current politics has me in a cynical ranting mood!

single sum make-up payment with interest at plan's actuarial equivalent rate to the date of correction and then adjusted/corrected payments going forward, not rollover eligible and no other available elections - this is cut and dried.

Politics is all about what you do now to get re-elected, not what you do for the long term health and welfare of the nation. Killing small business retirement plans to generate current revenue at the expense of both future revenue - because it's a tax deferral - and the cost of increased future entitlements - because more people will retire into poverty - is short-sighted. Same with negotiating with unions on governmental plans, particularly post-retirement health, as politicians secure lower current wage increases for immediate tax savings but give away unsustainable future benefits and let future generations deal with it. These "kick the can down the road" policies are setting this country up for a huge generation and class warfare among four quadrants of citizens: wealthy aged, poor aged, self-sufficient youth and un/under-employed youth. Forget political term limits - make everything an extended single term so there are no re-elections, and mandate there must be a "term off" before running for a different office. Then we might get true public servants with the country's best interests in mind, not career politicians working only to stay in power. Unfortunately, "House of Cards" is probably very close to true politics in this country.

I think you are correct, and this is contrary to how certain "veterans" in the industry (self included) were brought up. Although, just thinking conceptually, this does make sense. You have an HCE excess in 2016, it becomes taxable in 2017, but instead of distributing it you allow it to remain in the plan as an after-tax contribution - in essence, you have allowed them to re-contribute it to the plan, so why wouldn't it be ACP tested in 2017? Unless you have an unusual design or testing results, I wouldn't anticipate recharacterized deferrals being able to satisfy ACP testing with existing match, but who knows?

I think it depends on the terms of the Plan. if this is an owner who is still employed/active, unless the Plan allows for in-service distribution after NRA (or age 62 if applicable), I don't think you have a distributable event until the RBD. If the person is separated, no problem. If not, and that language isn't in the Plan it can be amended. Also, the Plan could (if it has the provisions) commence the minimum annuity (50% J&S) beginning 4/1 and then provide a new annuity starting date upon actual retirement and allow a lump sum election if desired.

agreed, if the funds were timely segregated from employer assets and deposited - the timing of investment/trade is another matter and one which was apparently corrected so that participants were not harmed.

i would go the other way, to avoid a situation where the code is in and out of filings from year to year, but I personally don't think it matters because you can reasonably justify either answer and this is really just statistics the IRS/DOL is collecting year after year for our pleasure.

Hey, Mario was an excellent fielding shortstop!

if company A and company B where separate with no overlapping employees pre-transaction, i think it would be reasonable to look back at them separately for HCE determination and similarly for NHCE ADP or, as suggested, using the prior NHCE ADP for both in 2017 testing. I don't think there is any regulatory guidance, so you do what is reasonable and document a logical case for why - as long as it does not result in abuses and the HCEs benefiting substantially more than they were otherwise benefiting before, I don't see the IRS challenging it. Also, if the plan isn't amended to change coverage or benefits, don't you have the option to test as one plan under the M&A transition rules? I thought those ran both ways - acquisitions and divestitures.

correct, not ez eligible

Are there no HCEs getting current allocations or no HCEs in the plan? If you have HCEs and they get future allocations from the individual rate group formula then you could have a BRF issue regardless if gateway and NDT were satisfied, unless NHCEs received similar allocations that were fully vested.

Whenever a plan sponsor wants to do something like this that might be a PT I always refer them to qualified legal counsel for an opinion.

Absolutely not - regulations are specific that you can use the average ENAR of the NHCEs benefiting in the CBP as the ENAR for each NHCE benefiting in the plan. The four who do not benefit in the CBP need additional 2.5% in PS to satisfy gateway.

your spouse must sign-off to your designation of your father as beneficiary if you are married

Wow, what business is the plan sponsor in? Wait, don't tell me, I don't want to turn up missing like the participant!

A plan to plan transfer is different than a direct rollover, which is why there is specific and different language in the plan document. A "transferred" benefit usually is more restricted and used in special circumstances - you almost always want to have a direct rollover.

I believe ETA's second approach is the right way to go. I also believe the DOL position would be the transaction is not "complete", that the participant has not been paid, and that the funds are still plan assets which must be restored to the participant's account until such time as they can be paid.