CuseFan

As kc noted, I would confirm with the client (owner). If you have the plan contact - the one presumably giving you the contribution amounts or rates - getting the highest amount or rate, it smells a little funny. This may all be on the up and up, but still warrants a double check and will demonstrate to the owner that you're looking out for him or her.

We would pay the value of the missed payments plus interest to the spouse's estate and then review/revise procedures that led to this failure. They could forfeit and move on and likely never have it discovered but that is not the correct (or right) thing to do. Two years removed from spouse's death, however, may make this difficult, especially if estate was closed or there isn't one. In that case I would suggest seeking out any children.

I think there isn't a one-year break-in-service so you treat as if they never left, in terms of participation, and so the clock is still ticking from 12/5/2016. Not that it matters for this, but did this person get a distribution right before they were rehired? If so, I'd be more concerned about potential "sham" terminations/retirements to skirt distribution restrictions and get at retirement funds.

Agree with ESOP Guy - you can exclude as a class because "interns" are clearly a reasonable classification of employees for business reasons, but as noted, any that meet eligibility requirements that could have been imposed (i.e., 21 & 1) cannot be excluded from coverage and nondiscrimination testing (but are still excluded from plan, unlike part-timers who would have to be covered).

but the potential return for the plaintiffs' attorneys..... isn't that what this is really about?

and if you haven't had a long enough history of higher earnings then you might run into 415 limitations as well

Yeah, really. it does seem like if you're going to fund up it should be for all - or for all who request lump sum distributions, or do not fund up for anyone. But if the existing funded status was sufficient to pay one lump sum, then I think the Plan Administrator is obligated to facilitate that pay out and subsequent requests are SOL, agreed?

Yes, but put that aside - what if this was a mid-size medical practice and one owner retired and wanted a lump sum while two others left to form their own practice and also wanted lump sums, and the plan was sufficient enough to pay just one but the others would then be restricted? Could the plan pay the retiree and leave the TVRs restricted? Pay the first request but not the other two? Pay the largest, pay the smallest? What if through the receivables of one of the exiting owners the employer funded up enough to pay just that owner? i know these are all questions that stress the importance of a good partnership agreement, but what if it's a PC?

Partnership agreement doesn't say anything. Can the employer fund up and just pay the one HCE, telling the others sorry, still restricted?

DB plan (CB format, but that doesn't matter) for law firm has multiple terminated former partners who are among top 25 restricted HCEs/former HCEs and cannot get a lump sum because plan is not, and will not after distributions, be 110% funded. Employer is interested in funding up the plan to be able to pay one particular restricted HCE, but not all of them. All the regulatory guidance I've seen appears in the context of "a" restricted employee. Favoring/discriminating for one HCE over another HCE may not have any qualified plan ramifications, but the danger may be other legal implications. I don't know if the partnership agreement stipulates anything in that regard - let's assume it does not, otherwise the answer would be easy, right?

The annuity starting date was the RBD, and since you are past that date I don't see a basis for allowing the spouse to make an election. I think proper course of action is to commence the survivor annuity retro to the RBD and make a lump sum catch up payment with interest to correct for the missed RMDs.

i don't think you can offset match, which are contributions under 401(m), only similar employer non-elective contributions under 401(a) such as safe harbor non-elective, profit sharing or DB.

you don't need to pass rate group testing at 70% (RPT) - the reasonable classification is for coverage only. if coverage passes RPT by this one additional person not benefiting then your NDT can pass however you get it there - RPT or ABT.

then the match is permitted, but still fails ACP and so must be forfeited to extent not vested and distributed to extent vested, right Tom?

i would view as an employer "corrective contribution" because they didn't withhold the proper amount from the ipads when they were given. no good deed goes unpunished right? lesson: change comp definition to W-2 excluding non-cash fringe benefits.

love the Peabody & (pet boy) Sherman refernce Tom!

25% of eligible payroll is plan limit (IRC 404), lesser of 100% of eligible pay or $53,000 (2016) is individual limit (IRC 415).

A co-worker (an actuary of course) shared this. Enjoy

Don't see your language, but the plan says that either all eligible participants get the SH or it specifically limits who gets SH. Based on the wording of your question I'm guessing it does not exclude anyone from the SH so everyone, including HCEs, must receive. This is not optimal design if part of cross-testing PS or DB/DC combo because young HCEs (e.g., owner's children) can really blow up your results (enter restructuring). Good luck

A reduction in tax rates could trigger a slew of Roth conversions, if still available, and yes, make Roth the "game of choice" as you say. The advantages of qualified plans compared to after tax savings are (1) the business owner actually does save and invest the funds for retirement (I just met with a doctor who is concerned with getting by on $500k - spending up to their income and not setting funds aside is a problem) and (2) the funds are protected from creditors. But any good accountant will tell you to tax diversify your (retirement) assets regardless. The ultimate losers will be employees if business owners determine they don't need qualified plans any more.

i don't think anything less than 100% vesting for a terminated participant would work because any non-vested amount would (presumably) be forfeited (assuming concurrent distribution) and I think IRS would tell you the forfeited amount doesn't count toward your test. If you provide benefits for actives who are or have the ability to become vested, then that might be a different story - but this would be a facts and circumstances situation you would have to justify to IRS if the plan is audited or submitted at some time in the future.

Unfortunately, you cannot use the otherwise excludable employees permissive disaggregation and test those people separately and exclude from gateway. 410(a)(1)(B) provides for the 2-year wait and 410(b)(4)(B) provides for the separate testing of otherwise excludables but without regard to paragraph (B) of 410(a)(1). You also can't restructure to avoid gateway either.

so you always had a multiple employer plan but satisfied "commonality" from DOL perspective and now you don't? i think you have to go with S2. Using S1 would only make sense if plan terminated. How would/could you file for A under S1? there's not a lot of guidance on this sort of stuff with 5500's - i'd just do what is reasonable and defensible, Scenario 2.

The key is the limitation year as it is defined in the plan document. It should be defined as the plan year, but sometimes for whatever reason it isn't and you get crazy situations like this.

From IRS Publication 541 - Partnerships Guaranteed Payments Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only. For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income. Guaranteed payments are not subject to income tax withholding. The partnership generally deducts guaranteed payments on line 10 of Form 1065 as a business expense. They are also listed on Schedules K and K-1 of the partnership return. The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his or her distributive share of the partnership's other ordinary income. Guaranteed payments made to partners for organizing the partnership or syndicating interests in the partnership are capital expenses. Generally, organizational and syndication expenses are not deductible by the partnership. However, a partnership can elect to deduct a portion of its organizational expenses and amortize the remaining expenses (see Business start-up and organizational costs in the Instructions for Form 1065). Organizational expenses (if the election is not made) and syndication expenses paid to partners must be reported on the partners' Schedule K-1 as guaranteed payments.