Larry Starr

I don't agree with your impression. Do you have a cite for that? I say you are not imputing permitted disparity. You are simply meeting the requirements of the safe harbor of 401(l) (2)(A). I suggest there is no reason why you have to use the full TWB as long as your numbers meet the safe harbor of 401(l). We actually have done this a number of times (less than 10 I would guess) over the years.

I don't think I understand CuseFan's answer, because mine is NO. You don't have to use the TWB; you can use less than the taxable wage base and use a 5.4% or 4.3% kicker on top as appropriate for a regular integrated plan. Is that what you were asking? And yes, you can pass non-discrim on that basis even though the plan (in your mind at least) is "cross tested". It is no longer cross tested if you instead applly the normal integration rules to show that you are non-discriminatory.

Your first answer is the correct one.

Not in my practice! Just the annual problem (and COST) of valuing the stock each year would be prohibitive in most situations. And I think they have to be very careful with how the stock gets in the plan to avoid prohibited transaction issues. If the client insisted, they would be doing it with a different firm; we just don't need the headache that goes along with this. You may feel differently and that is just fine with me.

Maybe not, but they do often say "what do we need to do for the dead partner for his partial year of participation up until his death? It's nice when they do that early. Sometimes.....

You are correct; applies to MP and Target plans as well.

I think the article is very well written and a very good discussion of the possibilities. Like others have said, this is not a new idea. As an aside, insurance comes back into vogue (in some cases) because of the elimination of the stretch IRA (but that it for another thread). I am part of a Family Office (we represent high net worth clients only) that is based in Nashville. We have a group of experts (guess what my expertise is!) but we include property/casualty expert (especially for foreign property), marketing expert, concierge medicine practice, accounting expertise, our own trust company, high level estate planning lawyers, and some other areas. We also have life insurance expertise, which I backstop as well. So, other than the ridiculous marketing name, this does have applicability to some people but it requires being well managed, almost always by someone who understands and is not getting paid on commissions (the product choice is critical, and often non-commissioned products would be best). Is this legit? Yup. But not for everyone (which I think is what the author said very well).

To quote one of my favorites; "Sometimes a cigar is just a cigar". Sometimes caps are just caps!

That would be my guess; hopefully the estate willingly complies. Better to avoid the problem in the first place of course.

Yeah, I know. I noted the typo when I re-read it. I know Ben Cardin; I have pictures with me and my wife and him. We wrote the legislation when both Ben and Rob were in the HOUSE. They are both in the Senate now but still hold their position as "the pension guys". I like both of them (though I certainly have differences with some political positions of one or the other).

ALL of my DC plans have QJSA rules; yes ALL. To leave out the rules, you are disinheriting the children of a prior marriage. That is a hidden result that everytime I mention it to new clients that we take over that don't have QJSA rules (especially those who have children from a prior marriage), the reactions are sometimes FURIOUS that they were never told that. We had MANY 15% PS and 10% MP. We merged all of them in those years.

Can't get to the article without hitting this: Mimecast requires you to enroll this device to access message links. I won't do that. Can you post the article itself?

Agreed.

See my response in CAPS above.

Paying out the dead partner! Of course, it would be nice if they consulted before the death as well (and, seriously, sometimes possible).

You know what, I was going to say that in my response, but then went back an re-read the original posting and it did not say that they were. But of course, it made perfect sense!!!! ?

No reason at all why they can't.

Luke, thanks for that reference. Here is the language for those that care: (f) Certain acquisitions or dispositions. Section 410(b)(6)(C) (relating to certain acquisitions or dispositions) provides a special rule whereby a plan may be treated as satisfying section 410(b) for a limited period of time after an acquisition or disposition if it satisfies section 410(b) (without regard to the special rule) immediately before the acquisition or disposition and there is no significant change in the plan or in the coverage of the plan other than the acquisition or disposition. For purposes of section 410(b)(6)(C) and this paragraph (f), the terms “acquisition” and “disposition” refer to an asset or stock acquisition, merger, or other similar transaction involving a change in employer of the employees of a trade or business. The inclusion of "acquisition" does seem to cover the situation and does seem to give the transition period.

First, there are few money purchase plans left (we have none). I am single handedly responsible for the (almost) elimination of the MP plan because of my insistence that we put a provision in the legislation we were writing for Portman/Carman all those years ago that dropped the 15% profit sharing deduction limitation. My associates said Congress would never go for it; I cried, banged my shoe, and eventually they gave in to include that provision in our draft and, what do you know, Congress BOUGHT IT! Anyway, it clearly can be allowed for MP plans. We have to await guidance to know all the rules, but it will also apply to a PS plan without a 401(k) feature. It is a type of in-service distribution. Ultimately, you will have to add the language to your plan and that will provide the operational process that will apply. It's too early to be talking about adding this language, IMHO. Wait for guidance.

Well, the 2018 valuation, if it reflects a $10k contribution that was never made also needs to be redone. And the tax return need to be amended to reflect the actual situation (they took a $10k deduction that they were not entitled to). That's the correction.

It's fine. Life insurance does not get any special treatment or lose the client the ability to file the SF.

Assuming that the plan does not exempt HCEs from the 3% SH contribution and that the PS contributions are not by utilizing groups with each partner in his/her own group, then the partnership owes the money to the plan. If they screwed up by paying out all the money that the partnership owed the deceased partner without holding the amounts for the plan, then they have a problem. I assume the K-1s were not done, so they can now do them properly. I would hope they could get the estate to give back the necessary amount, since the estate was overpaid. Obviously an example of why plan sponsors need to talk to their admin firm before doing things like this, but then again.......

What is it that makes you think they might have to file the full 5500? You obviously have something in mind; it would be better if you asked THAT question.

FWIW, I would never use AFLAC as an example of a company that knows what it is doing.