C. B. Zeller

If there is any doubt as to whether a plan (or potential plan) is covered by PBGC, you can request a coverage determination for free.

What does the plan document say about when forfeitures occur?

Not the IRS to blame this time - it's Congress. This comes from the statute. Some googling tells me that this particular section (attribution to minor children) was part of the original text of section 1563 which was added by the Revenue Act of 1964. It's worth noting that ARA has been trying to get this fixed in legislation, and at least one of the bills that was drafted (but has not been passed) does include a provision to fix this. https://www.asppa.org/news/browse-topics/what’s-new-secure-act-20

What software do you use? It probably has a way to calculate the APR. It might be labeled "present value factor" or something along those lines.

https://benefitslink.com/boards/index.php?/topic/68165-lifetime-income-illustration-formula/

Agreed. This was assumed, I should have been explicit. However in that case, having that last day requirement saves you because you can now change the allocation formula mid-year.

Agree with BG - you can't do an -11(g) amendment that only increases an HCE. David's suggestion may be helpful, but I usually see disability defined with respect to the Social Security Act. If the participant is not disabled within the meaning of Social Security then that may not matter. For the PS, there is the overkill option of adopting a new plan retroactive to 1/1/2021 under the SECURE rules, put benefits in it only for this one person, and aggregating it with the existing plans for testing. For the CB plan there is generally no reason why you can't adopt an amendment to increase past benefits, as long as the plan is not restricted by its AFTAP. The increase would have to be tested in the current year, i.e. 2022, since it wouldn't qualify for -11(g) treatment. Assuming the individual returns to work in 2022, they may have a double accrual for 2022 testing. When you say the DC plan is 401(k) + SH, is that a safe harbor non-elective? If so then I would suggest removing the 1000 hours and last day requirements. There is no benefit to having them in this type of plan design. All it does is limit your flexibility.

Is the company a partnership? And are they talking about making the employees partners? Guaranteed payments are payments from the partnership to a partner. If the employees become partners, then their compensation for plan purposes will be net earned income, the same as any other self-employed individual. If the guaranteed payments are being paid out during the year as partnership draws, then they can be deferred from, but there is a risk that the net earned income at the end of the year may not support the amount deferred, e.g. if the partnership had a net loss.

I can't speak to what you may or may not recall, but I don't see any problems with anything you described.

I agree they can amend the plan to designate the 100% survivor annuity as the plan's QJSA. I am not clear on what you mean by "mandatory" 100% QJSA.

The big difference is the universal availability rule—403(b) plans have to cover everybody, immediately, with limited exceptions. A 401(k) plan on the other hand can have a service requirement. The flip side of that is a 401(k) plan is subject to the ADP test whereas a 403(b) is not.

There has been discussion on this issue in the past. If you use the search box you might be able to dig up the thread. From memory, there were two key points: 1. the plan should have some kind of written administrative procedure that says deferral elections will be honored only to the extent possible, taking into account the actual compensation available after other withholdings and deductions, and 2. cash tips, while still compensation, can't be used to fund deferrals, because in order to be a deferral it has to be paid by the employer to the trust before it is received by the employee, and that can't happen if the employee received the tip in cash.

I like to use gender-neutral terms like "the participant" to avoid any misunderstandings. Singular "they" should be acceptable in most situations as well.

I agree, but be careful because: If you have any participants who are receiving an allocation of prevailing wage contributions, and that contribution is being included in the testing for the profit sharing allocation, then you have to include those participants as benefiting under the profit sharing portion of the plan, regardless of whether they met the plan's allocation conditions. For example, if you have an employee who terminated but who received a prevailing wage contribution equal to 2% of pay, they are now in your test. If the gateway minimum is 5%, then this person would have to get an extra 3% as a profit sharing contribution in order to pass the test, even though they didn't meet the conditions for a profit sharing contribution. Most plan documents that I've seen include an automatic waiver of allocation conditions if needed to pass the gateway test.

Generally a participant wouldn't be "forced" to select a particular form of benefit, since whenever a plan is subject to QJSA it also has to offer the participant a QOSA. If they make the QJSA the 100% survivor annuity, then the QOSA would be a 50% survivor annuity. The QOSA can be elected by the participant without spousal consent. 1.411(d)-3(c) provides rules about how and when redundant forms of benefit can be eliminated.

A standardized plan probably won't allow for the DB top heavy minimum to be provided in the DC plan. If the only participants are the owners - since I really hope they're not using a standardized document if they have employees - then it probably isn't a big deal since there would be nobody eligible for a top heavy minimum anyway. Regardless I would restate the plan onto a nonstandardized document asap.

Interesting, because that's not what the reg says. One of the examples in the reg clearly says you can use one bond to cover both the qualifying and non-qualifying assets. However it might be easier to get a second bond than to argue with a DOL agent if the plan is under audit. DOL reg 2520.104-46(b)(1)(iii)(B), relevant section highlighted.

Too bad. Should have diversified.

Assuming the husband is over 50, they can both defer $26,000, and the $32,875.50 employer contribution can be split any way they want between the two of them, with the only limits being that they each have to get at least some of it, and the maximum for the wife is $8,900. Also assuming that there are no other employees so no coverage or non-discrimination testing concerns.

I agree with Bri. There is no waiver of the mandatory withholding just because it's an in-kind distribution. If it's an eligible rollover distribution then mandatory withholding applies. They might need to sell some assets in order to pay the withholding.

Catch-up contributions do not count towards the annual additions limit. Wife defers $26,000 (assuming we're talking 2021 limits here). That exceeds the 402(g) limit so $6,500 is reclassified as catch-up. The remaining $19,500 does count against the annual additions limit. Her annual additions limit is the lesser of $58,000 or 100% of comp. In this case that's $28,400. The amount she has left under the annual additions limit is $28,400 - $19,500 = $8,900. That is the maximum employer contribution that could be allocated to her for 2021. That does exceed 25% of comp, but remember that the 25% deduction limit is applied on an employer-wide basis. $103,090 + 28,400 = $131,490 x 25% = $32,872.50 is the deduction limit for 2021. You could allocate $8,900 to the wife and the remaining $23,972.50 to the husband, if you wanted to. This is assuming no other employees besides the husband & wife.

A participant who does not keep themselves informed of IRS regulatory activity (presumably most participants) should rely on a trusted service provider such as a recordkeeper, custodian, or TPA to provide them with the most up-to-date information. Pub 590-B (which only relates to IRAs, not qualified plans), even says "If an RMD is required from your IRA, the trustee, custodian, or issuer that held the IRA at the end of the preceding year must either report the amount of the RMD to you, or offer to calculate it for you." The IRS does not expect IRA owners to calculate their own RMD amounts.

The revised 1.401(a)(9)-9 which contains the new tables was published in the Federal Register on November 12, 2020. https://www.federalregister.gov/documents/2020/11/12/2020-24723/updated-life-expectancy-and-distribution-period-tables-used-for-purposes-of-determining-minimum

I did some Googling and found the interaction that Mike referred to, from the 1999 ASPPA Annual Conference. https://www.asppa.org/advocacy/irs-qas-1999 That's it, one word for an answer. I agree with Belgarath, this is confusing, as there does seem to be a distinct possibility of a non-discrimination issue. To answer the question from earlier, as to why I think it would be unlikely that this would be nondiscriminatory: When the owner is acting as the trustee of the plan, they are going to select a mix of investments that they feel will meet the needs of the plan, regardless of what the participants in the plan might want or would have chosen if they'd had the chance. In the plan covering the employees, the participants are not going to get a chance to give their input on the plan's investments. What I don't understand is how you could expect such a person, in the position of the trustee of an account that only covers themselves, to not consider their own investment preferences. Maybe there is someone out there who could invest their own account as if they were a disinterested 3rd party, but I don't think that's the same person who would go out of their way to set up a whole separate plan for themselves.

It might, however, strengthen any later claim for the funds (whether by the plan or by the designated beneficiary) against the person in control of the bank account, as such person would have to actively commit an act of deception in order to keep the payments flowing.