C. B. Zeller

Just to be entirely clear, there is no 6% limit on the deductible contribution to the cash balance plan. When an employer sponsors overlapping DB and DC plans, and the contribution to the (non-PBGC) DB plan exceeds 25% of compensation, then the deduction on the DC plan is limited to 6% of compensation.

Depends how "unrelated" they are. Even if there is not enough common ownership to create a controlled group under 414(b)-(c), there might still be a controlled group under 415(h).

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The plan is required to ask for the money back, but there is no mechanism allowing the plan to forcibly recoup it. However, the plan has a qualification issue created by allowing the participant to take an impermissible distribution. If I were the plan sponsor, I would be wanting the recordkeeper who allowed the distribution to pay for a VCP filing to correct the failure.

Assuming you did not make a calendar year lookback election, you will need to know 6/30 year-end comp and calendar year comp for all employees in both companies. For A's plan year beginning 7/1/2020, employees in both A and B who had comp greater than the limit for the period 7/1/2019-6/30/2020 will be HCEs when doing A's testing. For B's plan year beginning 1/1/2020, employees in both A and B who had comp greater than the limit for the period 1/1/2019-12/31/2020 will be HCEs when doing B's testing.

Don't forget the DOL can impose substantial penalties for a late filing in addition to the IRS. The DOL penalty is currently $2,233 a day. DFVCP by comparison is $10 a day with a cap of $750. I think the choice is clear. Also, don't file the 5500-SF saying that it was filed under 5588, if 5588 was not filed. Remember the plan administrator is signing under penalty of perjury. Check the box for DFVCP and pay the $10.

You can require 2 years of service if all contributions will be 100% vested. The 2 year of service rule is not available for 401(k) deferrals. You can still use semiannual entry dates with the 2 year of service rule. The way 410(a) is written, it says that if the plan provides 100% vesting then you can just replace "1 year of service" with "2 years of service" and nothing else changes. As long as the employee becomes a participant no later than the earlier of the first day of the next plan year or 6 months after completing 2 years of service, then they meet the requirements. Be careful with how you define your eligibility computation period when using this rule. The initial period always starts on the employee's date of hire, but the default in many plans is to have it switch to the plan year after the first period. If you do it that way the second period could begin while the first period is still ongoing. For example, if you have somebody whose date of hire is April 1, 2021, they would complete their first year of service on March 31, 2022. If the eligibility computation period switches to the plan year, then the second period begins on January 1, 2022 (assuming the plan year is the calendar year) and they would complete a second year of eligibility service on December 31, 022 and enter the plan on January 1, 2023. If the intention is for them to become eligible no earlier than their 2nd anniversary of hire, then you have to make sure that the eligibility computation period remains on the anniversary year and does not switch to the plan year.

If the goal is to promote networking among forum members, how about a stickied "Introductions" thread? It might repeat some of the same info found on people's profiles, but how many of us are browsing individual profiles? This way everyone's blurb would be in one place.

I agree with CuseFan and I'll add that your plan probably has a section describing what happens when an employee transfers from an ineligible classification to an eligible one. That section is more than likely going to say that they become a participant on the date that they transfer to an eligible classification, provided they have satisfied the age and service requirements with the employer as of that date.

If I'm reading Mike's mind correctly (and that's a big if), the concern is that, following the amendment, the accruals in the first plan year are zero, and then something larger than zero in all subsequent plan years. That would not satisfy any of the accrual rules under 411. If you did it in two amendments: 1) change the plan year and freeze accruals, and 2) reinstate accruals effective the first day of the next plan year, I think that would be ok, or at least better. There is always the question about definitely determinable benefits when freezing and unfreezing DB formulas though.

The final plan year ends on the date of the final distribution. That is the date you should use on the 5500. The 5500 is due on the last day of the month 7 months after the final distribution.

https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/dfvcp.pdf

Yes, as long as you are a qualified individual within the meaning of the CARES Act. Code 4 means you are the beneficiary of a death benefit. Notice 2020-50 section 1.C states that "any distribution received by a qualified individual as a beneficiary can be treated as a coronavirus-related distribution."

To address the original question of "How does the CARES Act RMD waiver affect a participant who would have been required to commence distributions by 4/1/2021," this is addressed in Notice 2020-51.

An individual born after June 30, 1949 and before January 1, 1950 would turn 70½ in 2020 and 72 in 2021. An individual born after December 31, 1949 and before July 1, 1950 would turn 70½ in 2020 and 72 in 2022.

If the employee turned 70.5 in 2020, then their RBD is 4/1 following the year they turn 72, under the SECURE Act.

Typically a 401(k) election that is expressed as a percentage will be applied to gross pay (before taxes, medical premiums, or other deductions or withholdings). That is a general trend, but not a rule, so you should confirm with your wife's employer. Most 401(k) plans will allow you to make an election as a dollar amount per pay period, instead of a percentage of pay. If your goal is to defer the annual maximum it might be more practical to do it that way, so you would not have to worry about periodic fluctuations in her pay. You will also need to ask them what they do if her gross pay is not enough to support her elected 401(k) amount after tax withholding, medical premiums, and any other deductions. They might do the maximum, they might do nothing, or they might have some other procedure. Again there is no universal rule on this, but they should have an established procedure in place.

If there are no accruals under the DB plan, then there should be no need to aggregate it with the DC plan for nondiscrimination testing.

Rev Proc 2019-19 6.02(4)(a) (emphasis added)

Sound to me like they have either a significant operational failure which is uncorrected for more than 2 years, or a demographic failure; either way, the correction is VCP. Earnings should be calculated at the plan's actual rate of return.

If an ASG exists, then both companies are treated as a single employer for most purposes. 1. No. He can't contribute to the SEP while part of an ASG (unless he wants to provide SEP contributions to all the employees of the ASG). In addition there is a single 415 limit which applies across all plans sponsored by all members of the ASG. 2. Yes. Since A's only comp is his W-2 comp from the S-corp, the S-corp needs to adopt the 401(k) plan in order for him to make 401(k) deferrals. 3. Yes.

Since both businesses are in the field of law, they are automatically service organizations, and you have to consider whether an affiliated service group exists. The answers to your questions will depend heavily upon whether or not there is an ASG (or controlled group, but that seems less likely to me). Based on the way you worded question #4, it seems likely that an ASG does exist, but ASG determinations are highly fact-dependent. Is Attorney A an employee of partnership B (does he receive a paycheck and a W-2, in addition to the partner's distributions paid to his S-corp)?

If you exceeded the deduction limit, then the excess can't be removed from the plan. Since it was deposited in 2020, it can't be counted as a 2021 contribution either. What will happen is that the amount in excess of 25% of net earned income is not deductible for 2020, and it will have to be carried forward and deducted in 2021, and will count against your 2021 deduction limit. There is also an excise tax of 10% on the non-deductible contribution.

I am thinking that at this point, for a completed 2020 valuation, the options are: Obtain an executed election from the plan sponsor to use the pre-ARPA segment rates for the 2020 plan year, or Prepare a new 2020 valuation using the ARPA segment rates.

Sure, you're allowed to have an earlier NRA than the latest allowed by law. But we're contemplating making the latest age later, which would only be of interest to plans that want to use the latest possible NRA. I don't know about the employee thing. This is what IRC 411(a) says: and 411(a)(8) Says nothing about being an employee on the date they attain normal retirement age. I also don't see anything to that effect in the 411 regs. I would be happy to be proven wrong though. The way I read this, a participant who defers their distribution (and is eligible to do so, i.e. not subject to mandatory cash-out) until NRA becomes 100% vested. Interestingly, though, our plan document (FT William cycle 3 401(k)) only says that "a Participant shall become fully (100%) vested upon his attainment of Normal Retirement Age while an Employee."