C. B. Zeller

Even if it could, availability of an investment alternative is a benefit, right or feature which can not be discriminatory in favor of HCEs.

What does this mean? Are you doing a floor-offset plan? Yes, the owner's son has to be included in the general test, even if he gets no accrual in the cash balance plan. Consider amending the 401(k) plan to not provide the safe harbor non-elective contribution to HCEs, then he won't receive an allocation at all and his EBAR will be 0. Also see if you can use component testing to put him in a rate group tested on allocation rates, preferably with some older NHCEs whose EBARs aren't helping the owner. It's possible, if you can use component testing, but not guaranteed. If the plan will be exempt from PBGC coverage then their profit sharing contribution will probably be smaller than they are used to due to the combined deduction limit.

Another vote for your interpretation. If you want additional support, this is in the preamble to the 2001 new comp regs: https://benefitslink.com/src/taxregs/1.401a4-8-final.html

There it is again. It's not tax-free, because the distributions are still subject to federal income tax. Some states have no income tax at all. If the individual retired in one of those states, would you go around claiming that they got a tax-free retirement plan? Of course not, because they would be paying the taxes they are supposed to, which happen to be zero at the state level. Same in this case. This is deliberately misleading. The author is using a term established for federal tax law purposes and saying that it should apply to the state. What's your stake in all this, if I may ask?

Combined. You can use one partner's net earned income to substantiate a contribution for the other.

Contributions to an HSA are tax-free if spent on qualifying expenses. Many people use them as a retirement savings vehicle. Individuals with income less than certain thresholds do not have to pay income tax in that year. If such an individual contributes to their employer's Roth 401(k) plan, they could have a tax-free retirement plan. There are other, further contrived examples, but I contest your assertion that there is no such thing as a tax-free retirement plan. I perused the publication and it is pretty clear that NY taxpayers can subtract pension payments from NYC Teachers’ Retirement IRC 403(b) plan from their income. I am not an expert on NY state tax law so there may be some subtlety in there that I did not pick up on. I agree with QDROphile, NY state is free to implement their tax law however they see fit, without regard to whether it makes sense to commenters on an internet message board.

Contributions to a profit sharing plan have to be "substantial and recurring." A 401(k) plan is a profit sharing plan, but a MPP is not, which is presumably why shERPA recommended it.

Is the plan a QACA?

Could be a problem with the contingent benefit rule in 1.401(k)-1(e)(6). If two employees would both be eligible to receive the same bonus, but one of them receives a smaller bonus or no bonus at all because they deferred into the plan (and consequently received a match) then the contingent benefit rule is violated because the other employee received some other benefit as a result of their election not to defer.

The employee has to receive the DC top heavy minimum if they were employed on the last day of the year. If they are receiving a 3% safe harbor non-elective contribution then that probably takes care of the top heavy minimum.

If I'm understanding the question correctly, I think you are asking if you are required to use any particular definition of compensation when determining if QNECs are disproportionate under 1.401(k)-2(a)(6)(iv)? The section only refers to "compensation" which in the context of that reg means testing compensation. I would think you would use whatever definition of compensation you are using to perform the ADP test.

Have you tried asking your document provider? If you are using a checkbox-style adoption agreement, I would expect each of those to be options.

You mentioned the employee is only a participant due to a special eligibility window. If they never worked 1000 hours in any plan year, are they otherwise excludable for testing purposes? If the group of otherwise excludable employees passes without needing to cross-test (perhaps, because there are no HCEs) then the gateway does not apply to that group.

That thread cites the EOB as authority for allowing an EACA to be effective mid-year. If you have access to the current edition of the EOB, try looking up that section and see if it's been updated to address this question.

Do you have a source on this? EACA requires a notice to participants before the beginning of the year, therefore it can't be adopted mid-year. The earliest you could make it effective at this point would be 1/1/2022 (assuming calendar year). Not eligible for the tax credit in that case. The EACA has to apply uniformly to all employees unless they have an affirmative election.

Nope. A one-time irrevocable election is NOT treated as a 401(k) election. 1.401(k)-1(a)(3)(v)

If Company A and Company B are not part of a controlled group or affiliated service group, then an individual who is a participant in both company's plans has a separate 415 limit in each plan and can receive his full annual additions limit in each plan. As you pointed out, he still has only a single 402(g) limit.

I almost mentioned this in my earlier reply. I'm going on the assumption that the doctor asked ratherbereading to run a projected ADP test in late 2020 to see what was the maximum he could defer without failing the ADP test. Because we all know that an owner with earned income has to make their deferral election before the end of the year, even though they have until their taxes are finalized to make the deposit, right?

Short answer, yes, it almost certainly would affect it. Longer answer: As a participant in a defined benefit plan, your father would have earned something called an "accrued benefit." This is usually based on his salary and the number of years he worked for the company, and it is usually expressed as a number of dollars payable monthly starting at his normal retirement age and ending at death. Let's say that his accrued benefit was $2,000 per month. You said he started receiving benefits 30 years ago, so 1991, and his date of birth was 1933 so he was 58. If the plan's normal retirement age was 62, there would have been an adjustment for early retirement; so instead of $2,000 per month starting at age 62, his benefit would be maybe $1,800 per month starting at age 58, depending on the plan's early retirement factors. If the plan says that the $1,800 per month was payable starting at age 58 and ending at his death, then there would need to be another adjustment due to the fact that the payment ends at the later of his death or his spouse's death. The plan's actuary will calculate the amount of the adjustment, but the younger the individuals involved are, the larger the adjustment (and the smaller the payment) will be, since it would be expected to be paid out over a longer period of time. So, if they have been paying out all these years based on an adjustment for a 58-year-old and a 43-year-old, it would be potentially very different than the adjustment for a 58-year-old and a 53-year-old. In order to determine if they did it correctly, you would need to know, at a minimum: Your father's accrued benefit at the time he retired The plan's early retirement adjustment from normal retirement age to your father's actual retirement age The plan's adjustment factors for the form of benefit elected by your father at at your father's actual retirement age using your parents' actual ages Using those, you should be able to calculate the amount of the monthly benefit that was actually payable. If the plan provided cost of living increases or other adjustments for retirees, then there may be additional factors that need to be taken into account. Good luck!

Yes, it makes sense. When you reclassify deferrals as catch-up due to the ADP test, the only amount that gets reclassified is the amount that would otherwise be refunded. So it makes sense that the amount reclassified for the one HCE is equal to the amount of the refund for the other HCE, earnings aside.

More than that - it's a fiduciary failure, as Peter alluded to. If the contributions are not in the participants' accounts then they cannot exercise control over them and you have a 404(c) issue. If the TPA or other intermediary can't get the money into the plan for a couple of weeks, let's say, and the market blows up in those couple of weeks, participants could sue.

I believe you would just need to file an amended 5330. There is a section in the instructions for "Claim for Refund or Credit/Amended Return."

The 6% limit only applies if the DB plan is exempt from PBGC coverage. If your business is a sole proprietorship (not a corporation) and you are not in the business of professional services, then you might not be exempt. If you are not exempt then you are probably past due on a 2020 PBGC premium, but you would be able to get the full 25% deduction on the profit sharing plan.

https://apps.irs.gov/app/picklist/list/priorFormPublication.html?value=1099-R&criteria=formNumber&submitSearch=Find You can also get to this link from the IRS's "About Form 1099-R" page by clicking the link for "All revisions for Form 1099-R and instructions"

Since you took the distribution in 2020, if you meet the definition of a qualified individual (impacted in certain ways by COVID), then you should be able to treat the distribution as a coronovirus-related distribution, which a) lets you spread the income tax out over 3 years, and b) lets you recontribute it back to an IRA or qualified plan within 3 years, without regard to any rollover or contribution limits. More info on coronavirus-related distributions here: https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras