C. B. Zeller

I think you're right - I must have missed that section about the effective date that applies to the segment rates. The way I'm reading it is that the sponsor has to make an affirmative election to continue using the old segment rates for 2020 or 2021. So for a sponsor who fails to make any elections, the new segment rates come into effect for 2020 and the new shortfall amortization for 2022. Effen, thanks for the insight. It's disheartening that the new rules undo a lot of the plan to get single-employer plans adequately funded under PPA. Perhaps ironically, the higher PBGC premiums might actually be justified now if plans are going to be less well-funded as a result of the changes made by ARPA.

Agreed on PBGC premiums. It's disappointing that Congress didn't act to stabilize premiums in a similar manner to funding. Hopefully ARA will lobby for it whenever the next round of relief comes up. It's insane that the 1st segment for minimum funding under ARPA for 2021 is now 4.75% while for PBGC premiums it can be as low as 0.51%.

Sure, why not?

Compensation for self-employed individuals is always net earned income, regardless of whatever definition is chosen for employees.

The Rescue Plan Act was passed by the House today and is expected to be signed by the president on Friday. The bill adjusts (increases) the segment rates for minimum funding starting in 2020, and (optionally for plan years starting in 2019, 2020, and 2021, and starting for everyone in 2022) replaces the 7-year shortfall amortization with a 15-year amortization. How are you planning to handle the changes? Hopefully most of us have our 1/1/2020 valuations finished by now, are you contacting all your clients and letting them know they should expect a new minimum contribution calc? Are you going to discuss the shortfall amortization option with them, or just opt them all in (or out)? Or wait until your software supports it before even bringing it up? Any other ideas or concerns about the new law?

I've got a better solution for this. Click on your username at the top, or on mobile, open the menu and go to Account. Then go to Account Settings. Go to Content View Behavior and choose Take me to comments I haven't read, and Save. Seems to be working for me on both desktop and mobile.

Nope. And there may be issues with a 412(d)(2) amendment as well. If you have an hour, Kevin Donovan did an "Actuarial Grab Bag" webcast a few weeks ago that covers these and other issues and goes through some creative solutions. I highly recommend it. It's on ASPPA's web site.

IRC 401(a)(11). In order for a 401(k) plan to be exempt from the qualified joint & survivor annuity rules, the participant's spouse must be their 100% beneficiary, unless waived.

There's nothing that says MEPs have to be huge plans. You can have tiny MEPs - we have several in our office. The basic things you need to know about a MEP are: Coverage, non-discrimination and top heavy are done as if they were separate plans Service is combined for eligibility and vesting On the 5500-SF, check the box for multiple employer plan and see the instructions for the required attachment

If you go into the thread I linked @RatherBeGolfing explains the whole story. The short version is that starting in 2020 the instructions for the 5500-EZ say that a partner includes a 2% S-corp shareholder, as defined in IRC 1372(b), and 1372(b) references 318.

The plan might also allow you to designate a non-spouse as your beneficiary.

I sent you a DM

As far as I can tell, the tax laws of NY state treat distributions from the NYC teachers' 403(b) plan as non-taxable. Is that fair to others who receive distributions from 403(b) plans in New York that do not get the special treatment afforded to the NYC teachers' plan? I don't know, but that's a subject for the citizens of the state of New York and their elected representatives. If people paying their fair share of taxes is your main concern, it seems to me there are far bigger fish to fry.

What does the retroactive amendment say? Does it say that the employee became a participant solely for elective deferrals or did it say they became eligible for all contributions? Does the plan document say that all employees who are eligible for deferrals are eligible for safe harbor contributions, or does it impose a minimum service condition to be eligible for safe harbor? Is the plan top heavy?

This forum is full of stories from people who tried to do it themselves and ended up fouling things up. Of course, if there are any business owners who are successfully administering their own plans, they probably aren't coming on here to tell us about it, so you do kind of have a self-selecting group. That said, I would strongly encourage you to hire a TPA. For a one-member LLC with no employees, you won't have any testing and won't even need a 5500 until combined plan assets go over $250,000, so prices should be pretty reasonable, and you have the confidence of working with an expert who knows all the rules. For the cash balance plan you are required to use the services of an enrolled actuary even if you don't have to file anything, so there's no doing it yourself with that one. If you can tell us where you're located, I'm sure someone on this board will know a local TPA who can help you. Our company for example does administration for dozens of owner-only and micro-sized plans so there are definitely firms out there who cater to your market.

Yes. All one-participant plans of the employer are considered together to determine if the $250,000 limit is reached.

Sec. 318 attribution applies when determining who is a 2% shareholder of an S-corp for purposes of determining whether the plan is eligible to file Form 5500-EZ. See prior discussion here:

Sometimes you have to read between the lines, but the answer will be there somewhere. Start with the DB plan - it has to say somewhere to which plan the top heavy contributions will be made. If it says to the DB plan then you are stuck with the 2% accrual. If it says to the DC plan, then you have to go and look at what the DC plan says. If the DC plan allows for top heavy minimum contributions to be made on behalf of the employer's DB plan, then go ahead and make the 5% to the DC plan. If the DC plan doesn't acknowledge the DB plan for top heavy minimums, but it doesn't have a last day allocation condition for profit sharing, then you can still make the 5% to the DC plan, just call if profit sharing. If the DC plan does have a last day condition, then you will probably need to do an -11(g) corrective amendment to waive the last day condition for those employee(s) entitled to the top heavy minimum.

See this thread for a discussion of the 5500-EZ issue: Short version: the definition applies solely for purposes of determining whether a plan is eligible to file Form 5500-EZ and not for any other purpose under Title I.

You would have to ask the authors of Title I. The definition of employee benefit plan does not reference IRC 318 attribution.

Read where? "Solo K" is not a team that's defined in any of the law or regulations. It's just a marketing name. There is such a thing as a "one-participant plan" which means they are eligible to file Form 5500-EZ. A one-participant plan includes a plan that covers only a sole proprietor and their spouse, partners in a partnership and their spouses, and (new starting in 2020) 2% shareholders in an S-corporation and their spouses, children, parents and grandparents. Any plan adopted by an employer which has no non-highly compensated employees will be exempt from most testing, which is the real benefit of a "Solo K" plan anyway. So go ahead and adopt a regular 401(k) plan and don't worry about it.

Are the plans part of a required aggregation group? (The answer is yes if both plans cover any Key employees, which they probably do. It's also yes if they are being tested together for 401(a)(4) which it appears they are.) I agree with your conclusion. If an employee was eligible to defer but has not met eligibility for the DB plan then they need the 3% DC top heavy minimum, and if they have not met statutory eligibility then they can be disaggregated on the general test and so would not need to receive the gateway.

If we're talking about participant elections, and not just plan documents, don't forget about 1.401(a)-21.

VCP can give the plan relief from operational issues. In other words, if the VCP is granted, the plan can't be disqualified for allowing the distribution to be treated as a CRD even though it was paid in 2021. I don't believe that any IRS departments outside TEGE are obliged to honor the VCP though. Meaning that there is no guarantee that the participant would be allowed to treat the distribution as a CRD on their taxes.

Agree with Bill. I would cite DOL reg 2510.3-3(c)(1) which says "An individual and his or her spouse shall not be deemed to be employees" - it says nothing about their children.