C. B. Zeller

Since you said this is for 2019, then you can not do either, since the 2019 deferral limit is $19,000. Assuming you meant 19,000, and also assuming that the W-2 amounts you gave include deferrals, then you can do the first one but not the second one. How would you defer more than you earned?

I think this would violate the contingent benefit rule of 1.401(k)-1(e)(6)(i) - you would be conditioning the right to make future deferrals on having made deferrals in the past.

I agree, with one modification: Chances are the plan year and tax year are the same anyway.

401(a)(31) is a qualification requirement. While not exactly on point, 1.401(a)(31)-1 A-6(b) notes that "A plan will fail to satisfy section 401(a)(31) if the plan administrator prescribes any unreasonable procedure" for electing a direct rollover. Requiring participants to return their forms in less than 30 days could be considered an unreasonable procedure. What does the plan administrator intend to do with the benefits of participants who do not return a distribution form? Roll them over to an IRA provider (e.g. Penchecks)? Consider this scenario: the employer sends out the 402(f) notice on December 16. No response is received and the account is rolled over to Penchecks on December 30. On January 3 the participant returns a completed distribution form electing a direct rollover to another qualified plan. The plan will have failed to failed to comply with 401(a)(31) by not providing a direct rollover to the plan specified by the participant.

I don't think so. You are amortizing 3 separate bases. It just so happens that you have one large positive base and 2 smaller negative ones. The positive base has a smaller duration (in the Macaulay sense) than the negative bases, so it contributes less to the outstanding balance, but a larger payment so it contributes more to the current installment. It is weird but, as you've shown, clearly not impossible. Editing my reply to add that the sum of the outstanding bases, although it is required to be reported on the Schedule SB, is not a number with any real actuarial significance. You can't use it to determine anything useful on its own, which is presumably why you are required to attach the schedule of bases to the SB.

If there were multiple disqualified persons, then each one would file their own 5330.

Looks fine to me. There's no requirement that the sum of the installments be less than the sum of the PV of the outstanding bases for any given year.

The excise tax under sec. 4975 is paid by the disqualified person who participated in a prohibited transaction. The employer who failed to deposit contributions in a timely manner is probably the disqualified person in your scenario, but it will depends on the specifics.

Just a reminder that Key employee is not the same thing as HCE. Keys matter for top heavy. HCEs matter for nondiscrimination and coverage. How many HCEs and non-HCEs are there in each company? If the owner is the only HCE in any of the companies and he is covered, then the plan will have to cover at least 70% of the non-HCEs across all 3 companies, or less if you can satisfy the average benefit test.

If you aggregate for coverage, you have to aggregate for nondiscrimination as well. For coverage, if you are testing a plan (including a plan consisting of two or more permissively aggregated plans) with multiple age and service conditions, you must use the most lenient age and service conditions to determine the coverage group. You can use the otherwise excludable employees rule to disaggregate employees who have not met the minimum statutory age and service conditions and test them separately.

To those who feel that there is some problem with allowing participant loans as a pooled investment, remember that participant loans are also permitted in DB plans.

Do these three PLLCs have anything to do with each other besides the fact that the members used to work together at the same law firm? If they are working together then there needs to be some sort of an umbrella organization, in which all 3 PLLCs have some ownership, and then you will (probably) have an ASG. You could of course also do a single plan as a MEP if there is no ASG. Why can't you just use the adoption date of the new plan as a special entry date?

Is this what you're looking for? 1.401-10(b)(2) If a self-employed individual is engaged in more than one trade or business, each such trade or business shall be considered a separate employer for purposes of applying the provisions of sections 401 through 404 to such individual. Thus, if a qualified plan is established for one trade or business but not the others, the individual will be considered an employee only if he received earned income with respect to such trade or business and only the amount of such earned income derived from that trade or business shall be taken into account for purposes of the qualified plan.

Members of a controlled group are treated as a single employer for purposes of 415, that is, for determining compensation. However, check your plan documents to see if any compensation is excluded, for example compensation paid by other members of a controlled group which have not adopted the plan.

How about amending the plan to name B as the sponsor, and then terminating A's participation?

Socratic method notwithstanding, no, they can't. I mean, they could, but they would have to exclude HCEs from the match as well since no HCE can receive a higher rate of match than an NHCE at the same deferral rate, and at that point you might as well just be subject to the ACP test.

Remind the son what the "R" in RMD stands for

I would think you would use the greater of the elected flat dollar amount or the auto-escalated percentage, computed each pay period. For example, it's the participant's 2nd year so their auto-escalation rate is 5%. When they first became eligible, they elected to contribute $50 per paycheck and have not made an affirmative election for the second year. Week 1, their pay is $1200. 5% of $1200 is $60, so their contribution is $60. Week 2, their pay is $900. 5% of $900 is $45, but they affirmatively elected to have $50 withheld, so their contribution is $50. For the participants who want to defer the annual limit, they will already be making an affirmative flat dollar election each year, so the auto-escalation will not apply.

Sounds like VCP to me. Good luck.

A QRP or qualified replacement plan is a way of avoiding or reducing the excise tax on reversions when a plan terminates with assets in excess of the maximum that can be paid out. Do you have an existing defined benefit plan that you are terminating? Without all of the relevant info, no one here is going to be able to give you meaningful advice. All 401(k) plans are profit sharing plans ... but not all profit sharing plans are 401(k) plans. Section 401(k) is a "feature" of some profit sharing plans that allows elective deferral contributions. There is no such thing as a "Solo-K" plan. There are profit sharing plans, with or without a 401(k) feature, that cover only the owner. These plans are exempt from Title I of ERISA, including the annual filing requirement with the DOL. There is an IRS filing requirement however.

I would be worried about the contingent benefit rule of 401(k)(4)(A). The CODA is not qualified "if any other benefit is conditioned (directly or indirectly) on the employee electing" to defer. The investment direction is so closely tied to the deferral election that I would not feel comfortable allowing this.

I did not say roll over the entire amount, I said cash them out. Rollover does not have to be made available for distributions <$200. If rollover is not available then the notice is not required. 1.401(a)(31)-1 Q-11: Will a plan satisfy section 401(a)(31) if the plan administrator does not permit a distributee to elect a direct rollover if his or her eligible rollover distributions during a year are reasonably expected to total less than $200? A-11: Yes. A plan will satisfy section 401(a)(31) even though the plan administrator does not permit any distributee to elect a direct rollover with respect to eligible rollover distributions during a year that are reasonably expected to total less than $200 or any lower minimum amount specified by the plan administrator. The rules described in §31.3405(c)-1, Q&A-14 of this chapter (relating to whether withholding under section 3405(c) is required for an eligible rollover distribution that is less than $200) also apply for purposes of determining whether a direct rollover election under section 401(a)(31) must be provided for an eligible rollover distribution that is less than $200 or the lower specified amount.

I promise no keyboards were harmed in my mathematical excursions!

This is the key - your tax burden is higher solely because your account balance is higher. If you had invested that income and earned $100 in the market you would owe capital gains tax on it. Since plan earnings are taxed as normal income, not as capital gains, it is taxed as income when withdrawn from the plan.

Thanks Larry - I worked out the math on it using actuarial notation a while back, just to prove it to myself. I found it to be a very useful exercise.