JimK

416(i)(1) describes key employees, but 416(i)(3) states that self-employed individuals shall be treated as "employees". (not key-employees) It seems illogical for them to describe how to handle key employees accounts if they won't allow transfer of funds into the account. What do you think? Or, should I just keep my wife's salary under $130K to stay under the 416(i)(1) limits? Also, the main reason for this posting was to see if there was any firm that has experience in 401(h) plans. Has anyone set one of these up before? Thank you for your insights.

I think you may be referring to 420(e)(1)(E), regarding exclusion of key employees? 401(h)6 just says key employees must have separate accounts. Alternatively, since my wife could be considered not a key employee, I could be covered as her spouse.

Sorry, Should be code 420(f)(2)(C)(i)(II) " (II)in the case of all other taxable years in the transfer period, the sum of the qualified current retiree liabilities which the plan reasonably estimates, in accordance with guidance issued by the Secretary, will be incurred for each of such years, and..."

I have a small S-corp consisting of 2 employees, my wife and I plan is to retire in 5-6 months at age 62. Currently I have a defined benefit plan administered by a large firm. Due to significant market gains over the last few years, the plan will be over-funded by about 800K to 1M at the time of termination. Both employees are at 415 limits. From what I can find, a 401(h) plan seems to be my best option. I plan to roll over all excess assets into the 401(h) plan at the time of termination as per Code 420(F)(C)(i)(2). Unfortunately I am having trouble finding someone to set up this plan and take over administration of it. A local pension firm suggested I use this forum to perhaps find someone with experience in this area. If anyone has experience in this area please let me know. Thanks,