truphao

it depends (as usual). If the client keeps good records of hours and the owners did not cross the 1,000 hours I think it is possible (assuming this is how the plan is drafted). Had exaclty same situation last year and we froze the benefit accruals for Owners in late August. I did spent a great amount of time educating the client about the keeping the proper records and the due diligence. I was comfortable implementing at the end of the day given the quality of records and the corresponding decrease in W-2s.

110% issue is within the 401(a)(4) regs, so one would think it would not be applicable to H&W situation. But, I think the IRS insisted that the language be included in the pre-approved plan documents, so I believe all "known" PD vendors have that language in their PD. So, it becomes an operational issue. Proceed at your own risk.

it is not just 415, it is a deductibiltiy too. If your Plan Document says "do whatever you want" (aka each participant in their own group) then you can do whatever makes sense. If yoour document is not flexible, you follow the Plan Documnt terms.

David, we are getting a lot of situations where the client/prospect already has an existing 401(k) Plan through ADP, Paychex, and the likes. This is usually a total crap from the perspective of accomodating a CB Plan. So, more often than not a workable solution is to add a CB Plan and a stand-alone PS plan just to get going to accomodate the proper eligibiltiy, entry, TH minimums, etc. The actual benefit level design is limited by imagination and creativity only.

50?! i.e 3 hours and 20 minutes per plan? assuming no data issues, all provisions are standardized, everything is passed on the first try and zero time spent on documentation and notes? double that. Here is another tip - in old good times we would put on a wall a large map with multipe colors highlighting the permissive aggregations. Might still be an efficient and relevant tool inspite of all the AI advancement.

usually plan's formula for oner-only plan is 10% of AAC (415 limit formula). Thus, there is no need to complicate things.

that applies for sole-props as well and many (if not majority) of CPAs think it is OK to deposits VATs by September-ish.

What is the basis for that? I do not see in §1.411(a)-5(b)(3) any reference to distinction by plan type. If it is a "replacement" plan, then sure, but is it? And if it is, what makes a DB plan not to be a "replacement plan"? The old plan exists, and a new plan is being added to accomodate whatever, with a different structure of benefits and vesting.

dependent on the actual plan design you potentially need to calculate various factors for each person at attained age at termination, normal retirement age, age 62. That is using 5.50%. 5.0% and 417(e) rates. Btw, you need to watch out not to exceed 415 limites along the way for 2024 (if applicable) and 2026. Varous proration rules applied to dollar-based limit and compensation-based limit. The precise guidance in the IRC Section 415(b) and the final 415 regulations. GL.

"Buy cheap, buy twice." Only in this case it will be much more than twice in 2026.

not sure if I see a practical issue here. I am of opinion that you got to protect the annuity benefit but it is extremely likely that the additional one year of pay credits will make the protection to go away. So, unless you are doing something really funky duiring the very first year after the change, it is a non-issue. FWIW, I am sure I could be missing something here, so I am interested in hearing other people thoughts.

agree with Effen, QRP is a reversion. The final decision is with the client and their attorney.

let's say, the solo 401(K) allows investment in bitcoin futures. Unless the main 401(k) allows investment in bitcoin futures as well, the BRF test is flanked.

let's not overlook the fact that the actuarial equivalence definition might have changed because payments did not happen in 2023. Dependent on plan provisions, definition of actuarial equivalence, and interplay with 417(e) rates all kind of messy things could have happened.

no, it fails. 1.401(a)(26)-5(a) thows you into 1.410(a)(b)(1) which requires an increase in accrued benefit (assuming exceptions do not apply):

pay attention to the language in BOTH plans. Minimu required is 3.0% but this can get overruled by the "bad" Plan Doc language - I have seen it on many ocasions.

Cash Balance Formula ususally relies on 133 1/3% rule, I do not belive I have seen anything else for small plans. It is only the "large" plans when you are trying to design pay credits based on age/service/points will ocasionally fail 133 1/3 rule.

I did and am waiting for a response......Will post an aswer once I receive it.

Employee enters the CB Plan on 1/1/2021. Plan requires 1,000 hours to earn a Pay Credit. Works 1,100 hours in 2021, 1,100 hours in 2022, 900 hours in 2023 and 900 hours in 2024. 12/31/2024 accrued benefit is $100/month, his average comp is $60,000. I think he would pass the 401(a)(26) on accrued-to-date method. The system (Datair) calculates his accrual rate correctly but marks him as "non-benefiting". What am I missing here?

Integrate into data collection process, anticipate and respect their professional needs and deadlines, engage them into post-cycle planning process. To sum it up - COMMUNICATE.

Form 5500-EZ instructions do not refer to "other qualified plans" but rather to "other plans maintained by...". SEP is indeed an indivudal IRA but it is established and maintained by a business entity.....My vote is to count the assets in SEP toward the 250K threshold...

Thank you Belgarath, I am trying to convince myself that this is a CG so I do not have to go down the rabbit hole of ASG

Company A, Father owns 50%, Son own 50%. Company also employs son's mother and son's wife. Company B is 100% owns by mother, mother and father are not married. This is a B/S CG, right?

yes, if there is a cchange in both the firm and the actuary

not sure if 204(h) is applicable to an Owner-only Plan. Although the regulations do not exempt Onwer-only situations explicitely but it is not an ERISA plan.