truphao

Thank you all for the input

Let's consider a hypothetical situation. We have a lovely couple, he is an independent 1099 ER doc, she has a one-person dental office running her business as a PC. The husband happens to be very good with finances, budget planning and all the financial matters and handles those issues for his business and as a W-2 employee for the wife's dental office. She is very good with marketing, internet media, licensing etc. and handles those aspects for herself and for the husband's business as a W-2 employee. Am I dreaming that after Secure 2.0 change to family attribution rules that particular couple would be able to double-dip everywhere on retirement plans? Two 401k plans, 2 DB/CB plans, etc.?

you want to check you Adoption Agreement to see if it restores the benefits being frozen due to "below 60%". I have seen weird things.

can somebody cite where it is in regs that you cannot aggregate plans with different plan years?

I like year-by-year approach, it is solid. I am OK with calculations based on the 2023 basis (rates, mortality, etc.) using the logic is that is when the calculations are done. I would not use "old" rates.

That is the essence of my question. How do practitioners interpret "significantly" in that context?

mega back door roth, if there is a db plan

I am curious how comfortable practitioners using Grouping with 410(a)(4)? For example, one owner, one employee. If employee's MVAR is 12% how comfortable is to give the Owner MVAR of 13.80% (=12 x 1.15)? What is the interpretation of "significant" from the https://www.law.cornell.edu/cfr/text/26/1.401(a)(4)-3?

Generally agree, but I have seen situations where the pension accounting were impacting taxation as well (insurance companies and some other odd-ball situations). We need more details.

I cannot answer that question for a couple of reasons. Firstly, the information provided is not sufficient even if I were a CPA. And secondly, I am not a CPA but just an actuary

for FYE everything gets zeroed out. In other words, if there is no plan there is no assets/liability on the books. You can get there with a settlement accounting (the clean by-the-book approach) or you just solve for whatever is missing to get you to zero (my preferred approach since zero is a zero). Whatever is missing will be the additional expense (P&L charge) for the period.

Peter, Thank you so much! Am I reading this correctly that we got another hyper-aggro design in place to squeeze few bucks away from IRS?

limitations are based on the tax/plan year if the plan doc is written properly. My concern is ability to defer 401(k) elective wrt comp earned before plan is effective. I am very interested what others have to say.

Love your thinking Joef, IRS does not have a chance against talented actuaries long term. The only issue I am thinking about is the income. I think you would have to demonstrate that so much income was earned between 12/29 and 12/31 to process the valid 401(k) deferral?

Jakyasar, I am not a big expert on this but I would be concerned if amending NRA to 62 from whatever bizarre formula it were before would open another Pandora box. Some questions I would be asking myself in your shoes: 1) Do I need to protect anything (anti-cutback)? 2) If I do, how would I do that? Can the same be accomplished by changing another provisions? (vesting, eligibility, etc.) 3) How would I make clear to the client that prior years are still an issue, and that the client/prior actuary/whoever and not me is responsible? Special language in Engagement Letter? 4) Anything else as I am sure I am not thinking of everything right now?

I do not think anyone is disagreeing with age 62 per se, your original question was focused on funding and that is what stirred the pot for me . I apologize for being a troublemaker.

Agree, but I think there is a valid argument to be made that a successful high profile trial attorney can be expected to retire earlier than 62. Yes, I am stretching but what I am trying to say is falls into "facts and circumstances" area. I strongly feel that the answer is "yes". For example, husband and wife run a successful real estate business (or mortgage company) together with the wife being 5 years younger. Can I really assume they both would be working until their individual age 65 (as NRA being age 65 in the plan doc)? Or do I assume (after learning that they want to be done when the husband is 65) that that is my assumed retirement date for both of them?

I am not sure I see the legal definition of NRA and the funding calculations as interrelated as you do. For example, one of my clients is a relatively young successful MD. I wrote the plan with NRA = 62 but we fund his plan based on the assumption he will be done at 50. That is what he stated his objective is and I am comfortable operating his plan based on that assumption. I definitely agree that 55 as NRA is not "kosher" but you did not provide the facts related to years of SVC - it might be that neither of those attorney can actually retire before 62?

I will take a shot: 1) Regarding NRA - being at least 55 I do not feel too bad about it although probably not the best 2) Regarding the funding - as an actuary you should make reasonable assumptions regarding the expected retirement age. The rest will follow. I hope I am not oversimplifying.

or alternatively demonstrate non-discrimination in amounts using appropriate compensation as testing comp

While I totally agree with Lou, I think it is important to consider if the retiring person is an HCE or not. If the person is not an HCE I would be OK (I think?) giving a larger lump sum to him/her on account of the admin delay.

yes, it would be 411(d)(6) violation. You have to preserve the accrued benefit as well as optional forms based on the $1,888. What is the reason you want to change the AE? If it is to "solve" the testing, I believe you are "stuck" for 2022. For 2023 you can change to 417(e) or GAR94 table before the Pay Credit is accrued and you should be OK (I am guessing the 2023 Pay Credit will bring you over $1,888).

This is a very interesting topic, so I am going to play a "devil's advocate" for a moment. What about an idea of treating the excess over 6% as "after-tax" contribution? Obviously, this is likely not to be supported by the Brokerage House "solo 401k" document. That can be addressed by restating the solo 401k doc before December 31st, can't it be?

I am not sure I agree. The key point is to avoid the prohibitive transaction (real estate, employer securities, arm-length, etc.). Contributing “marketable securities” feels ok to me and it boils down to proper determination of the market value for the deposit. Contributing CD feels ok.