truphao

sole-prop, taxes for 2023 have been already filed. I am thinking of still implementing a CB plan retroactively to 1/1/2023, funding it now but taking a full deduction for 2024. Thus, for 2024 there will be doubled-up deduction. Income is very high so the numbers fit in. Am I missing anything here besides the additional level of complexity of decoupling 430 and 404 numbers for a year or two? Had a crazy week so I am afraid I might be overlooking something.

I am not sure I agree with a "separate account" notion. If the plan is designed properly a participant can "purchase" an additional piece of benefit (an annuity) by rolling in his DC money. That additionally purchased benefit is not subject to 415 and it is PBGC protected (if the plan is PBGC covered). So, there might be some numerical leverage involved if/when segment rates go above 5.50%. There is a lot of math there. This is one potential why. Need more info what people are trying to accomplish.

Thank you, Paul, for confirming my understanding. For solo situation it is OK process especially if all deposits are made once a year in one shot.

no, I do not belive I am. You can do MBR in-plan (which I prefer) or outside of the plan to an IRA via in-service distributions. My question relates to potential pitfalls related to maintaining the Roth subaccoint for IN-Plan conversions within the plan.

normally in those situations we recommend establishing a separate subaccount for Roth money, and conversion is done by election with accompanying physical movement of funds into a separate Roth account within the same plan. Is there a problem with keeping all sources (both Roth and non-Roth) within a signle account and the "segregation" being done on the recordkeeping level only. I think it is OK but wanted to hear the wisdom of other practitioners. Are there any considerations I need to be thinking about?

cushion does not exist for a start-up CB plan unless you get funky. Just trying to get my framework together on how to consult for a start-ups in 2024....

I am doing some modelling trying to forecast the segment rates for 2024 EOY valuation. I am getting 4.75/4.96/5.59 for 430 and 5.03/5.27/5.23 for 404. Leaving the technicalities apart, thus my conclusion is that for 2024 the min and max are the same and are driven by 430 rates. This is totally insane, what am I missing?

it is all good for 2024, it is probably too late to do VAT for 2023 given that only contributions made up to January 30th can be considered toward 2023 415 limit.

Thank you all - this gave me enough to formulate my thoughts. Tremendously appreciative, as always.

that is essentially what my question is? They are not partnership, they are not ASG, but are they a CG?

no, each business is owner-only, both H&Q are in professional services but different fields.

Husband owns his S corp, Wife owns her S corp. Business are not related (different fields). Can one DB plan cover both H&W? State NC. Just trying to keep the admin cost on a low side.

I think they are benefiting. I would not be uncomfortable deploying a de minimus threshold though ($ or %).

in addition to SPD it owuld be extremely beneficial to obtain a copy of the actual Plan Document in effect as of the termination date. It is not that uncommon (especially if we are going back) that the SPD and the Plan Doc language are not lined up perfectly.

yup, ouch it is. We are doing in-service distributions right now to avoif further deteriation of value on account of aging.

FYI, Datair is using 4.87% for the moment.

FWIW, at the 2023 CCA Enrolled Actuary Conference the question was asked during the Q&A session with IRS. They responded pretty firmly that one participant plan must file EZ.

yes, ACP applies. Not likely to work unless all Ees are HCEs.

5 year clock can be bypassed by opening a Roth IRA in advance with a nomianl $100, no?

Lou, do you prefer In-Plan conversion or "Out-of-Plan" to an IRA? What are the resonings for your preference?

if you follow the simpliest way to convert (bypssing all bells and whistles) it should pretty straightforward. In the worst case you would just feed into the system the Opening Balance (even if it has be calculated outside in the spreadsheet) and move forward. I think Datair Plan Documnt system also allows for conversion.

change the document and be done? subject to effective and actual availability tests of course.

I am with Effen. Adding a few points: 1)In-Service can be made available at 59.5 (rather than only at NRA) which requires the proper language in the document. 2)I also think of in-service as a distribution of a full accrued benefit rather than some random amount. Thus if a participant recived a full distribution at January 1, 2023 of his benefit accrued as of December 31, 2022, then there is nothing to be distributed until January 1, 2024 since he receives an additional accual only on December 31, 2023. Is it too simplistic? 3) Those distributions require some actuarial gymnastics if the design is at 415 level, got to be careful with proper capturing the offset for val purposes

no way out, NHCE gets 3% and HCE would get whatever % the testing would support. To avoid the TH, you could had excluded HNCE from the Plan alltogether but then you would have a coverage issue. Bottom line, the HNCE must get 3% if the PLan is TH. But is it?

with Bri's #3 - put a clause in your engagement agreement that the client idemnifies you for any <2023 issues.