Jakyasar

Perfect, thank you for reminding me about component HCE requirement. All the best

Looking at a DB/DC combo and checking on otherwise excludable (OEX) testing Do I need to have an HCE in the OEX group for the PS portion? This is for 401a4 only as 410b passes easily without separating the groups (this is NESH plan with 3% mandatory allocation) It makes a difference in the gateway as I have 5 NHCEs that are OEX. Thanks

I agree with the retro though still looking into it. Second part, not sure. Appreciate your comments

Hi Looking at a proposal for combo plan DB/DC, owner plus a bunch of employees DC is in existence for many years and DB will be retro to 2023. No PBGC coverage. Just found out that, the owner of the company sponsoring the DC plan also has a schedule c (no employees) which has substantial income but not adopted the DC plan as an additional employer so only w-2 is being used as his income. FYI W2 is 150k and schedule c income is 1M Q1. Can the schedule c retroactively adopt the DC plan as additional employer? Q2. If schedule c cannot adopt the DC plan retroactively as an additional employer but is included in the new DB plan, what compensation can be used for: Combined testing Combined deduction at 6% DC limit Combined deduction at 31% limit Thank you

Yes, pro-rata with no integration. Thanks for your input and confirming my thoughts. Now let's see if they will agree to a second DC plan.

Hi, thanks for the responses My question was (it is for retroactively adopting a CB for 2023), can I add a new PS only plan for 2023 with a different allocation and use the new one instead of the existing provisions? Existing provisions are comp-to-comp New proposed provision would be everyone in their own group Is there any anti-cutback issue here?

Hi Looking at a takeover and a combo plan design. Existing plan has deferrals, basic match, EACA and PS. PS is comp-to-comp with last day rule but no hour requirement so not a good option for combo plans. I was asked to look into a possible 2023 CB plan addition. Is it possible to add a new PS only plan and not utilize the existing plan's PS provisions? Also, as I never worked with EACA, does it affect any combo designs? Do not think but checking. Thanks

As an addendum, to make sure I am understanding correctly that I can do the restatement prior to 12/31/2024, I found below from the IRS website. The plan in question satisfies all conditions. Am I wrong or missing anything? ------------------------------------ Correction programs available: Self-Correction Program Some, plan document failures may be corrected on or after April 19, 2019 under SCP if certain conditions are met. The conditions are: Plan document failures must be corrected within the two-year correction period specified in Rev. Proc. 2021-30, section 9. The failure begins in the plan year that includes the end of the applicable remedial amendment period. Plan must have a favorable letter as defined in Rev. Proc. 2021-30, section 5.01. SCP is not available to correct a failure to timely adopt an initial IRC 401(a) plan document. Corrective amendments to resolve demographic failures that were not timely adopted are not eligible for SCP and must be resolved under VCP or Audit CAP. The late adoption of discretionary amendments is not considered a plan document failure. Refer to Rev. Proc. 2021-30, sections 4.01, 4.03, 4.04 and 4.05 for program eligibility requirements. Example 1: The Carrot Stick Company has sponsored a 401(k) plan since 1997. They use a pre-approved plan document. On May 3, 2019 the plan sponsor realized that they failed to timely amend their plan for EGTRAA by the April 30, 2010 deadline and for PPA by the April 30, 2016 deadline respectively. The EGTRRA document was adopted on June 30, 2015 and the PPA document was adopted on December 5, 2018. Can these failures be considered resolved under SCP per Rev. Proc. 2021-30? The answer is no. The failures can't be resolved under SCP. The correction of the failures occurred before April 19, 2019, the effective date of the revenue procedure. Prior to April 19, 2019, the correction of these failures needed to be accomplished using VCP or Audit CAP. Even if the failures had not been corrected, they would still be ineligible for SCP under Rev. Proc. 2021-30, because correction would occur after the end of the 2-year period for correcting significant failures under SCP. That period would have ended on 12/31/12 for the EGTRRA failure and 12/31/18 for the PPA failure.

Hi In general I do not work with/accept take overs unless all is in good order. A CPA friend of mine asked to take over a plan that did not restate for cycle 3. I will need to help out. 401k/PS plan established in 2014 using PPA document. It is a pre-approved document. Calendar plan. Cycle 3 was due 7/31/2022 and not done. also, no interim amendments were done/provided. Reading RP 2021-30 for SCP and trying to determine if can be a SCP and also if within permitted time frame. Under section 4.1.b, looks like a plan document failure Under section 9.2, have up to 3 years to correct The restatement would be done using a pre-approved document and completed by end of February 2024. Am I correct or missing something here? Thanks

Hi Checking a Combo plan CB/DC and came across the following: CB definition of compensation is W-2 and includes all DC definition of compensation is W-2 and includes all (section 125 as well - not deemed) But Under a separate addendum, DC excludes deemed 125 compensation in Compensation and 415 Compensation (language from the document). So when I check for compensation in DC for allocating PS, Gateway, Top heavy and also for testing, how does the "deemed 125 compensation" language kick in. So confused.

Agreed and thank you. I just could not find any way out.

Any takers?

Also included in 2023 testings

CB/DC combo 401k with NESH at 3% Terminated on 12/22/2022 but received the final paycheck in 2023, last payroll of 2022. No hours worked in 2023. Do you agree for 2023 Need 3% NESH Need 2023 gateway

Great information, thank you for sharing.

FMSINC Thank you for all the links. I agree about the RE agent being ICs (with the proper credentials) but when your title is marketing manager, how is this a RE agent? Hmmm But again, I do not know if they have the credentials as listed in the first link you provided so will dig in more. Ernie, I agree 1099s cannot be salaries. This is getting crazier by the minute but will have an attorney go nuts about it. Thank you all for your input.

Thanks for chiming in with the additional information. I agree with the common law employee statement but what do you use for compensation if they are getting 1099s?

And it walks like a rose

Hi Ernie Thank you for the write up and the questions. I am approaching this from both points. Point 1 being, are they really IC? Not my place to determine. This is why we have attorneys to make that determination. The fact that they are on the website and indicated as managers, hmmm. Point 2 being, if not IC than is it reasonable to pay them on 1099 basis and can the 1099 be used as a salary? My immediate reaction no but again not my place to make any comments. In my opinion both points require an attorney's blessing and treated accordingly.

I never make that determination or negotiate nor attempt to, not my place as I have no clue about the biz structure. I know about the 20 step rule and also know enough for pass/fail smell test and also enough to make noise about it. At the end of the day, it is between the sponsor and the CPA. I can only either warn them about the dangers or not accept as a client. nothing else to do.

Real estate agent Joe operates as a corporation, only owner, only employee. Checked the website and Joe has a team, Mary, sales associates and Jane, marketing manager. I am told that Mary and Jane are both paid as 1099 employees. The burden of proof for independent contractor is not me, the TPA Joe wants to set up DB and 401k plans. So, what is wrong with this picture?

I have what you provided and want to add also that, the plan has to be set up by 4/15 and no extension is allowed. I read this somewhere, cannot remember Ok then, so nothing new added, thank you for your comment.

Hi Lou I checked 2024-2 but did not see any reference to section 317, may be not looking correctly. Do you have the section they are referring to? Out of curiosity. Thanks

Finally got my system updated and confirmed my suspicions but want to ask out there as well. Looks like at 65, the APR is lower for 2024 then 2023 and for someone at age 65 with full 415 limit, the 415 lumpsum dropped by approximately 33.9k, ouch All agree?

Thank you for confirming