Jakyasar

If that is the case as Lou pointed out, on very simplistic approach (1st grade math), to get to roughly 3.4M (415 lump sum limit at 62 assuming a minimum of 10 years of participation and minimum 265k salary average), put in as the future value on the calculator, interest rate at 5.5% and number of years would be from current age to age 62 and do annual interest accumulation (this is compound interest but again who cares illustration here) For example, if you are age 52 today, making a salary of over 265k+ and want to fund the plan for 10 years to maximize lump sum at 62, on average you need to contribute approximately 250k (could be different if you calculate beginning of year deposit vs end of year deposit) Now for cash balance purposes, if you want to maximize, you can show a pay credit of 250k/year on the participant statement. Year 2 would show 250k plus the interest credit plus another 250k pay credit and so on. As others mentioned, contribution, in practicality, does not match the pay credit due some other factors like return on investments, IRS mandated segment rates etc etc etc. As I said, this is a very very simplified version of the calculations. A lot more goes into though. On a side note, on the participant statement, there is no limit shown, just what your document states - contributions made are not on the participant statements but on SAR/AFN to be provided to the participants. There are some programs out there that may insert "exceeded 415 limit". Everyone is different. FWIW.

Hi Luke Both numerator and denominator are the same. 2 active and 3 terminated, all have benefits in excess of 0.5% on the average in the past. I am not sure about the top heavy response as no key is benefitting in either plan and only PS provisions exist, no 401k deferrals or SH.

As an addendum for the prior benefit structure, there were no other terminated participants paid out so what you see is what you have. Does it matter if the 3 terminees (terminated in prior years) are not fully vested? Reread 1.401(a)(26)-3 and may be there is hope to pass under prior structure rule but again fried brain and would love to hear from the gurus out there.

Hi Totally fried brain so will ask the following stupid questions Frozen CB plan (frozen early 2023 hard freeze i.e. no new entry+ no accruals to anyone): Top heavy Title I (no PBGC) Underfunded i.e. assets are less than the total account balance Covering 2 owners and a few previously terminated participants. 2 additional non-owner employees, one HCE and one non-HCE categorically excluded PS Plan: Not top heavy Only PS provisions No contribution for 2023 Top heavy benefits are provided under PS plan and only to non-keys (no top heavy provisions under the CB) Combined plans are top heavy and plans were aggregated in the past for testing. Questions: I believe I have to pass 401a26 within the CB plan i.e. at least 2 must get meaningful benefit, agree? If prior benefit structure would work, how would I test it (I am always confused with this). I have 2 active and 3 inactive participants, all with meaningful benefits prior to freeze. Any thoughts on this? Assuming I need to provide the meaningful benefits and only to the 2 non-owner participants, I do not have to provide any top heavy under the PS plan as long as the keys do not get any allocation in either CB or PS plans, agree? What else am I not thinking of/asking about? Thank you.

Report the attorney to the proper authorities, totally illegal. Unbelievable.

Wow, thank you for additional comments. I am trying to avoid any ugly threats, will see if I am hired first.

Thank you, nice advice but I am not yet hired nor have decided to take over the client. I doubt PBGC will allow me to be filing coordinator yet, especially without the client's consent/approval nor I want to be.

Trying to avoid any unpleasant experiences with prior TPA. Lou, I am aware of the reasons but I was asked why and that is why trying to get some info for 2023, I have nothing to work with at this time. So I told the sponsor to pay and if needed to be corrected, will do later. Also, thank you for the suggestion but I think the sponsor is clueless prior TPA never explained anything to them. If I accept this plan, I have a feeling I am going get a lot crap info, if any. To be seen.

Prior TPA will not provide any access. I tried to get in with my access hoping to get something but to no avail.

Hi May be taking over a DB plan where prior TPA is most uncooperative. Client does not have any prior PBGC filings and got a premium payment that seems to be high, according to him. He does not remember what happened in the past 2 years. Like EFAST for 5500SF, is there a way to find a list of prior PBGC filings? Thanks

Sometimes you miss it if you are making a lot of dough. I will suggest Brenda's approach.

Your guess is as good as mine.

Thank you for the input

Hi Question for 401 gurus. Non-HCE participant deferred $8,000 on 2022 w-2 (1,000 per paycheck) and terminated after 8 paychecks. Just found out that they deposited another $1,000 without a paycheck i.e. $9,000 was deposited during 2022. As only $8,000 was on the w-2, how is this corrected? Earnings are pennies as all invested in cash. Thanks

I do not see how retroactive termination is possible. no paperwork in place. As Tom said, 1 year rule would not have been satisfied but it is a moot point, you do not have a resolution to terminate going back to 2021. You mentioned the plan is frozen for some years now. Let's assume hard freeze and no 401a26 issues (you mentioned not covered by PBGC so may have issues, up to the actuary to decide/test) Given no benefit accruals and severe underfunding the only cost is usually generated thru amortization of shortfall. Did they try the new 15 year amortization schedule as it would reduce the required contribution somewhat? Just my 2 cents.

If this is for 2022, I do not know the answer but if for 2023, you can simply amend one of the plans now and be done with.

Hi Someone I work with told me that line 19 - discounted contributions - attachment is not required unless the plan is subject to quarterly payments i.e. if less than 100% funded in the prior year. I reread the instructions on SB and seems to be supporting this. I always attach to avoid any misses. Any comments are appreciated.

Allow me to take it up a notch and make an argument - good or bad From FIS attachment Paul provided "In Private Letter Ruling 201229012, the IRS ruled that a plan does not include the compensation of a participant who is only eligible for the elective deferral portion of the plan (i.e., not benefiting under the nonelective or matching portions of the plan)." In literal reading, it states that "the participant is only eligible for deferral" i.e. excluded from PS portion of the plan. If I read this literally, I agree that the compensation is not included in 404 On the ASPPA-ASAP, last paragraph, 6th line from the bottom, it states "401k only participant". Again, in literal reading, possibly excluded from the PS allocation. Let's keep in mind that a PLR is an opinion and not the law and specific to a certain plan. Just playing both sides here. IMHO, always provide a minimal allocation, whatever you are comfortable with but definitely not $1 unless the salary is $10 or less.

I do not think 404n states that, it simply say, deferrals are not part deductions (n) Elective deferrals not taken into account for purposes of deduction limits Elective deferrals (as defined in section 402(g)(3)) shall not be subject to any limitation contained in paragraph (3), (7), or (9) of subsection (a) or paragraph (1)(C) of subsection (h) and such elective deferrals shall not be taken into account in applying any such limitation to any other contributions.

Hi Sorry if was asked before. DB/DC plan combo, covering 2 owners only (no PBGC). Each has 100k of salary DC plan has 401k and PS provisions only - no SH match Owner Joe has deferral and PS Owner Mary has only deferral and no PS What salaries are included to determine the maximum 6% PS deduction? Assume DB contribution is 500k so will never satisfy 31% rule. Thanks

Tx Lou

Hi I am sure this is the first time it is happening New client (husband & wife only) set up a DB plan for 2022 and literally signed the documents yesterday. No need to file 5500 forms but do I need to file PBGC for 2022? Yes, they are covered by PBGC. I was told that they had SEP all this time. Yesterday, before preparing the documents, found out that they have a solo 401k plan and not a SEP. Caught it in time to set the plan # properly for the db plan. Deduction is not an issue. Solo 401k plan has 800k in assets and never filed 5500 forms - this plan is with a reputable brokerage house. Did a bit of math and figured out that they exceeded 250k 7, may be 8 years ago and no one told them that they had filing obligations, quelle surprise! Other than filing with DVFC, anything else I should be aware of? Do not care about the documents etc as I am not taking over the plan, just helping with the 5500 forms? Thanks

Hi Recently applied for a coverage determination with PBGC for the following LLC filing as a s-corp Owner is Joe owning 100% and Mary (spouse of Joe) is the other employee, no ownership. First determination said that the LLC is not a professional entity. Second determination was for substantial ownership and it was determined that 1563(e) does not apply. The LLC is not treated as a corporation under 1321(d) thus Joe's ownership interest cannot be attributed to Mary and that Mary does not meet the definition of a substantial owner. Also indicated that Mary is not a substantial owner as only Joe owns 100% of the LLC. Interesting, right? Now, for determining HCE status, do we agree 318 steps in here i.e. I do not have to run non-discrimination testing? Top heavy is not an issue as providing way over the limit. Thanks

Hi For an s-corp that is owned 50/50 by 2 unrelated partners (no other employees), trying to determine if 5500-EZ is ok to file - I think it is but wanted to double check. What say you? ----------------------------------------- From 5500-EZ instructions Who can file 5500-EZ 2. Covers only one or more partners (or partners and their spouses) in a business partnership (treating 2% shareholder of an S corporation, as defined in IRC §1372(b), as a partner); and 3. Does not provide benefits for anyone except you (or you and your spouse) or one or more partners (or partners and their spouses). From IRC §1372 (a) &(b) (a) General rule For purposes of applying the provisions of this subtitle which relate to employee fringe benefits— (1) the S corporation shall be treated as a partnership, and (2) any 2-percent shareholder of the S corporation shall be treated as a partner of such partnership. (b) 2-percent shareholder defined For purposes of this section, the term "2-percent shareholder" means any person who owns (or is considered as owning within the meaning of section 318) on any day during the taxable year of the S corporation more than 2 percent of the outstanding stock of such corporation or stock possessing more than 2 percent of the total combined voting power of all stock of such corporation.

Unfortunately, there is no such evidence, at least none that was presented to me. I am aware in some instances, there was a resolution or certificate of actions with the intent of setting up a plan and the document being signed later. But not sure about the circumstances. I do not like it though. Not sure what they decided to do. Thank you all again for your input.