Jakyasar

It is determined to undo the termination and redesign the benefit formula.

It is not about charging the client, it is about doing the right thing. The 0.02 hit the account as an interest residue. What to do, what to do.

Client told me all assets were distributed by 6/30/2022. Filed an extension on 1/31/2023 till 4/17/2023 Now found out that still 0.02 is in the account and they will close it this week. When is the final 5500 due?

Good point, thank you

Paul, thank you, looks similar to schedule c. Never dealt with a farmer client before.

Hi Sole proprietor, farm owner. CPA is asking if can use schedule for Pension purposes. Never heard of it but someone may have experience with farm owners. Thanks

Agreed and thank you.

Hi Bri Thank you for the input. If this person worked 1000+ hours from 3/15/2021 to 4/1/2022 (sorry did not mention before), would not be statutory exclusion, correct? Given the age, need in the testing i.e. cannot use as OEX, will never pass the test otherwise.

Hi Looking into a proposal, all plans are calendar. DC Plan already exists. Provisions are 401k+NESH+PS Entry is first day of the month following completion 1 YOS Compensation is defined as from DOP CB plan will have 1 year wait, dual entry and full compensation For all purposes, all top heavy. DC plan top heavy provision states last day rule. PS states last day rule+1000 hours EE data for DC plan: DOH 3/15/2021 DOP 4/1/2022 DOT 5/1/2022 2022 w-2 $12,000 Salary from 4/1/2022 to 5/1/2022 - $3,000 From above, never eligible to enter CB plan so top heavy is only 3% and under DC plan only Gateway is 7.5% (3% NESH+4.5% PS) For gateway, $3,000 salary is used and thus $225. Top heavy is based on full salary i.e. $12,000*3% = $360 however, plan has last day rule. What amount is supposed to be allocated? Thank you

Thank you so much for sharing.

Hi Paul I have not yet submitted to PBGC. Just looking for some wording on a notice to be provided to the plan participants about rescinding the termination. It is a good story though

All I need is to unfreeze at this time, will worry about unfreezing later. Any suggestions on what to write on the notice? I do not see any other way of reducing the vesting to 40%. 100% it is.

Yeah, not really. I have a signed certification stating all notices (204h+NOIT) were provided and timely. I am not going to question this.

All termination was done according to PBGC rules so no questions on that. I simply want to unterminate first and then think about unfreezing later. Lost 50% of biz due to war in Ukraine, that is a good reason for terminating the plan. Well documented.

Before allocating to others, one advice would be to have an input from the plan sponsor. You may choose someone because the math favors them but plan sponsor may not be happy about. Be watchful of the BRF issues as well. Also, when you say maximizing HCE's, you meant owners, correct? Bird/Bri and BG have excellent points.

Hi Another new one for me. PBGC covered plan, terminated 12/31/2022 500 is not yet done/filed with PBGC. Sponsor changed their mind, wants to continue. Can a simple notice to the participants stating "we decided not to terminate the plan" would be sufficient? I will amend the plan later to unfreeze the benefits. When terminated all became 100% vested (plan was only 3 years old and all would have been only 40% vested if not terminated). I cannot find any written document of making everyone 40% again with the reversal of termination. Anyone knows if possible? Thank you

Yes it does and yes, ratably allocated to the rank&file, unfortunately no escape.

Thank you for steering me to the right direction/advise.

You mean reallocate the 4k to the others? This is not a pooled account and the excess was done during the year. Can it still be reallocated in 2023 i.e. transfer from 415violation-participant to the others for 2022? Thank you for your comments

Hi Here is a new one never dealt with before. I found out that the client (over age 50) has an excess situation and not sure how to tackle it The plan has the following features: 401k+NESH (3% mandatory)+PS. The plan is also used as a QRP - qualified replacement plan During 2022, $136,000 was deposited with the following breakdown April 2022 - $6,500 - from biz - 2021 catch up July1 2022 - $58,000 - from QRP - 2021 NESH+PS July2 2022 - $6,500 - from biz - 2022 catch up November 2022 - $65,000 - from biz - towards 2022 NESH+PS The July2 and November deposits created a $4,000 excess deposit during 2022 i.e. over the 415(c) limit. (71,500-67,500 (max 2022 415(c) limit) = 4,000 How is this to be corrected? Any suggestion/pointing to the right direction is appreciated. Thank you

No virtual contribution is worth the paper it is written on. Must have proper paper trail

Presentation-Variable-Benefit-Plans-in-Depth.pdfPresentation-Variable-Benefit-Plans-in-Depth.pdfPresentation-Variable-Benefit-Plans-in-Depth.pdfHere is the presentation from a few years back. Hope I was allowed to post.

Hi A client who uses their DC plan as a QRP made a big booboo last year which I just found out. For 2021, they used 65k of the QRP as mandated (1/7th) and allocated from the suspense account to the individual account in 2022. No problem for 2021. However, unbeknownst to me, later in 2022, the client deposited 60k in their account (owner only) by mistake, it was not intended as they are fully aware of the QRP requirements. For 2022, according to the suspense account balance and 1/6th rule, they need to use 60k of the QRP. Given that this is 3 person pension plan, is there a way to correct this i.e. client refunds the deposit made in error during 2022 with interest adjustment back to the biz account? I do not see how but...... Otherwise, as the owner is almost at 415c limit, the 60k pretty much will have to be allocated to the 2 rank&file employees (both make 50k in salary and unfortunately one of them is the spouse of the owner aka HCE). I have never seen this before in all my dealings with QRP and wanted to ask if there is a way to correct this, something I may have missed? Thank you

I still think that a resolution should be in place for QRP purposes i.e. stating any excess will go to XYZ DC plan, something like that. I bleive it can be adopted now as it will be available 95%+ of all current participants. Having a meeting with the client and see what they want to do. Owner is nowhere close to 415. Thank you all for your comments/input.

Curious how the participant cancelled the policy (unless done thru sponsor/trustee), unless he/she is the owner/trustee. Policy is supposed to be owned by the plan and an asset of the plan. If the policy is cancelled aka surrendered, cash value is an assets of the plan and cannot simply be distributed. what am I missing here?