Jakyasar

Throwing in another question for a balance forward PS plan i.e. pooled account. Same scenario above i.e. asked in November for a distribution based on 12/31/2021 balance (assume document is written this way). No action taken by sponsor/TPA (assume the worst) to provide the paperwork and also distribute prior to 12/31/2022 despite the fact the participant asked for it. If paid in 2022, 100k but now in 2023 dropped to 80k. What do you do? This is different than participant got the notice but did not return timely.

SECURE 2.0 may have some reduced penalty but only if corrected within 2 years. Looks like, the first 3 years is out of luck, at least from I understand. Depending on facts and circumstances, can always go to the IRS, cry and blame someone that the participant was not aware of not was notified, etc etc etc. Do not know all the details, just a general info.

How would you write the amendment? As an 11-g or a general amendment specifying the terminated participant by job category or name. It may not be so clear cut, just thinking out loud and curious. This would be an amendment retroactive to 2022? I do agree with the amendment should be prepared and should definitely be done as the participant may create a lot of headaches since there is a significant difference between 2021 and 2022 rates.

The CPA just said not to include, go figure.

Ok, thank you

Sorry, my question, in this case, is what DC components are used to offset?

Hi CB You are absolutely right that I did not mention what kind of offset, it the DC plan AE offset. Thank you for pointing that out.

Hi Looking at a possible takeover. This is a question on what is used for offset calculations. I have not done of these in 20+ years. DB is 50% of pay offset by 26.25% of TWB, fractional DC has 401k+PS+NESH (mandatory 3%) What is used for offset? Thank you

But 5 years in a row and TPA does not know about the account activity? I still think it is quite a stretch unless the participant never disclosed the account (happens, right?)

I am confused too, didn't the TPA provide the client with the RMD amount each year? Or, did they actually expect the client to determine his own RMD for a pension plan and withdraw? If the TPA provided the info and the client did not take it out after one year, did they inform the client about the issues? 5 years in a row is a bit too much of a stretch for not informing the client each year and continue administering the plan as if nothing is wrong. Hmmmm. Moreover, when the TPA did the annual work, didn't they notice that there were withdrawals missing? May be I am not reading the original post correctly!

As I stated, nothing is excluded. Definition is W-2. Deferrals are pre-tax, that is why listed as "less" No 125 listed. To be used for cash balance, SH, PS and testing.

Hi Need to revisit the following as I am now getting contradictory info from CPA. There are no exclusions per plan document. From W-2 Box 1 $240,000 Box 6 $225,000 On the earnings summary Gross Pay $225,000 - matches box 5 less deferral $ 20,500 plus s-corp 2% $ 42,000 - medical premium less catch up $ 6,500 Reported W-2 $240,000v - matches box 1 What to use as salary for pension purposes? Thank you

Hi I am pretty sure the answer is no but wanted to see if I missed something here. A QRP with excess assets from a terminated DB plan which is allocated every year to the plan participants as PS allocation. The plan sponsor wants to make a contribution/donation to a charitable contribution using some of these assets that are in a suspense account. As far as I know, these kinds of contributions can only be made from IRAs. Just wanted to check and see if anyone has a comment on this. Thank you

pbgc time chart.pdf Attached is a great chart for PBGC termination. For non-PBGC, 15 days is for 204(h) notice - plan freeze. There is no termination notice deadline.

Truphao - reason to change is to lower the AB especially for testing purposes, it is a huge difference between 5.5% 417e table vs 4%GAR94 where the pay credit is always limited to 415. I agree with the facts that it is possibly 411d6 violation wanted to check out there this is a takeover plan needs to be redesigned anyway. David's question is a different subject.

Hi Looking at a possible takeover and have a dilemma I did not deal with before. Plan's AE assumptions are not great and need to be redone. Currently, post AE is 5.5% with 2022 Applicable mortality table (yes, hard coded in the document as 2022). I would like to amend it to a more favorable assumption that would reduce the AB for owner. I checked the math and based on current assumption, AB is $1,888/month. If I change to more favorable assumption, AB drops to $1,503/month which is huge difference especially for testing purposes. In either case, the 415 limit stays the same. If I change it now and the pay credit does not change, is this 411d6 violation because the AB drops but not the pay credit? Thank you

I see what you are saying, hmmm not sure I get it though. Time to stop working for the week.

Hi Looking at a CB document for someone. The formulation is written in a way I have never seen. For accrual/pay credit, no service requirement i.e. 0 hours. Crediting period is "Each Plan Year". For the formula within a group, they wrote "$2,000 however for any terminated participant during the year, they will receive 1/12th of the pay credit for each month they worked 1 hour". How is this possible? Aren't the member of this group entitled to full pay credit since no service requirement? What am I not seeing/confusing here? Thank you.

Hi All below are on a calendar basis. I have never seen this before. Hope there are some out there who have experience/knowledge on this. Company X left PEO on 10/1/2022. They want to set up a new combo plan for 2022 which will be 401k/PS plus CB. How are the PEO contributions and salaries applied? How is testing done, just from 10/1/2022 (salaries and contributions)? Are they supposed to be short plan years? Anything else i need to be aware of? Thank you in advance.

Wishing you all happy holidays and great, prosperous New Year. The best think tank ever.

Hi Bri Thank you for your comments. Luckily for them, no HCE's get SH, only non-HCE's. 415(c) limit can easily be controlled with PS contributions for the owners. A bonus question, can they still make PS allocation for 2021, assuming no testing failures (10/15/2022 deadline came and went). Again assume no deduction and 415 issues. Just curious on this.

Hi Looking at a run for someone. I think the TPA who shall not be named here somehow left it all to the client to run the 2021 numbers. Very bad communication with the client. 401k+SH+PS are the 3 provisions. SH is non elective 3% Was just told that they will make the 2021 SH deposits prior to 12/31/2022. I never worked with this before as I always make sure all deposits are made timely i.e. by the due of corporate tax return, in this case, 9/15/2022. When performing 410b+401a4 testing for 2022 projections, do I need to include the 2021 figures? There is plenty of room for deduction, so it is not an issue. Thank you

Follow up question, not sure what the answer was. As the 401k deferral is being added now for a plan in existence since 2021, can the owner satisfy ADP with deferral limited to 5% of salary plus catch up now? He will also make PS contribution for both himself and the terminated employee. Thanks

Hi An interesting situation that I never encountered. Calendar plan with 3 provisions 401k deferrals 3% non-elective SH PS with integrated allocation. 1000 hours+last day rule. Owner is younger than the employees so worked out great. 5 participants, 2 HCE and 3 non-HCE. 2 additional HCE's are excluded categorically All 3 non-HCEs terminated during 2022 before the last day, 2 with under 1000 hours and 1 with over 1000 hours. Plan passes both ratio and ABPT. Since all non-HCEs are getting no PS allocation but only 3% SH, I do not think the plan can rely on PS allocation to be safe harbor anymore and needs to be tested for 401a4, do you agree? Anything else I am thinking of? As a bonus question, all 3 employees left - 2 got new jobs and 1 for difficult maternity and applied for some kind of disability. Would that constitute partial termination? They hired additional employees during 2022 of which only one remains employed. Any comments are appreciated.

I did but solved my problem by providing contribution. Thank you