Jakyasar

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

Lou Sorry for being dense here but I am confused about the TH, how can I not provide it, sorry cannot get my head around it, last day rule or not? There is no safe harbor provisions on this plan. I think i will advise the client to make 3% contribution and be done with it. If he wants more then will do the gateway testing.

Daily is not an option but 5%+catch-up is but what happens with top heavy issues? May be put in 3% of PS? Any other thoughts? Thank you

Hi I am no 401k expert so looking for any suggestions on options. PS plan signed Sept 2022 for 2021. Only PS provisions. Covered owner+employee. Now in year 2022, wants to add 401k deferral option but the problem is, the employee was fired (embezzlement of company assets) in May with over 500 hours. No other employees. I know that I have to provide PS allocation to the employee for 2022, if owner decides to make one. What can I do if the owner wants to defer (will take full year salary next week)? Employee never had a chance for deferrals. Owner is over 50 and expected 2022 w-2 is 100k and employee's final w-2 is 15k. QNEC is an option, may be 4%SH additional is an option, what else can be done? 5% limit of deferral to the owner? Any thoughts are appreciated. Thank you.

Thank you all, happy txgiving

What if the 2022 valuation is not done i.e. no info available as of 4/1/2023?

All, much appreciated

Bri, thank you for the link, totally forgot about it. Much appreciated all your input.

SPD was all consolidated (I could have done individual SPD's but they did not ask for it). This was 3 years ago. I did prepare a consolidated 204(h) notice but they are coming back saying need to keep all separate, really, after 3 years you wake up? As far as I know (from my previous research), the 204h notice needs to be provided to the participant(s) who are affected by and also serves as SMM. I do not see any issue here to create 10 different ones. How my benefit is impacted is not how your benefit is impacted. Any thoughts on why I cannot do it? Thanks

Thank you A follow question. Facts: The plan covers the owner (the daughter - 100% owner) plus her father and mother as the employees. Mom is the participant who turned age 72 in 2022, again no ownership, just an employee. Does mom need to get the RMD? She is an HCE/key by family attribution. Thank you

Hi My very first age 72 RMD. Turned 72 in September 2022, when is my first RMD due from the DB plan? Is the AB based on 12/31/2021 AB if starting 4/1/2023? If participant wants 2022 RMD and withdraws in December 2022, can he receive annual lump sum by 12/31/2022? Thank you

Hi One life/owner only CB plan. 3 years old. Business is sold, needs to terminate by 12/31/2022 Plan document states any excess to be reverted to the corporation (there will be no DC plan as QRP- qualified replacement plan). The participant is nowhere near the 415 limit and the excess, if can be provided to the participant, will be eliminated. Can the plan be amended so that the excess can be provided to the plan participant rather than being reverted to the corporation? I am aware of the 5 year rule but always wondered it was only for switching from participant to the company. Thank you

Hi Cash balance plan with 10 groups, some groups cover individuals (like founding member) and some groups cover multiple participants (like support staff). Benefits are to be frozen. Can 10 different 204(h) notices be provided for each group separately? Thank you

CB, it is AB, not balance, slipped here. Thank you all for your comments.

Hi Owner just took the 2022 RMD in one shot based on 60% vested balance. Now decides to terminate the plan in 2022 i.e. becomes 100% vested. Does he need to get additional RMD or still based on 12/31/2021 vested percentage? Thanks