Jakyasar

Hi all Second guessing myself (or being paranoid) and checking my thought process. Going back to my original question for the participant with $1000 salary but allocated $3000. As a reminder this is a target benefit plan i.e. normal cost is developed based on YOP and salary average. I did all the calculations by hand. Based on the salary average (going back a few years) and on plan assumptions, the normal cost came to $3000. However, 415(c) is specific about the lesser of 100% of pay or dollar limit. Based on 415(c), the participant can only be allocated $1000, am I not correct? Although the calculations are done based on DB plan, the limit is still 415(c). If I am right on the above, I should also test it for 410b/401a4 (though it will always pass at 100% on contribution basis). Happy 4th

Thank you all

Much appreciate your time, explanation and education, you learn something new everyday. Mine was a non-M&A termination.

Not even for safe harbor?. I have done one 401k/SH termination (SH was 3% non-elective) and asked the plan sponsor to provide a notice to the plan participants about the pending plan termination date which was the cutoff date for the deferrals as well as SH contributions. So, this is not required by law, especially the SH portion? Sorry not a 401k expert, just thinking out loud and may be asking too many questions.

Out of curiosity, in a 401k plan, should you not tell the participants of pending termination informing them that there will be no further accruals?

As a follow up, what is the corrective step to take for fixing the lack of 11-g amendment?

Hi Bird Thank you for your comments. As I stated above this is a conversation. I am not making the client do anything other than fixing 2020, the 415c violation. As this is a takeover, I have to let them know what my findings are and it is up to them on how to proceed and taking the risks. I just follow the orders up to a certain point. I am still not convinced (sorry for being dumb here) that once you fail the coverage, you can go ahead and provide the full benefit structure, as you do for your clients. Well, thanks again

I am not sure I agree but again...

Hi Bird I am not sure I agree with you on the allocation amount (just having a conversation here). In my humble opinion (I might be wrong here) You cannot simply allocate a full benefit based on the definitive plan formula unless you meet both the last day and hour requirements If an 11-g amendment calculation is required (lack of physical amendment aside), I do not believe you can simply provide an amount arbitrarily. It should be an amount up to the point of satisfying 410b and 401a4 e.g. if the plan formula was generating 3K (assuming last day+1000 hours satisfied) however only 2K was needed to pass 410b+401a4, only 2K should/can be allocated (assume top heavy is satisfied with a lower amount). Am I wrong here in my thinking? I still think, lack of amendment is an issue and not sure how to fix it. As I said, this is a takeover plan so need to provide options to the plan sponsor. Thank you

No, it is 11-g language.

Hi Does SB still needs to be physically signed or docusign or another method is ok? Thank you

The saga continues and getting better and better. Not sure what to do here. Just got 2018 and 2019 census and the only rank&file employee worked under 1,000 hours in both years and employed @ EOY (TB allocation requires 1,000+ hours and last day rule). As the plan is top-heavy, at least 3% has to be provided since employed @ EOY. Also, since no longer a uniform allocation, must pass 410b and 401a4, at least in my opinion. The prior TPA assumed 1,000+ hours of service for each year (totally ignored the census) and provided full benefit using the plan's formula. There is no 11-g amendments either. Any comments/suggestions are appreciated. Thank you

Ah, tx

What is a DER?

Datair does it too and nicely, at least my experience. Same way Bri explained.

Hi Existing DC plan with NRA 65 only. Plan effective 1/1/2018. Participant DOB 1/1/1946, DOH 1/1/2011, DOP 1/1/2018 thus NRA attained on 1/1/2018. Looking to add a CB with NRA 65 and 5 YOP Participant attainted age at val date (EOY) 75 with NRA 79. This is for the CB plan. When testing for combo plans, the system used 75 as the testing age. Is this correct under 401a4-12? Thanks

1000 hours of service, if it is in the plan document

Even if you do not have last day rule, can be amended prior to accrual of 1000 hours of service, assuming you have one. TWB %/level must be spelled out on the AA.

Any thoughts on late filing penalties for 5330?

Sent one by private message as I wrote one many moons ago.

Hi Lou Thank you for your comments. I agree on the 1st one, easy. I am not sure if earnings is needed as this is a pooled account. I will just apply as contribution already made. On the possible missing contributions for the owner, 5330 is late for 2020 as was not filed by 10/15/2021. This is a concern, at least for me. Would the IRS come back for late filing penalties? I do not know. The 10% penalty has to be paid one way or another. As the contribution will be corrected in 2022, no excise tax is required for 2021. I still cannot believe how they missed the 415(c) issue. Thanks

Hi Taking over a TBP - target benefit plan - with some issues that I was able to determine for 2020 plan year: 1- Participant had $1,000 salary and got an allocation of $3,000 - they did not check this 415(c), 100% compensation limit rule even if the report clearly stated 415 violation. They simply applied the contribution based on the formula without looking into the 415(c) limit. 2- The owner was allocated $0 but I think should have had an allocation due to the incorrect calculations. The owner had $10,000 in salary. So: The contributions were made after the end of 2020 plan year so I can fix the 415 issue but the fact that the deduction was taken is another issue. What to do with the excess deduction (assume no allocation to the owner for this scenario). Cannot allocate to others as all TBP calculations are based on a formula. If I determine an allocation was due to the owner, I can use a portion of the excess from above but still would be short. As the contributions are mandatory, how to correct the missing contribution? For arguments sake, let's say $5,000 is short for 2020. They probably will need excise tax of 10% for each 2020 and 2021 i.e. 5330. Any suggestions especially of self-correction? Thanks

Wow, thank you all for chiming in. To confirm my understanding and what I suspected, only PS can be seasoned, conceptually.

It is a giant red flag to have insurance in pension plans, period. I will see what I can find but if anyone has comments, I welcome them. Thank you

Hi I have not dealt with insurance in DC plans for many years and need a refresher. Plan had 401k, 3% NESH and PS provisions. Assume whole life thus up 49.99 percent cumulative limit of the contributions. They want to use all 3 provisions to maximize insurance. Which provisions have seasoned money for future? PS definitely. Thank you