Jakyasar

Thank you both but I am not sure if the reduced se should be. It is higher on the net c I.e. lower deduction. I did ask all those questions to the cpa, waiting to hear.

Hi I have a confusing situation I have never seen it before. John, LLC (filing as a single member) provided me with the 2021 schedule. This is the entity sponsoring the pension plan. I was just informed that, the LLC is a 16% partner in a totally unrelated entity (assume no CG and ASG issues at this time). Net C amount was 150k but the K-1 received from the partnership show loss of 50k income. This loss was not reflected on the schedule c. When I was provided the SE tax form, the SE calculations were based on 100k. Has anyone seen a situation like this? Currently I have no other information and asked about the nature of the partnership income. What am I missing here and what should the income be for pension purposes? Thank you

That is already in the works, thank you.

Thank you and I told them no anyway.

Hi A one person employer has a 401k plan and for 2021 already put in max deferral and PS and also filed the corporate tax return by 3/15/2022. Now wants to set up a DB plan for 2021 but take the deduction in 2022 (given the level of 2021 salary, the 31% rule will yield only 9k of DB maximum for 2021 but 2022 will have a high enough cushion to have 2021 and 2022 deduction). If the corporate return is filed without any extension, too late to amend for 2021 and have a low DB deduction as well as adjusting any other deductions, correct? If filed with extension, can he go back and redo the deductions (2022 will be an issue as well but easier to deal with). Thank you

I agree with Cusefan's approach. Just add additional contributions under maximum deductible rules (it will increase every year even with HCE limitation for formula adjustments - cushion limitations) and adjust the pay credit every few years. This is a good approach/control if you want to limit the increase in pay credit and the accrued benefits at end of each year to 415 limits. Just my 2 cents.

Thank you

Hi A question for someone. I inherited an IRA from my parent. Can I roll over this IRA into my profit sharing plan? Thank you

Thank you all for your comments. I intend to bring this to PBGC's attention, will see how it goes.

Can an S Corporation Be a Member of an LLC? | legalzoom.com Hi Mike Company A is an s-corp that owns company b which is the llc which I am told is a disregarded entity. This is all new to me as never seen it before. Please look at the link provided (I hope it is ok to do).

Pay credit can exceed the salary, all depends how the formula is written in the document e.g. if written as "the lesser of 100% or X amount" then the pay credit is limited to the salary. This does not mean your deduction is limited to the pay credit. Also, your pay credit could be lower than the required minimum contributions. All calculations depend on the ages and salaries and also 415 limits under 415(b).

Mike It was similar and re-asking as I have more facts now. I was told: Company A is an S-Corp Company B a disregarded entity. David, I am aware the PBGC pilot program (in fact working on one for financial person now). Just wanted to check with the gurus out there first. All your comments are much appreciated.

Hi I own Company A 100%. No employees and I am not on payroll. Company A owns Company B 100%. Company B employs me and my spouse. We both get salaries. Company B sets up a DB plan sponsored by Company B only. Is the DB plan covered by PBGC? None of the companies are professional entities. Thank you

Yes as long as US based income. No issues except what happens to the monies once they terminate the plan? All depends on the country they are associated with for taxation.

Hi Friday late, fried brain, cannot think straight. Checking a design for someone. 401k+SH match+PS are the provisions. Plan is top heavy. 401k+SH has age 21 and no service for eligibility. PS has 21/1. The sponsor will be making a PS contribution (all in their own group). All satisfying the eligibility get the gateway (a little over 3%). I have 2 participants employed in 2021 (both worked over 1000 hours in 2021) and entered the plan in 2021 and also deferred (I have 5 others employed late 2020 or in 2021 but did not defer). So, they got the SH match. But they do not get PS/gateway as they are otherwise excludable employees. The other 5 who did not defer got no match and no PS/gateway. Am I correct? Thank you

Best if you go back to the client/CPA and get the schedule c information (preferably copies) and deductions taken for all years. Just because they put does not mean they deducted it. Kac1214 made a good point on this. Never assume what that is not clear/confirmed.

And de minimis provisions have to be in the plan document, correct? How do you go back to 2018? 99k/year is a big number to be generated on de minimis especially where 415 may be limit due to lack of 10 years of service, as CB indicated. Any chance there was also a corporation adopting the plan?

Cannot justify either, one is plan provisions which I do not want to touch (the return on investments is over 7%), the extended NRA not an option as the HCE is not expected to survive the summer, sadly.

Calavera, I am aware of the math but thank you, very short in assets C.B., not going to happen, they do not have it. I guess no other way but wait a year or so and beef up the assets. They may even decide to terminate the plan so can get paid.

Hi Doing a 110% liability test for a CB plan. As far as I know, one can use any reasonable method as long as it is approved by the sponsor and stay with the decision forever. The methods I am aware of are, 415 lump sum assumptions, 417e assumptions or 430 assumptions. Assume AFTAP is not an issue. Usually 430 assumptions would yield lowest amounts but in my case nothing is working so looking for another way to lower the liabilities and see if they can pay the HCE who is now terminated and under disability. I would like to get this done before an accrual for 2022 happens which will make things even worse. Any other methodologies that I am not thinking of? I know the bond/annuity etc options but trying to avoid. Thank you

Oh, believe me it is tingling but I get the response that it is IC, not my determination. I can only let them know what I think the issues are, other than that, not much I can do but rely on what the CPA/Sponsor tell me. Thank you for all the cautionary information.

I am testing the plan both ways and make sure that I pass either way with no contributions (always like to cover any future surprises - I do not always believe that 1099s are always IC's). After all it is the CPA/sponsor telling me what this person's employment status is, nothing I can do on this. Of course, the future issue would be if the IRS determines to be an employee, how to correct all missing contributions.

So not in testing at all, correct? All other monies are being returned, I was told, I am not the TPA, just doing testing.

Hi Combo plan, CB+DC. An HCE was employed in 2020 as a w-2. Excluded from CB but included in the DC. Now I am informed that he terminated as an employee on 1/2/2021 and became 1099 employee for 2021. He had $0 W-2 for 2021 however they make 26k deferral plus non elective SH on his behalf for 2021. How is he treated for all coverage and non-discrimination testing? How is his deferral/SH to be corrected? Thank you for your comments.

I did not check but can you change from one year to another on how to calculate the balance? Seems to be inconsistent, at least to me. Just curious. I agree that, one can do either cash or accrual but does it have to be consistently?