Jakyasar

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?

In a recent webinar, the presenter mentioned that he would be more comfortable with 100% vesting, especially given the amounts are usually very small. In my opinion, jury is still out on this. As Mike said, got to give something.

Hmmm, now I am confused with different opinions, still researching myself, just cannot seem to find anything that matched my situation. To be continued.

Makes sense so no OEX option and must provide gateway. Much appreciated, thank you

Years of Service is Periods of Service if elapsed method is used. Definitely getting PS allocation, no ambiguity there. Still trying to understand if this employee is otherwise excludable - OEX - as always worked under 500 hours (just got updated information). If OEX, then, although getting PS allocation, no need for gateway??? Also, can be tested separately as OEX, right? Thank you

Hi Looking at a combo plan with an existing DC plan. DC plan effective 2018 had a special entry that let in a part-time employee in 2018. This employee always worked under 500 hours. Elapsed time method is used for all provisions (I am by no means experienced in using elapsed time) DC plan has deferrals, non-elective SH and PS. For PS, last day rule is required. In addition, participant must complete period of service under elapsed time - I do not see any provisiosn as to what period is - will be checking with the other TPA. Adding a CB plan for 2021 (assume all ok for top heavy) which will have 21/1 assumption with 1000 hours for eligibility and accrual. This part-time employee will never be eligible in CB. Cross-testing both plans. Does the part-timer get gateway? He is in the testing because employed on 12/31 and also has 401k deferral and SH (possibly PS too). Can he be tested under otherwise exclude (the only one and non-HCE). Thank you

They look like LLC/partnership investments which provide k-1s at the end of the plan year for the plan asset valuation. In general, they are considered as non-qualified assets thus not eligible for SF and must file 5500 plus 100% ERISA bond coverage. Just speculating.

Nate, no affiliation whatsoever, as I was told. All 3 do different work and serve different clients.

Hi Joe and Mary are spouses and have no children under age 21. They do not live in a community state. Company A is owned 100% by Joe and has employees. No pension plans. Company B is owned 50/50 by Joe and Mary but Mary is not an employee. There are no other employees, just Joe. No pension plans Company C is owned 100% by Mary and Mary is the only employee. A DB plan is in effect covering Mary only. None of these companies interact with each other and they all do different lines of work. What issues are there? Thank you

Exception is for s corp

Hi Company owned by dad and son 50/50. Company also employs mom and daughter (son's sister). All above are HCE's for 2021. On March 1, 2022, dad sell his portion to son and son becomes 100% owner. When does sister become a non-HCE? Thank you

Already discussed the option but thank you.

Thank you for confirming, very sad situation.

I did and trying to determine if one exists (possibly may take the in-service route as age 63+). I am assuming 110% rule still applies as it is not related to the disability issues?

Hi I am having my first disability request in my entire career and a bit challenging to understand. This is for a cash balance plan, 2 years old. Document has a few options for benefits but do not see "lump sum". The only other option could be under "Other" which I am checking with the vendor. The participant in question is an owner/HCE and unfortunately not much time left to live so no coming back to work. He is age 63+. He checks all the requirements of being disabled, unfortunately. Currently on disability however still part of the company i.e. not officially terminated, at least that is what I am told. Still a 5%+ owner but no salary. No interest credit as provided annual at EOY. It is a fixed rate so no interim adjustments. From all the material I could find, looks like, can pay him his lump sum now, correct? He is already 100% vested. I am assuming, being an HCE, I still have to perform 110% test, correct? Anything else I am not thinking of/missing? Thank you

Assuming this is a PBGC covered plan and if the plan is underfunded, you can have a substantial owner waive their benefit (not for valuation purposes, only for payout purposes) or you can do a 4044 allocation, just in theory, thinking out loud without knowing any specifics. Also, by terminating the plan early in the year, you may have a pro-rated amortization schedule that may reduce the required contribution level substantially. The longer you wait, the more compliance issues the plan may encounter. All facts & circumstances.

Thank you all.

Hi Termination or not, isn't a "top heavy and underfunded and PBGC covered plan" exempt from 401a26 testing?

Lou, I meant Jeff's comment but thank you for clearing it out. Thank you all for your comments and have a nice weekend. Some of us will have blizzards and good luck with that.