Jakyasar

I want to add another scenario to this out of curiosity. Assume existing 401k plan, only has deferral and safe harbor match, no PS provisions and/or top heavy duplication provisions. Automatically passes top heavy. Now, let's start a DB and a PS plan for 2021 today. DB will say top heavy is provided by PS and PS will say all top heavy is satisfied under the PS plan. So, 401k will have deferrals+SH match only, PS will have all top heavy/gateway and DB will have whatever benefits (some at meaningful benefit levels) Any comments on this as well? Thank you

Very complicated issue, big can of worms to open here.

Hi Sponsor has an existing PS plan. Now wants to add a DB plan for 2021. DB plan, by design will state that the PS plan will provide top heavy. However, PS plan has no provisions on how the "top heavy duplications when a DB plan is maintained" checked. In general, depending on the document type, I would put in a very detailed language explaining how the top heavy will be satisfied under the PS plan. For 2021, DB plan is on the hook for top heavy? There is no way to retroactively amend the PS plan for 2021, correct? I just cannot think of a way out of this. Any thoughts? Thank you

Looks like as long as min required is done, who cares other than matching pay credits.

It is EOY val

Hi This is theoretical question as never encountered before. Might be a silly question but I am curious. Brand new CB plan, effective 1/1/2021. For vesting (3 year cliff), no prior service is provided. Participant enters the plan on 1/1/2021 with pay credit of $1,000. Accrues 1,000 hours but terminates during the year. Thus 0% vested. Accrues the pay credit and the equivalent AB is used to pass 401a26. However, at end of year, his pay credit is forfeited due to 0% vesting, thus account balance is $0 at end of year. Does the plan sponsor need to make a deposit of $1,000 on this person's behalf? Assume minimum required contribution requirement is not an issue, whether this $1,000 is deposited or not. Thank you,

Follow up question If no minor children but Law firm does work for wife's company, what are the issues, if any?

No new deductions, they want to eat up the excess. New benefits based on new salaries (after adjusting for prior distributions) would be able to eat up the remaining excess. I am no expert on spin-offs, would that work here?

Hi Here is a new one for me. Fiscal DB Plan - 7/31 year end. Overfunded 500k. This is a husband and wife plan only. They got paid out max 415 limits (compensation not dollar) Plan terminated 7/31/2020. Benefits rolled into respective IRAs March 2021 and the excess was transferred to the QRP (profit sharing plan) by 7/31/2021 with a small remaining residue in October of 2021. The DB account is still open with $0 balance. The idea was to eat up the excess within 7 years as much as possible. They now have opportunity for large salaries for 2021/2022 and wanted to see if a new DB plan can be set up and the excess can be transferred back into the new DB for satisfying the contributions? Can this be done? If yes, I will have follow up questions. Thank you

Wow, BL at its best, thank you all for your comments even though I am not agreement with some of them (especially with no service/last day rule as lack of them would limit any amendments in the early parts of the year due to 411d6 - I am aware that many do not have the requirements). You all gave me very good thinking points to discuss with the client. Just a few quick comments: Peter, this is an LLC filing as a corporation, great idea and information, not going to work here BG, on your last comment, equivalency is not an option however it may not necessarily be discriminatory as I have all non-HCE's fully benefitting but it is not an approach I am comfortable taking. CB - adding a PS is not option just to have him get a benefit. I will check on the disability but I was not told about any. Besides as you stated, tough one to prove. Your time is much appreciated. Again, thank you all.

Hi First time for everything. CB/DC (401k+SH+PS) combo. Both plans require 1000 hours for accruals/allocations. PS requires last day rule as well. One owner/HCE got very sick and only worked 100 hours however employed on last day. The other partners want him to get CB accrual as well as PS allocation. All non-HCEs are covered under both plans and get the minimum required gateway - no exclusions. Some non-owner HCE's are excluded from CB plan but participate in DC plan - just getting 3% non-elective SH. Can an 11-g amendment be made just for this HCE and have him accrue benefits for 2021? If yes and gets benefits, should these benefits be included in the 2021 410b and 401a4testing? No issue with 401a26 as comfortable passing. With him benefitting for 2021, all my testing will still pass so issues there (checked it already) Any other suggestions I cannot think of? Thank you

Having a discussion with a CPA and not sure I understand what needs to be used. No 401k deferral. No exclusions listed in the document. This is for 2021 and for an LLC filing as an S-Corp W2 Box 1 $92,000 W2 Boxes 3 and 5 $75,000 - SS and Medicare wages Earnings summary states Gross Pay $75,000 Plus S-Corp 2% Medical premium $17,000 Reported W-2 wages for Box 1 $92,000 Reported W-2 wages for Boxes 2 and 3 $75,000 What is the compensation to be used for pension purposes? Thank you

Thank you

Hi It has been a long time since I came across this as all my plans are done on volume submitter. Somewhere in the corners of my old memory I remember that if DC plan is done as standardized prototype and if the DB plan is done a volume submitter, it was not permitted to be set up this way. Only standardized plans can be set paired?? What am I not remembering here? Thank you

Well, this as it may be, the insurance company did not allow a single bond (I think it was Colonial) and had to get 2 bonds, this was a while back. I am just sharing my experience. By the way, thank you for pointing to the example.

I was once told by an agent it should 100% of the non-qualified assets plus 10% of the qualified assets i.e. 2 separate bonds and that is what I do.

Having late Friday brain freeze DB/DC combo, non PBGC. 1M payroll, checking for 31% rule i.e. 310k deduction total If DB portion is 200k, can do 110k of DC, correct? Even though DC portion exceeds 6%, it does not exceed the 25% overall DC deduction limit. Anything I am missing? Thank you

Hi I believe the answer is no issues but always would like to confirm: Common factors: Company A has a 401k/PS plan Joe and Mary are married and have no minor children at this time Mary owns 100% Company B and has no business relationship with Company A/no affiliation Scenario 1 Joe is an officer of Company A (no ownership but CFO and making over threshold) Joe's wife Mary also an employee of Company A - for all purposes, a rank&file employee Company A provides ER contributions to both - Joe is at 415(c) dollar limit Company B - no employees other than Mary - also provides ER monies to Mary No issues as well as combined 415(c) limits for Mary, correct? Scenario 2 Now Joe owns 49% of Company A. Other 51% is owned by unrelated party. Mary is still an employee but now HCE due to attribution No issues as well as combined 415(c) limits for Mary, correct? Scenario 3 Same as Scenario 2 except Joe now is also employed by Company B Company B pays Joe 305k of salary and wants to provide Joe maximum PS - in addition to Mary So, Joe can get maximum limits in both companies separately, correct? What am I not asking here? Thank you

To all, happy and healthy New Year and Holiday. Let's see what New Year will bring. Thank you all for your wisdom and experience.

Thank you and happy holidays

To understand what you said: If they worked 1000 hours in 8 months, they enter in the 9th month, correct?

Looking at a plan doc prepared by another. Calendar plan. 401k eligibility is 6 months (in which 1000 hours of service is required) with entry date first month following completion of 6 months. Can the plan require 1000 hours of service where eligibility is 6 months? PS is 12 months with 1000 hours so this is fine. Entry date is dual entry, 1st and 7th months. Thank you

Agreed and thank you, happy holidays

It is actually a plan with other participants but wanted to check on how it could be done for the owner. So would need a deferral election form stating $6,500 and execute by 12/30/2021, correct?

A rhetorical follow up question. Assume 1 lifer and age over 50. A sole-prop earning 500k of net schedule c. Assume the plan has 401k+3% non-elective SH+PS provisions. QRP allocation will be 58k (1/7th). Wants to deduct something for 2021. SH 8,700 - covered by QRP PS 49,300 - covered by QRP Can he do 6,500 as 401k deferral catch up? This would be deductible? If yes, what does he put on the deferral election form? Thank you