Jakyasar

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.

Hi Having a discussion with someone and need outside expert opinion. I never came across with a situation like this. Sub-S corp XYZ is owned by Joe 100%. No salaries taken. LLC partnership is owner 100% by XYZ. LLC has Joe and Mary (husband/wife) as w-2 employees. LLC is setting up a DB plan LLC has income and will cover the deductible contribution and transfer the balance of the profits to XYZ. This is the way the structure was explained to me. Q1: Is the LLC DB covered by PBGC? Not a professional entity so technically not an exempt category of business. Q2: Is the above structure kosher? I am assuming the deduction is fine with the LLC Anything else I am not thinking of? Thank you

Lou, I am assuming you are responding to Lou, especially your first comment? Second part, in agreement.

Follow up scenario on this Box 1 $135,000 (box 5 less deferral plus health insurance) Box 5 $140,000 Deferral $20,000 Health Insurance $15,000 What is the gross salary for pension purposes, $155,000 or $140,000? Thank you

Sorry, reposting as hit return by mistake. Let me rephrase, system did not delete it, just applied 0% vesting and assumed TNC was $0. technically benefit is accrued and then 0% vesting applied thus the forfeiture. The system used the benefit for testing. This is the first time I have a participant terminating in the first year and that is why I am questioning it. Thank you

Let me rephrase, system did not delete it, just applied 0% vesting and assumed TNC was $0. technically benefit is accrued and then 0% vesting applied thus the forfeiture. The system used the benefit for testing. This is to me and that is why I am questioning it. I

My system forfeited and deleted the TNC

Lou, to your response for the second part, wouldn't the PS portion cover the top heavy?

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