Jakyasar

Agreed and thank you

Hi Participant was paid out (force out) her balance a few weeks ago (terminated in 2018 - never provided the completed distribution election forms). The balance was less than $500 and had 100% vested safe harbor and 50% vested profit sharing portions. 50% of the forfeited profit sharing account was transferred to "forfeiture account". Plan's limit is $1000 for involuntary payout. Now sponsor decided to terminate the plan, effective 12/31/2020. Resolution states, "the accounts of the participants will be 100% as of the plan termination date". It is signed today. Language from the document "in event of termination of the plan, the account balance of each affected participant will be nonforfeitable" Do I need to go back and vest the participant 100%? Thank you

Technically all amendments/restatements have to be in place by the termination date. However, under the cycle 3, based on my understanding, restatement date can only go back to the beginning of the plan year in which the restatement is executed. Again, different vendors may have different opinions. If your plan is a calendar year plan, can go to 1/1/2020, depends on what provisions you want the restatement to cover.

To all Wishing you all happy holidays and a healthy New Year. This board has been a wealth of information with many different contributors sharing their knowledge and experiences. Thank you all

Agree to include TNC if 1000+ hours accrued. Adjusting liability EIR is interesting as the liability is calculated on the date 110% is applied. Thank you for your input.

Regarding point 1, depending on which document provider you ask. Some might say must do and some might say not required as long as all good faith amendments are in place by the official termination date. If no amendment was available at the time of termination, it needed to be adopted anyway. They have claimers on the good faith amendments not being approved by the IRS so sometimes recommend to file a determination on termination. I have had these conversations with different vendors and got different responses in the past. Just my 2 cents FWIW.

Hojo, that is another way using 430 assumptions. Thank you

Hi Andy Thank you for your input though never heard of 404 assumptions to be used. Always used 436 or 417e3. Still not too clear what to do on cash balance situation. Thank you

Good morning all I was asked to perform a 110% test for a cash balance plan and see if an HCE is eligible for lump sum. I was told the client is eager to pay the lump sum. I have done this many times for a defined benefit plan and never needed for a cash balance plan. As I am not 100% sure, would one of the 2 methods be acceptable? 1- simply use the account balance (no 415 issue) as of distribution date (adjusted for interest credit if required) and compare to the assets as of the same date, or; 2- determine the AB's as of distribution date and convert them to lump sum using?? PVAB would be based on plan actuarial assumptions, 430 assumptions, 417e assumptions?? Any other methods that are acceptable that I am not thinking of? Also, do you provide the client the method to choose as sometimes one method would allow lumpsum where another would not? I remember this discussion sometime ago and some well known actuaries had no issue to let the client decide between 430 and 417e options (it was for a defined benefit plan), as long as the ramifications were well explained and disclosed to the client. Thank you all and have a great weekend.

Hi all I was asked the following (hopefully asking correctly): Owner of corporation got 20k salary in PPP monies and 50k salary from corporation thus 70k w-2 for 2020. Wants ps deduction for 2020. Which amount can the corporation contribute and deduct for? 50k or 70k? Thank you

Hi, any takers? Thank you

Hi Having a discussion and curious about the following for a 2021 RMD: Plan year changed during 2020. 9/30/2020 AB 2000/monthly 12/31/20 AB 3000/monthly - short plan year from 10/1/20 to 12/31/20 What is the AB used for 2021 RMD? Another scenario 9/30/2020 AB 2000/monthly but 20% vested at 400/month 12/31/20 AB 3000/monthly - short plan year from 10/1/20 to 12/31/20 but 40% at 1200/month What is the AB used for 2021 RMD? Thank you

Very interesting and educational, thank you Have a great weekend.

Hi C.B. I meant to ask as 2 separate scenarios. Scenario 1, if only in the dc plan and excluded from the cb plan. Scenario 2, if included in both the dc and cb plans. In both scenarios chooses not to defer. Only the dc plan provides top heavy requirements. Would any of your comments change? I got to be more specific next time as I type too fast sometimes. Have a great weekend and really appreciate your comments/time.

Hi C.B. You are correct in all your assumptions. His safe harbor match is over 3% so his top heavy is satisfied and as he gets on PS allocation due to 1000 hour requirement, he is not getting gateway either. Please allow me a follow up question, just curious and thought of it. If he was making no deferrals, he would not be getting any safe harbor match. If this was a dc plan only and no ps allocation, no issue of the top heavy. What happens in a combo plan assuming that he participates only in the dc plan and also in both plans? Never seen this but curious.

Hi Lou, thank you confirming my understanding.

Hi C.B. As I said senior moment since I only with non elective safe harbors in general. Thank you for reminding me about the top heavy coverage. If I understood you correctly, if he was in both top heavy plans and only DC plan provides the top heavy, not only he will get the safe harbor match but he will also get 5% gateway as a ps allocation, correct? Much appreciated.

Hi all Having another senior moment. Looking at a combo plan (both 401k and cash balance plans are top heavy) where the existing 401k plan has safe harbor match (changed to non elective for 2021) and ps allocation is last day+1000 hours and everyone in their own group. Top heavy also requires last day rule. The cash balance will be a new plan effective 1/1/2020. One employee (DOP 1/1/2019 and non-HCE) terminated 1/10/2020 and rehired 10/4/2020. He deferred a bit in the year and gets the safe harbor match. He is excluded under the CB plan. Gateway requirement is 5% Performed the combo testing and the system did not require a gateway allocation to him and passed the testing (I have others who satisfy the combo test and helping to pass the test). He should get at least 3% as the 401k plan is top heavy and did not get a warning on that either, correct? As it is safe harbor match, should have 3% of allocation, at least. Something does not smell right. I do not believe it matters if he worked under or over 500 hours. Thank you for your comments.

Hi Have not dealt with loans for couple of years and now a participant wants one. Loan procedure states prime rate plus 1%. Is this reasonable? I believe 2% is the unofficial safe harbor. Thank you

Thank you for your comments

Appleby They inherited in 2020 and also received the assets in 2020. My understanding from other comments and reading further, it is 10 years and starts in 2021. As to the ages, still no info so Q1 is out. Thank you for your time.

The rollover will be in 2020 however thank you for your time/comments.

Lou S., thank you One follow up to Q3 - does it matter if the beneficiary receives the rollover in 2020?

Trying to get to Q1. How about Q2 and Q3, in general terms? Thank you

Hi I was asked the following (not sure if a DC plan or 403(b)). Not sure if the deceased was already receiving RMD and do not know the ages of the beneficiaries. Assuming that the sisters get the amounts this year and rollover into their IRA's Q1: I do not think they need to get an RMD for 2020, correct? Q2: They need to distribute the IRAs and taxed on within 5 or 10 years? Q3: When will year 1 start? Thank you