Jakyasar

I totally agree with you but it bothers me that they will take a deduction for the corporation for a benefit that is generated from the LLC portion. I left it with them anyway. I can only suggest. Thank you for your insight/comment as usual.

Having a discussion with a CPA for 2019 deduction. Owner has a corp and also a partnership sponsoring the plan, it is a controlled group. Salary from corp was 180k and the K-1 income was 500k plus. DB deduction is 200k and DC deduction is 50k. Neither deduction can be achieved just by 180k salary. The so called salary total for 2018 is 280k (thankfully, the k-1 income high enough) and I suggested to split the deductions by using the fraction of 180/280 for the corporation and 100/280 for the LLC. CPA is reluctant to do so and wants the full deduction on the corp books which I do not agree but not my decision. IRS, if I recall correctly, does not have a set rule on this (may be misremembering) but consistency is important i.e. once you start one way, you continue that way. I am aware that there are required contribution requirement/lack of income for the LLC, but this purpose, let's ignore it. Any comments? Thank you

Hi Just took over a db plan with 9/30 year end. For the 9/30/18 year end, the participant (owner's spouse and 75 years old) was 20% vested with a very small AB. Prior TPA did not alert them of the RMD requirements for 2018 and also for 2019. The amounts are very small possibly between a total of $100 to $500 range for each year, may be a bit more for 2019 - did not do the math yet. What is the recommended course of action, send a letter to the IRS and say sorry and forgive me? Is there a threshold on the minimum 50% penalty? Thank you

They are but not always as favorable, all depends on the past salary history, benefits, accumulation and the demography.

Also, is this the first year i.e. you have no theoretical accumulation?

Hi Sorry if I am not seeing it but why age nearest is 62? At 12/31/19, age should be 54? NRA is 65 from what you provided. I concur the calculations all the way to VBRA but cannot back into the 57k figure.

Sorry, also passes 401a4, testing is not issue. Was just concerned if I had to provide any profit sharing for gateway purposes.

Including in coverage was never in question. Passes both ratio and ABPT without them. Thank you both for your comments

Just a follow up on the dc side. She can do full 401k plus 6% of eligible salary so could be up to 17.1k of profit sharing for 2020 and this is all the employer monies she can put in. The profit sharing portion will have to calculated once the schedule c and the defined benefit plan limits are determined. Sorry did not work out the db end but it is over 200k/year. So she can look at, between the 2 plans over 250k/year. Actual calculated numbers will yield more but this is a good start and hope it helps.

Hi Drawing a blank. Looking at a combo plan design which is not the way I do but asked to look at it. DC plan provides ADP SH Match, standard 100% up to 3% + 50% between 3%/5%. PS portion has 1000 hours plus last day rule. 2 participants terminated with 750 hours and prior to EOY however they bot deferred. Employer wants to make a profit sharing contribution (they are aware of the additional cost as they do not have 3% non-elective SH) The plan is also combined with a DB plan so testing together. Let's say the gateway minimum is 7.5%. Top heavy only in the DC plan (5%) and also required last day rule. Assuming that the terminated employees were not excluded in the DB (and not accruing any benefits), do they need to get any profit sharing as gateway? If they are excluded within the DB plan categorically, I do not believe they need to get any PS allocation, correct? Anything else I missed? Thank you

Well, it is confusing to me so thank you for providing some answers. I will look into this further as still not 100% clear on the benefit amount - not worried about the AE that he may elect (getting there though). To answer your question, in my case, spouse of the owner and yes, the biz has been around for 10+ years. They are just starting a new plan. Good question though for ownership determination. Appreciate your time.

I agree with the 1950 DOB. No issues there. Vesting is 1000 hours during the plan year. 1947 DOB, became a participant on 7/1/19 and will be 100% vested for the plan year beginning 7/1/21 and ending 6/30/22. So the first RMD is due 12/31/2022? My confusion comes for the following that is applicable to the DC plans "RMD in a DC plan, based on 1.401(a)(9)-5, Q&A, based the latest val within the calendar year prior to he distribution due". So for 6/30/21 year end, he will have $2,000/month AB but 0% vesting. As of 6/30/22, he will have $3,000/month AB and 100% vesting. What do I pay him on 12/31/22, assuming that is his RBD? $2,000/month. This is so confusing. Thank you for your input.

I did not do the math but make sure that, she does not make any profit sharing (or any match, if it exists) contribution for 2020 during 2020 as 6% profit sharing (or any other employer) limit is going to kick in. If she has no 401k feature, she should add for 2020. If she puts in excess of 6% employer monies into the DC portion, less deductions will be very low (31% rule kicks in). The next question is, how many year does she want to contribute. This would be a good way to determine the years of participation for 415 limit and what the 415 lump sum would be at the end of so many years.

Hi Actually have 2 of them 5% owner and August, 1950 5% owner and January, 1947 Thank you

I have not had a noncalendar RMD for DB/CB for many many years so a bit rusty (if a DC, based on 1.401(a)(9)-5, Q&A, based the latest val within the calendar year prior to he distribution due) Cash balance plan, effective 7/1/2019 with 6/30/2020 year end. Vesting is 100% after 3 years and no service prior to 7/1/2019. Participant who is already over age 71, will be 100% vested at the end of 6/30/2022. When is the first RMD due, 4/1/2023? What benefit do I have to use? For example AB at 6/30/2021 is $1,000/month (0% vested) AB at 6/30/2022 is $2,000/month (100% vested) RMD at 12/31/2022 is? RMD at 4/1/2023 is? Thank you

Thank you for clarification

Thank you for your response. My question was more of a theoretical on the 5 past service for safe harbor. As to the service being legit, it is the plan sponsor's burden to prove. I am not sure you meant by a more modern construct.

Following up to see if my understanding is correct after reading EOB with examples. The compensation used for determining the threshold is for the calendar year and not fiscal year. I now understand the question from C.B. Zeller. First time dealing with a situation like this so did some serious reading. Going back to my previous example with some changes: Brand new plan year, effective 7/1/2019 with PYE 6/30/2020. Calendar 2018 108k Calendar 2019 120k Calendar 2020 131k If indexed amount - non-HCE till plan year beginning 7/1/2021 - correct? If calendar year election made, HCE for plan year beginning 7/1/2020 - correct? Thank you

Plan not set up yet and trying to determine the best way to accomplish this.

Hi Plan document excludes non-resident aliens - standard language. Employee is residing and working in the US, working under h-1 visa and paid a salary thru payroll from his employee in the US. As far as I remember, he is included in all pension related matters like all non-discrimination testing (he is excluded under a job category but part of all testing). Also, if he was not excluded, he would get what contributions due to him including option to defer. Please let me know if I missed anything. Thank you

Looking into a new plan. The first plan year will be from 7/1/19 to 6/30/20, same as corporate fiscal year. One employee is in question with the following salaries 7/1/18 to 7/1/19 109k Calendar 2018 105k Calendar 2019 126k 7/1/19 to 6/30/20 125k+ or 130k+ Using lookback, looks like non-HCE for plan year beginning 7/1/19, agree? Is there anyway I can make the employee HCE for plan year beginning 7/1/19. Also, to determine the HCE status for plan year beginning 7/1/2020, his salary has to be at least 125k+ as of 6/30/2020, agree? Or had to be as 12/31/19? Thank you

Hi I am never comfortable with providing prior service for the following situation but there are different schools of thoughts out there. Working on a new DB plan. Have employees and the owner as eligible. I am now told that the owner's spouse have been working for the company and never drew a salary. He has been employed since 2000. Assuming that he always worked 1000 hours, any issues in providing 1 to 5 past YOS (have not totally determined yet on how many years I will need for the plan design) for benefit accruals (under safe harbor rules)? I believe, the lack of salary history will be of an issue especially for 415 and testing but let's put that aside for the time being. I just need to determine if I can provide prior service. Thank you

Trying to determine as this is a takeover for 2019. However, given the plan's funded status and the deductions taken, neither minimum nor the maximum will be affected. I may need to amend the filings/AFTAP/SB/PBGC, just to make sure that I have all corrected. Thank you for pointing out.

No funding issue the plan sponsor deposited the contributions from their biz to the plan. these erroneous deposits were never part of the plan's contribution, required or deductible. As to Bird's question, sorry did not think the math carefully, assume $2,500 loss i.e. 50% of it. Luke, thank you for the additional thoughts.

All good points and thank you