Jakyasar

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

interesting math and thank you for clearly explaining it. Much appreciated.

Good morning all Owner only 401k plan - OwnerCo. Owner also works for another company as an employee - EE-Co. Owner over age 50. Owner will defer $6,000 in the company - EE-Co he is working as an employee. Owner will receive $22,000 salary from OwnerCo and will defer $20,000. So between the 2 deferrals, Owner is not going to exceed $26,000 for 2020. Of the $20,000 deferral under OwnerCo, the owner will treat $6,500 of the deferral as catch-up which will reduce the base deferral to $13,500. Owner will also make a $5,500 profit sharing contribution from the OwnerCo. Therefore $13,500+$5,500=$19,000 will not exceed 100% of pay i.e. $22,000. Agree? Thank you,

Thank you all and happy Father's day.

To all Thank you for your comments/suggestions. Mike, I am leaning towards your suggestion however, what will happen to the stock that was sold within the plan and had 5k of gains? David, I agree, will do for next time. Anyway, have a great weekend and be safe.

Why does it matter of how much goes to the owners unless the SH have the clause of excluding the owners (presumably HCE's). Is there a waiver that I am not aware of? I am just curious about how they can get out of this obligation especially if the company is still in biz. Thank you

Thank you for your input. Here are some responses Let me clarify that the "client" is the client of the plan sponsor and has nothing to do with the 1. Client deposited directly into the plan (no clue they were able to do it as not the trustee or plan sponsor). plan sponsor found out later that these stocks were deposited directly into the pension plans. 2. No, the plan sponsor made the appropriate contributions and never used the stocks as part of contributions/deductions 3. The withdrawals were made within 6 months of the deposits all in the same plan year 4. No, it was only the in owners account, none of the other participants were affected by it, only the owner (all participants have their own separate accounts. This was not a contribution by the plan sponsor (the plan sponsor knows not to contribute anything other than cash). The plan sponsor did not deposit these stocks, their client did. Their client somehow was able to transfer the stocks into the pension accounts and nobody caught this until it was too late, how it was done without the trustee's knowledge is still a mystery. This is all I know. It was simply an error that should not have happened. Thank you

Hi Sponsor has a client who was supposed to pay directly to the sponsor's business fees in stocks. Instead of the monies going to the sponsor's business, they deposited 1000 shares of the stock to each plan and the price of the stock at that time was $50. All happened in 2018. In the DB plan, client sold 500 shares and made a long term gain of $5,000 and never withdrew the money (as far as I know, no taxes were paid for the gain). Remaining 500 shares were later taken out of the DB plan and transferred to sponsor's business account (no cash transaction but I believe the value at the time of transfer was less than $50/share). All in happened in 2018. In the 401k plan, similar situation happened i.e. transferred 900 shares back to the business (not sure if the stock price was over/under $50) and sold the remaining100 shares in the plan but at a loss of $5,000 and never withdrew the money. I never had to deal with this and what is the corrective steps to take? Never a dull moment, best not to check statements! Thank you,

Hi Having a bit of brain freeze. Looking into adding a DB to an existing 401k plan. Sponsor FYE is 6/30 however the 401k plan is a calendar plan. Definition of compensation is plan year. Not designed by me, takeover. If a DB is designed the same way i.e. effective 1/1/2020 and plan year compensation will be used, can the deduction be taken for 6/30/2020 corporate year end? Of course, we will have to wait next year until the salaries are established. The design is important both plan are going to be tested together. In the past I have always used the salary paid for the FYE within the PYE, never salary paid for the plan year in with FY ends. What am I missing/not seeing here? Thank you,

Agreed and thank you

May be, was just curious though, thank you

Hi all Read this, not 100% clear. I checked other resources as well. Looks like it can be however, PBGC may think otherwise so this is a situation where to apply to a determination under PBGC, agree? A question. Let's says PBGC provides an official reply stating not a professional and the client takes 25% deduction under the DC plan. Gets audited by the IRS and IRS says, it is a professional. Who prevails here as IRS may demand deductions to be adjusted? Thank you