Jakyasar

Mr. Bailey Thank you for your comments. If I am understanding you correctly (and also agree), Joe cannot do a separate defined benefit plan for himself under this 736(a) income. He is not part of any plan from the XYZ, LLC (not that I am aware if they have one). As far as I am aware, one needs to be their own entity to have a qualified pension plan and not thru a separate firm (could be some circumstances for exceptions - may be). My thinking was, if Joe does not have his own EIN (schedule c or some other entity, how could he set up a DB plan from a severance pay that he is paid from his ex firm. If you have any further comments/correction to above, I would very much appreciate it. Regards,

Partner Joe (over age 70) retired in 2017 from partnership XYZ, LLC (a large law firm) and started receiving IRC §736(a) payments (distributive share or guaranteed payment under IRC §707(c)) for a period of 48 months and in form of k-1. These payments are subject to self employment tax. Joe also has clients on the side that he is consulting with. Not sure how he is paid yet but can assume schedule c. Joe wants to start a pension plan on both incomes, can he (how about only on the k-1 he is getting from XYZ, LLC)? The plan will be for 2019, 2020 and 2021. From an article I found online written in 2017 (not the code - could be related to 736(b) - no taxation of income - not posting the article not sure if can be done - please let me know if possible and will do so): Note: The type of retirement program (between Joe and XYZ, LLC) discussed here is not a tax-favored partnership retirement plan such as a 401(k) plan, Keogh plan or SEP plan. Instead, we are talking about a relatively simple written arrangement (generally unfunded) under which payments are made by the partnership directly to its retired partners. Such an arrangement is not subject to any of the complicated funding and nondiscrimination rules that can potentially apply to a tax-favored partnership retirement plan. Thank you for your comments.

Out of curiosity, what dates make a difference? Thank you

Owner aka child 1974 DOH 2015 Dad 1946 DOH 2015 Mom 1950 DOH 2015 Thank you

I own my company (100%) and have my parents as employees (no ownership). My company sponsors a pension plan. Under 318 attribution rules, my parents are 5% owners therefore RMD's are required. Please let me know if I missed anything. Thank you

Thank you for your response. Plan and limitation years are always the same so short plan year=short limitation year. Do you agree that I need to use the 2019 w-2 for the valuation? It is DB plan, sorry forgot to mention. No adjustment to the 415(b). Thank you

Current plan year is from 12/1/18 to 11/30/19. Compensation is defined as calendar year ending within fiscal year. for this plan year, it is 2018 w-2. Switching the plan year to 12/1/19 to 12/31/19 i.e. a short plan year. Assuming that will need to use the full 2019 w-2 for the short plan year, what proration is required if any, dc and db plans purposes other than hours? Thank you

Current plan year end is 9/30/19. RMD is taken for 2019 based on 9/30/18 balance - 1.401a9-5-Q&A3 Amending the plan year to a short year from 10/1/19 to 12/31/19. As a calendar 2019 RMD is already taken, will there a need for further allocation requirement based on 9/30/19 balance? If there is, what is the methodology? Thank you

Agreed and thank you for your comments. Exclusion is by job category only.

As a follow up question, for the DB coverage testing, assuming 410b, can it be ABPT or must be ratio? Using a safe harbor formula - integrated and excluding certain employees and it makes a huge difference ratio vs ABPT. Any comments are appreciated. Regards,

Thank you for your response. To confirm my understanding on the coverage, 70% ratio test, correct? Will check on the uninsurable issue within the DB plan - never saw but may need to closely look (as never had to deal with it). I agree with Bob Schramm rule. Thank you

Revisiting BRF issue with insurance as trying to find a safe way to have insurance for all without violating BRF issues: Revised plan approach Combo DB/DC DB will be integrated safe harbor formula DB will have insurance for all participating DC will be group based and will cover all including the owner – not a uniform/safe harbor formula All will be eligible for insurance ------------------- Q1: Is the above ok for BRF? Q2: Is the above ok if the DB has excluded employees but all covered under DC? Q3: If under the DC plan, the rank&file opts out of insurance and provides this election in writing, is this ok for a free pass under BRF? What if they are also excluded under the DB plan? Q4: If the rank&file is not insurable, is this a free pass on BRF? Thank you for your comments

This is not a SARSEP (5305-A-SEP -I agree no qualified plan can co-exist) nor a traditional IRA (5305-AI do not see where a qualified plan cannot exist), just a SEP account that is subject to 25% deduction rules. I must admit, I do not see (possibly missing) where it says you cannot have SEP and a DB plan together. Could you please point out? As far as I knew, as long as the deduction limits are calculated properly, no issue. I have not had one of these in many years, so possibly overlooking something. Regards

Good morning Would like to check/confirm the following: Client wants to start a DB plan for 2019. Informs me that put away 20k in a SEP already. This is already in excess of 6% projected 2019 salary (non-PBGC - one lifer) Under deductions rules, 31% application, max 2019 deduction is 50k (based on current comp - will not increase). SEP was 20k and DB deduction cannot exceed 30k. if opnly SEP, max deduction is approx. 40k. Q1: Cannot take back the SEP, correct? If not, how can it be done? Q2: If a DB plan required 100k of contribution and only 30k is deductible for 2019 (as per above), assuming that there will be room for 2020, can the remaining 70k deduction be applied towards 2020, in addition to the 2020 100k DB deduction i.e. 2020 total deduction can be 170k? Or, DB plan design for 2019 should have no more than 30k of required contribution? Client wants 100k each year and start in 2019. Thank you for your comments.

Good evening: Not sure the following is right and/or passes BRF. A floor offset plan - assume 401a26 passes. After all offset are applied, only the owner has a substantial benefit in the DB plan. Only the owner is HCE. So far so good. Now the agent wants to provide insurance to the owner under the DB plan, thinking since no one has any benefits and plan passes 401a26, kosher, right? Also, they do not think that they need to provide any insurance under the DC plan. I am not in agreement for the following reasons (the ones that come to mind - possibly missed a few): 1- Any insurance provided to the rank&file (or NHCE) under the DC plan is not of the same value as the one provided to the owner under the DB plan; 2- For any insurance provided to the rank&file under the DC, the premiums have to be paid thru their benefit i.e. the contributions provided to them by the employer where in the DB plan, only the employer pays as contribution to the plan and does not reduce any benefits; 3- There is BRF issues for DB and combined plans. 4- As per some prior information I heard, even if the DB plan provided a benefit to the rank&file employees (say 2% and the owner gets 10% of pay), the insurance provided is not of equal value (even if calculated the same way, say 50X) due to the discriminatory type of benefit formula. The DC portion would not make it equal due to the reasoning I provided on item 2 above. 5- How is 410b satisfied? Please let me know your thoughts/comments on this and if I missed anything and/or misunderstood. Thank you

Hi all Sponsor wants to terminate the services of the vendor (or provider/platform) and wants to move another one. By mistake, tells them to terminate the plan i/o telling them that their services are terminated and assets to be transferred to another vendor (not well informed nor was contacted by anyone - you get you pay for). Vendor terminated the plan in April 2019 but assets still not distributed - I believe the sponsor signed a resolution for the plan termination rather than contract termination. Can the sponsor still undo the termination with no issues as to the continuance of the plan? It is a 1 year old plan. any other corrective measures that will be required? No idea about what happened to the deferrals, just finding out the facts. Vendor also tells the client, even if they move the assets to another vendor/platform, they will get a 1099R?? How is this possible there is no distribution? Your comments are appreciated as well as any insights. Thank you

Thank you for your replies. I am assuming that item 3 is 3% and not 2%, correct? If they want to stay with the SH match where the top heavy is automatically satisfied, because of the combo plans, excluding them from the DB plan will still require the participants to get at least 3% (plus whatever is necessary for the gateway), correct? The way i see this, there is absolutely no advantage staying with the SH match, if any. Thank you again for your comments.

Never dealt with the following as always use 3% non-elective SH. Existing DC plan with 401k+ADP safe harbor match+PS options (no ps contributions ever made) 10 eligible, only 4 deferring thus only 4 getting SH. Passes top heavy on its own. Want to add a DB plan and need to combine for all testing and top heavy. If a participant is in both plans and not getting any allocation under the DC plan because not referring, how is the top heavy allocation determined? If a participant is excluded from the DB plan and also not getting a SH because not deferring, how is the top heavy allocation determined? Thank you for your input.