Jakyasar

Revisiting this issue as I now have the actual w-2. It is 27,200. If only ps, can do up to 6,800 @25% deduction limit As catch-up is not part of the 415(c) limit, can the client do the following? 401k deferral 19,000 PS Allocation 6,800 - may choose a lesser limit, do not know yet Total 25,800 - less than 100% of pay plus catch up 6,000 Total 31,800 Thank you for your comments.

Thank you all for your comments

Hi My apologies if this subject was discussed before. Taking over 2 plans for the same sponsor and requested the past 3 years of information as well as documents etc, the standard information which are all available in PDF format. Sponsor cannot locate them all. Sponsor contacted the prior TPA and asked for the information. In return they asked for a payment to provide the information that already belongs to the sponsor and was paid for in the past. Sponsor is very unhappy about the amounts and wants to complain to an institution about this. Is this a common practice i.e. ask for money to provide the information already belonging to the sponsor? I have dealt with this many times and unless it was some very specific calculation etc, it is usually customary to provide the information without any money. Is there a customary amount? Your comments are appreciated. Regards,

And make sure to check old rate vs new rate for a period of one year for lump sum determination.

Assuming that the participant declines to have insurance, how does a DB plan cover coverage and BRF issues - not get any coverage? One way to do is just simply get the insurance (assuming no tests are required). Of course the employee may choose not to sign any forms. Bonus question: Owner is healthy and wants insurance in the DB plan. 2 out of 3 rank&file employees are not insurable due to health reasons. What to do? Rely on average benefit percentage test based on accruals?

Very interesting, thank you

Hello Doing a little reading of the new ACT and wanted to see what others think: RMD related: Have a DB plan and the owner will turn 70 1/2 in 2020, does that mean, the RMD is not due until the calendar year he turn 72 i.e. 2021? In-service age of 59 1/2: As the new ACT lowered the in-service distribution age to 59 1/2 under defined benefit and money purchase plans (target benefit plans too), can we restart designing the DB plans with normal retirement age less than 62? Thank you

Thank you all for your contributions. Totally can exceed 100% of pay as long as it is catch up only. A happy and healthy New Year. All the best,

Hi This is a 2019 related question to confirm if my understanding is correct: 2019 w-2 is $30,000 Can I do the following: PS contribution $7,500 401k Deferral $19,500 Catch up $6,000 - not limiting to 100% of pay OR 2019 W-2 is $20,000 Can I do the following: 401k Deferral $19,500 Catch up $6,000 - not limiting to 100% of pay Thank you and happy New Year and holidays

One more addition, may buy life insurance under the plan, pay the premium from the plan assets and the face amount may cover the losses attributable to the over funding but needs to be planned carefully especially with the cash value that will be generated thru the policy. with this approach, the plan needs top continue until the policy beneficiary passes or assets go down to a reasonable level. Sometimes, it may work.

Plan is way over 1M overfunded. Adding his spouse with reasonable compensation (to be discussed with the CPA and the plan actuary) may solve this problem in the long run. Also need to discuss with the CPA and plan actuary if the spouse's past years of service can be included even if no compensation. If assets continue to grow, not much can be done to eliminate the overfunding. If they want any deduction for 2019, have them set up a 401k/PS plan for 2019 so that they can get some deduction. No more contributions into the DB plan. Sell the plan's assets??

Hello Have been filing 5500EZ for a few years as assets exceed 250k. Q1: Portion of the assets are rollover. If takes out of the rollover and rolls over into an IRA, assets will drop to 100k. Can they stop the filing? Q2: If allowed in-service distribution and rolls out all the assets into an IRA, can they stop filing? Thank you and happy holidays

Thank you, appreciate it.

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