Jakyasar

Hi Joe owns 100% of corporation and 100% sole-prop - separate lines of bizs with separate income sources. Corporation has employees and sole-prop does not. Both entities adopted the plan Joe's 2023 DB contribution is 200k split 50/50 between the 2 entities (his w2 from corporation was 165k and had 500k net c from sole-prop so 50/50 of the 401a17 limit). Joe asked if he could pay the full 200k from the corporation which was not the original agreement. Joe also asked if he could transfer 100k from sole-prop to the corporation and have the corporation put in the 200k but still deduct separately from each entity. Any thoughts/comments?

CuseFan, how many times the clients told us that "oh by the way I have a SEP that I funded" after adopting the DB plan?

Hi Another new one for me (usually had multiple schedule c's with 100% ownership) Joe owns ABC LLP 50/50 with his son - no other employees. K-1 income was $250,000 for each partner. Joe owns 3 other partnerships, 50% each and other 50% is unrelated. 2 partnerships had $50,000 k-1 losses each for Joe and 1 partnership has $25,000 of k-1 income for Joe. If want to set up a DB plan for ABC LLP, what is the K-1 I can use? Thank you for your comments.

The fact that they were CG back in 2015-2017 has no effect on what you are saying i.e. as only ABC is still in existence, you can only use ABC?

I wanted to follow up on this and see if anyone has come across something similar.

Hi Facts: Company ABC owned over 80% (but not 100%) by Joe and sponsors DB plan (started 2021) Company XYZ was owned by Joe 60% but sold in 2020 (i.e. not in existence when the plan has started) In each case, the remaining ownerships were unrelated. Joe has 125k average salary since 2021 paid from Company ABC that is used for DB plan purposes. Going back to years 2015/2016/2017 (*prior to plan inception), Joe had 150k salary each from Company ABC and Company XYZ i.e. 300k in total/per year. To determine Joe's 415 lump sum for 2024, what is Joe's salary? Assuming that you can use the 300k average (obviously limiting to 401(a)(17)), can you point to a code section to back this up or a starting point? Thank you

Hi all All comments are appreciated and will pass along to my friend.

Bri, not understanding what you are saying. My question is simply, can the definition of compensation be changed now without any 411d6 issue, gateway otherwise, given the allocation requirement.

PS is everyone in their own group and yes amending will change as high payroll, high gateway 414(s) is not tested yet but from what I preliminarily calculated, right on the edge with the informal IRS mentioned 3% cushion

Hi Asking for a friend. Existing 401k plan with SH and PS. PS allocation requirement is: Either employed on the last day or accrue 500 hours of service. Plan sponsor wants to exclude bonuses for 2024 for all purposes. Can it be done now or has to be tested for participant who fall on either allocation requirement? Thanks

Thank you

This is not a plan amendment, simply a terminated participant.

Hi A terminated DB plan participant has 6K coming to him. Current plan states 5k for immediate pay out. Under the law, one can increase the limit to 7K without an amendment so if this is true, can pay the participant without the spousal consent. This would be done after the participant terminated. What am I missing here? Something smells.

CuseFan They created both as they have transferred the assets without the trustee's knowledge as well as against the election forms signed by the participant. As for the 1099 issue, I believe there was a contract between the plan sponsor and the advisor, not fully informed but does not excuse what the advisor did, especially not contacting the plan sponsor/trustee and me. David Everything will documented with the plan sponsor/trustee. Thank you all for your input. Never a dull moment.

Actually the advisor in hot waters with this as I am also alerting his client the plan sponsor how the advisor screwed it up without consulting with me, all because he did not want to deal with 1099s. I am not taking any heat for this as I have providing all timely and in great detail. I am sure this is shocking to all. I am also leaning towards having the elections forms redone as long as the client agrees to pay for additional work.

I do not disagree with you but the issue is the election form would have been completed after all transactions took place. what if the participant refuses to redo? You cannot force them. May be I am overthinking this but not sure how the PBGC would react upon an audit.

Here is a new one. I have done many many PBGC terminations but never such a mess and screw up. PBGC termination with 20 participants. 10 chose rollover into the existing 401k plan and 10 wanted lump sum. Advisor was provided all necessary information to proceed with the distributions and the deadlines. Despite my constant reminders and follow ups: Not only the advisor did not do the distributions timely, the advisor, in order to avoid any 1099 responsibility, sent all the monies to the 401k plan without even discussing with me. Once the monies were transferred to the 401k plan and allocated to the participants accounts as rollover, in return, they were allowed to withdraw as lump sum from the 401k plan. Some of the participants who elected lump sum, decided to leave the monies in the 401k plan. How can this be corrected? Thanks

Hi Always aware of the options and always let the clients know. Thank you for your comments.

Oh yeah, will make sure none of that, thank you for your input

Hi I am 79% owner of a c-corp, other 21% owned by my siblings I am also a 100% owner of an LLC I am not a CG, correct? It is not relevant how the LLC is taxed. No ASG issues. Thanks

Hi Bill Good to hear from you. Thank you for your input. Agree that dad's partnership ownership never exceeds 50%.

Being paranoid here late at night. Joe owns ABC corp 100% One of the ABC employees is Joe's adult son, Harry in addition to many other employees. Joe and Harry started a partnership (LLC) in 2023 50/50 - no employees. LLC has nothing to do with ABC corp, no business transactions, no income exchange, no nothing. Do they have controlled group issues as they want to set up a DB plan for the LLC?

I would then say, they are overwriting the trustee duties which I am assuming here. In this case, I agree with all, take the money and run somewhere else in order avoid any taxation and many other issues that may arise since this is a DB plan subject to QJSA

Curious, is there no trustee, I mean how can they move the assets without anyone signing off to it? Am I missing something here?

Thank you all