Jakyasar

Hi If the employer is refusing to make the 3% non-elective safe harbor, what is the penalty or other issues? Tx

5500EZ instructions state that for a family biz filing as an S-corp, a plan covering only family members, can file an EZ. Owner, spouse and their children.

Did some reading and looks like related organizations under 414b, limits of code section 404 would be aggregated on a combined basis. Apparently, if affiliated service group, they need to be treated as unrelated employers. How you allocate (for all adopting the plan) is a different story as still undefined. Still would love to hear any comments.

Hi Non PBGC covered combo plans Sponsored by a corporation with the employees and a sole-prop. Joe owns both entities. Needs to use 31% rule. Under the corporation satisfied the 31% rule. Under the sole-prop only deducting CB for Joe only. No DC deduction. If you combine them for total deduction, fails 31% rule. However, ss they are separately deducting the contributions, I think it is ok to test deductions separately. Am I wrong?

Hi Currently have a SIMPLE IRA. Wants to add a DB plan for 2024. I thought cannot do it, what am I missing?

If it is an S-corp, yes. If DB/CB plan, PBGC may come into play, depending on the biz.

Bri interesting point. Again, I have no idea as to why it was put it. It is not going to affect the PS allocation for 2023 and 2024 so we are good on that.

Thank you both for your comments

Believe me, I would never test this way nor add ERA to the DB plan. My problem is that this is a 2023 design so was curious on how the ERA in the DC would affect it. Looks like, if not included in the DB, no issue, all can be tested under NRA. I will advise the DC TPA to remove the ERA under the DC which has absolutely no benefit whatsoever, at least, not for this group of employees. However, removing ERA, would it not violate BRF issues? Just curious. Thanks for your input.

Hi This is a first for me. Looking into a proposal for DC/CB combo. DC plan already exists and has early retirement age (ERA) provisions NRA is 65/5 and date on which participant attains NRA ERA is age 59.5 and at least 6 years of service for vesting purposes (1000 hours) and on anniversary date with/next following satisfaction of ERA I am confused the way written as at least I would this the retirement date would need to be the same (again, no idea and/or experience) The above aside, for CB plan design, other than NRA being 65/5, do I need to include ERA in the CB plan and cross test as well or just 65/5 is sufficient? How is the testing done? Any comments/suggestions? Thanks

How is it going to be valued as of valuation date as it needs to be done so by an independent appraiser? 100% value has to be covered by a fidelity bond which is very expensive. This is an unqualified plan asset. What is going to happen when the plan is closed as the participant cannot own it? What are you going to do, roll over part of the horse into an IRA? How about the earnings from any kind races, stud fees, if at all, going to be allocated to the plan? Just a few thoughts on dealing with intangible assets. this is even tougher as it is partial. Do get an attorney for this, so many booboos can happen.

it is EZ even if one of the spouses did not have any ownership

Isn't the age 21 issue gone under SECURE effective 2024?

Any other comments?

Thank you for your s/h which is exactly what I have. You and me both not fans of insurance in pension plans.

Hi Did not have to deal with one these in years. A few situations cannot determine if calculations right/wrong for incidental maximums. Insurance is whole life so would apply 66.66% for 74-307 Plan NRA is 62 Participant was age 35 on 1/1/2021 - effective date of the plan. Total 27 YOP to NRA Participant got insurance effective 1/1/2023 at age 37. Total 25 YOP to NRA Participant average compensation is 20k/month - 415 lump sum at NRA 3M (made up) Benefit formula is 75% of average compensation i.e. projected benefit at NRA is 15k/month - PVAB at NRA based on plan AE assumption 2M (made up) 1. To determine 100X, one should use formula benefit at 15k/month so face amount maximum is 1.5M, correct? 2. To determine ILP theoretical contribution under 74-304, law requires participation years. The LRM language (where document reflects the same) is "using the individual level premium funding method from the age at which participation commenced to NRA". 3. Based on literal reading of the law, for 74-307, I need to calculate starting from age 35 i.e. 27 YOP, correct? 4. For 74-307, the lump sum I have to use is the 2M figure (not the 415 figure), correct? Thank you

Hi I have not had one of these in years and just tried to research. I am not sure if the software is doing proration correctly (may it does - I am not sure) CB plan and the company (sole-prop), both start 5/1/2024 with 12/31/2024 year end. Owner is 60 years old. Has 450k of net c income for 2024 (after 1/2 SE adjustment) What do you pro-rate? 401a17 limit 345,000*8/12=230,000/12= 19,166.67/month 415(b) limit 275,000*8/12=183,333/12= 15,277.78/month - maximum 2024 accrual is 1/10= 1,527.78 so any cash balance pay credit equivalent cannot exceed this?? What am I missing? Thanks

It is a dissolution of biz partnership, nothing to do with marriage (they are not married) They are going their own separate ways - 2 separate entities.

No takers?

Hi I hope I am going to be able to explain this properly. Looking at a takeover combo plan which was done in software A and I am checking it on software B CB plan uses full year salary where DC plan uses salary from DOP. I have not had one of these in sometime so am conflicted with the different results. Only DC provides top heavy. The way the prior TPA did the calculations with software A, they calculated the DC EBARs gateway using salaries from DOP and they added those results to CB EBARs. Overall testing was done using full year salary. The way my software B does the EBARs, looks at both plans, picks the higher salary and applies gateway to the higher salary. Are both methods acceptable? Thanks

Any takers???

Hi Did not have to deal with one of these in many years so a bit rusty on the process. Everything is on a calendar basis. Joe and Mary are 50/50 partners of a law firm - no other employees. They both get K-1s. Let's call this LawLLP. All they have is a SEP. July 1, 2024 they will go their own separate ways. Joe sets up a PLLC (filing as a sole-prop). He will bring in some of the clients from LawLLP. Is this an ASG issue? Joe wants to set up a DB plan for 2024. Can he: Use prior service and income (limited to 5 past years) to start the DB effective 7/1/2024 (ending 12/31/2024 for a short plan year) so that he can have an AB as of 7/1/2024 for pre-funding? Assuming that he can, plan year must start on 7/1/2024 to avoid Mary to be involved in the DB, correct? What needs to be pro-rated, if anything? His net c will be 200k and he wants to put away as much as possible. Of course it will depend on what can be used from prior firm. What else am I not asking or thinking about? Thank you all.

Hi As I never came across one (nor dealt with 412e3 plans for over 10 years), how does one calculate RMD’s? Thanks

Hi Calendar 401k/SH/PS plan with 21/1 and dual entry as eligibility EE DOH 1/1/2023. Apparently deferred during 2023 (no idea when started deferring). Just got an amendment signed in 2024 stating as the employee deferred during 2023, for this particular employee eligibility is waived effective 1/1/2023. Does this sound right? Thank you

Unless there was a gateway requirement, I think 2022 allocation is not going to happen for this terminated participant. Also, if you are doubling the contribution for 2022 and 2023, watch out for the deduction limits.