metsfan026

It was a 2020 required contribution, so it had to be funded by September 15

They missed the 09/15/21 deadline for their required contribution. Going to be making it this week, plus any interest owed to make the participants whole.

Have a client that missed making their Safe Harbor Contribution. Going to make the payment now, plus lost interest. The question is what interest rate should be used? Where the money is invested calculates the actual rate of return, and from the due date to today most of the participants have actually lost money (even though the Plan lost during this time, I don't believe we can't avoid making interest). Therefore is it best to use the VFCP calculator to calculate interest? Thanks!

Good afternoon! I know people can have Life Insurance in a Defined Contribution Plan. Is it possible to have it in a Cash Balance Plan as well? I just wanted to confirm. Thanks in advance!

I have a client who is an S-Corp. They get a W2, but also took what the call $70k in "distributions" as bonuses that are not included in their W2 for the year. The question is, do those "distributions" count towards compensation during the year or is it excluded since it is not part of the W2?

I think they are trying to hang their hats on compensation being "W2 compensation". I agree, but I'm just trying to make sure!

We have a new potential client that may pay most of it's employees through 1099. I assume if the bulk (let's say 75% are paid that way), we're going to create discrimination issues? They were pushing back against me saying someone else told them it wasn't an issue, so I just wanted to confirm

I have a quick question and just want to make sure I'm not overlooking anything: Company 1 Person 1 - 100% ownership Person 2 - 0% ownership (though they work for the company) Company 2 Person 1 - 75% ownership Person 2 - 25% ownership The two people are not related. Since Person 1 owns less than 80% of company 2, there isn't a Controlled Group issue (even though Person 2 works for both, they only have ownership in one). Thanks in advance!

Thanks Bill. I've seen that, but I wasn't sure if a straight Profit Sharing Plan fell under one of those or if the assumption is that it falls under the "but not limited to" group

Is anyone familiar with the mandated retirement plan being instituted in New York? The question is if a company has an existing Profit Sharing Plan, but doesn't allow for 401(k) contributions, are they exempt from participating in the mandated plan?

Sorry, it's a 401(k) Plan

Is spousal consent required to process an RMD? I have one being held up by the custodian, due to needing spousal consent. Thanks in advance, and if you could let me know where in the regs I can pull the info I'd appreciate it!

What's the best way to word the definition of the pay credit in a Cash Balance Plan, if you want to allow it to rise each year? I'm not an actuary, but I've seen charts that show limitations for Cash Balance contributions based on their age (like a 40-year old may only be able to contribution $100,000). I know it's not the 415 limitation, so just trying to figure out the best way. I apologize for all of the questions, I'm just trying to learn more about these plans so I can be more helpful to the people in my office. Thanks in advance!

Isn't the maximum 1.5 * (Funding Target + Normal Cost - Assets) ?

Your right, and I probably should've worded the question better (I was rushing out to a meeting and I'm not an actuary). In this case, however, since the assets are in excess by enough they could only deduct up to the $25k correct? Otherwise they'd need to raise benefits, if they could, in order to allow for more contributions to be made. Just for further reference, the Funding target is roughly $900k and the assets are around a million

Sorry for all of the questions lately! Here's the rough situation: Total Normal Cost (which is the minimum contribution) - $120,000 Maximum Deductible Contribution - $25,000 (due to positive asset performance) So, does this mean that they can't deduct the entire contribution or can they still take just the required minimum contribution and nothing more? Thanks in advance!

Can someone please direct me to the regulations that state what the maximum pay credit per year can be in a Cash Balance/Profit Sharing combo Plan? Taking over another case where they added the owners spouse onto the Plan, and the 401(k) + Profit Sharing + Cash Balance credit exceeds the salary they are giving her. Just wanted to make sure what they were doing was alright (they are the only two participants, so there aren't as many testing issues).

I think that's what the prior people had been doing, but I haven't reviewed it yet. Generally 7.5% is the "safe harbor" number, isn't it?

Perfect! Yea, everyone is going to get about 6% into the Profit Sharing. I just wanted to make sure their Profit Sharing also gets included in the Rate Group testing (EBAR) since they weren't included in the Cash Balance

Have a new client where they have both a Cash Balance and Profit Sharing Plan: Profit Sharing is immediate entry Cash Balance is 21 & 1 (1/1 & 7/1 entry dates) So we have people eligible for the Profit Sharing and not the Cash Balance. When we do the testing for both plans (like the Rate Groups), do we include the people who are in just the Profit Sharing Plan? I just wanted to confirm, because those profit sharing contributions significantly help the testing. Thanks in advance!

Quick Question: Company A - Husband owns Company B - Wife owns, currently all work done for Company A The plan is for Company B to start expanding and doing legal services for additional clients. What is the fallout for setting up separate plans for Company A and Company B? Can they do it, or do we have an affiliated service group issue?

This is a multiple employer plan. So it would be for that one employer to use to offset contributions?

Thanks everyone! I just wanted to confirm, the investment earnings can be used as a forfeiture (more or less) and can be used to pay Fund expenses? Just wanted to make sure before I reported to the Trustees.

I'm going to scratch this, as our document doesn't appear to allow entry into the Cash Balance Plan until 1 year of service. Therefore, the only thing that will be included for 2021 is the Profit Sharing and the person will enter the Cash Balance the following year. They'll be included in the testing, but not receive a Cash Balance.

Perfect, thank you! So if we elect to exclude pre-entry compensation, therefore any testing (including the EBAR calculation) will be based on that salary? I just wanted to be clear, since this plan is allowing entry first of the month following the completion of six months (so we have someone entering the plan on 11/1/21)