metsfan026

Perfect, thanks! Didn't think being more generous would be a problem, but then I started overthinking it.

Good afternoon. I think this is a silly question, but I just wanted to make sure I'm not overthinking it. I know the Gateway for a Cash Balance/DC Combo Plan is 7.5%. An employer can give more than that, correct? The owner actually isn't taking a Profit Sharing contribution for himself. He'd like to give the employees a little bit extra (about 10% into the Profit Sharing). I just wanted to make sure that wouldn't cause an issue (I don't think so, since he's being more generous, but maybe I'm overthinking it).

Perfect, so they can get some Profit Sharing but not the full 7.5%. It's only one HCE, so that makes it easy. Thank you!

Got it, thanks! And that doesn't apply to HCE, correct? The gateway is only for the NHCE? And the HCE can get a lesser amount in Profit Sharing? I think I'm confusing myself. Sorry!

Thank you! What about someone who terminated prior to the end of the year? That makes them eligible for the Cash Balance (worked over 1,000 hours) but technically not eligible for the Profit Sharing (not working on the last day of the Plan Year). Would they get only the Cash Balance and not the 7.5% Gateway? Sorry, I just wanted to make sure I wasn't overthinking this.

I'm working on a new client that has a group of participants who are eligible for the 401(k)/Profit Sharing, but are excluded from the Cash Balance Plan. Are these participants required to get the 7.5% to pass the gateway? Or can they be given a lower amount into the Profit Sharing? Basically, I wanted to confirm that the people who get 7.5% are those who are eligible to participate in both the Profit Sharing and Cash Balance Plan? If someone is only eligible for the Profit Sharing, can they just get the minimum gateway to pass the New Comp testing? Their contribution, as well as the Safe Harbor Match, does get included into the 6% max going into the Profit Sharing, correct? (I'm pushing to move this to the 3% Safe Harbor, as it will obviously help), but I wanted to confirm I was correct.

What if one is eligible, but opting out of the PS/CB)? So they are getting $0 from either the DB and DC? If there were no contributions, can the DB be $0? What if there was an HCE who made just an Employee Deferral and received a SH match? Does that still mean the Profit Sharing could be $0? I just want to confirm I have all of my ducks in a row.

If there are no HCE's who are left participating in a DB/DC combo plan (an odd situation, I know, and it may just be a 1 year aberration), how would that impact the Gateway? Is it still the 7.5% or can that be reduced dramatically? The employer is going through some turmoil and change over so just want to make sure what we can/can't do. Thanks in advance

Got it, more of what I thought. Just to confirm, because I know the client is going to ask, the return has to be done for all of the HCE evenly? They can't put the correction just on the 1 employee

Question regarding and ADP Test Failure. We have a failed ADP Test for a client with 4 HCE: 2 HCE are under 50, and not eligible for a Catchup 1 HCE maxed out his contributions ($27k), so therefore we are already ignoring the $6,500 catchup in the ADP Testing 1 HCE, who is over 50, contributed $13,000 for 2022 Can we "re-classify" $6,500 of the HCEs 401(k) to a catchup, thus excluded them from the test? If we test this HCE with $6,500, we will pass the testing so I just wanted to confirm. Thanks in advance!

The gateway is an aggregated 7.5%, correct? So if we are giving 6% in the Profit Sharing plus a SH Match plus a flat dollar amount in the Cash Balance (say $2k per employee). That should suffice the gateway, correct?

I know the gateway for the combo plans is typically 7.5% (which can be split between 3% SH + 4.5% PS). What happens if it's a Safe Harbor Match? What type of Profit Sharing contribution do we have to include, because we're running into the 6% deductible contribution going over 6% to the eligible employees (less for the HCE)

Sorry, I should've been more clear. It was the funding rates for the valuation. Thank you for your help!

Thank you!

The document defines them as: The “Code Section 417(e) interest rate” means the adjusted first, second and third segment rates applied under Code Section 430(h)(2)(C), computed without regard to 24 month averaging under Code Section 430(h)(2)(D) and without regard to the adjustment for the 25-year average segment rates provided in Code Section 430(h)(2)(C)(iv).

Thanks, so are you using 4.75 / 5.18 / 5.92? Or just the 5.00 / 5.45 / 6.23?

Thanks! Which ones are you using:

Good afternoon! We took over a Cash Balance Plan and for '21 it appears they were using these interest rate s (they used the corridors under BBA): However, I see that this table hasn't been updated for Plan Years Beginning in 2022. Does anyone know when these will be updated, or what can be used instead? Thanks in advance!

Good morning! We have a Cash Balance Plan that has the owner and 2 employees being covered. The issue is, for 2022 the owner ultimately didn't take a salary due to business being terrible for the year. Would a contribution still be owed, even though there was no salary drawn? I believe I know the answer, I just want to be sure. Thanks in advance!

Yes, there was a successor Trustee in place. Unfortunately the balance is a little bit too big to just have it pay our fees. There will still be additional funds remaining

Good morning everyone! Have an old client that had terminated the Plan back in 2017 (all participants had been paid out). The problem is that they left a Forfeiture Account open, that remains open today. Obviously we'll need to file Form 5500 for the back years, since there was still money. The question is what should be done with that Forfeiture money? There will be some expenses, due to the required filings, but how should the rest be allocated? Does it need to go to the participants who had previously been paid out? What if those participants can't be found? The owner, who was one of the three participants, has unfortunately passed away. Thanks everyone!

I just wanted to make sure this company was given good advice (not currently our client). They currently have a 401(k) Plan and are looking to add a Cash Balance on top of that. I don't believe there are currently any employer contributions going into the 401(k) Plan. In that situation, do the Plans have to be tested together or can the Plans be separated and tested individually? So when we are collecting EBAR for Rate Group testing, etc., can the 401(k) contributions going into the other plan be ignored? Hopefully this question makes sense. Thanks!

Thanks! If the document is silent, pro rata is an acceptable method I assume?

Question regarding the termination of a Cash Balance Plan. Obviously, like most plans, the assets are down in '22 so now that they are looking to terminate the Plan they are roughly $20k short of the balances earned to date. That said, the only participants are the owner and his wife. Is it necessary for them to make a contribution in order to bring the balance up to the earned balances? Or can they simply distribute the money that's in the plan? Thanks everyone!

It was Hurricane Ian, but she was just visiting at the time. It's not where she lives, so I assume that means she's not covered as a hardship?