Basically

I know adopting a SH plan for 2023 is out. What about just a PS plan and then converting it to a SH plan for 2024? That should be perfectly fine, right? Date of adoption would be say today, 2/2/24 Effective date I could say 1/1/2023?

That was my understanding (not that it couldn't be done through payroll) This is all perfect, thank you all

This client is thinking they want to max out 2023 right now if that's allowed and then towards the end of the year they might be able to max out for 2024. Comes down to not exceeding the 415 limit. They don't want to miss the 2023 opportunity. Follow me? (or her financial advisor's thinking?) I guess my question ultimately is, can VAT contributions be paid after the year end like a PS contribution?

Very interesting... I will need to wrap my brain around this.

A single member plan owner asked if they can make a Voluntary contribution to the plan now (in 2024) for 2023. AND, can it then be converted into ROTH money. Follow up question is, I know the client can not contribute in excess of the 415 limit. They would be limited to the 415 limit or whatever their compensation is... whichever is less, right? hmmm, if the voluntary contribution is after tax going in, when converted do we withhold taxes on the conversion? I have to look around and see what I can find.

Can't be greater than 6%... Answered my own question. NVM

I have a plan, the sponsor wants to have a SH Match of 100% up to 25% of compensation. Can this be a SH Match formula? And... in the future, will this design satisfy Top Heavy ? (of course those employees who are eligible but don't defer will need to get the 3% TH Min).

Really? I'll have to read the doc. I guess I assumed there was an IRS limit. After I posted I though... "give them the 3% and then sweeten the pot with a PS NEC if they want. That way they are not locked in". Appreciate the response. Always good to know in any event.

What is the maximum SH NEC % that can be written into a SH plan? 6%

EXCELLENT! Thanks I looked and looked and obviously skimmed over that . Appreciate it.

Yes... I thought it through. I guess I always assume a Schedule C filer is the only employee. On the Schedule C there is a spot for pension deduction in Part II Expenses but that is for the pension contribution for the employees (if there are any), not the owner. Line 31 of the Schedule C is the number to use for the calculation. Looking at the forms... where does the owner deduct his/her pension contribution?

I just need some clarification. I know how to do the calculation. The profit figure to use is line 7 of the Schedule C? Line 7 profit multiply by 1402(a)(12) deduction (.9235) calculate and deduct FICA calculate and deduct MED Back into plan contribution Add it all up and the result is Line 7 Right? I want to explain it succinctly to the financial advisor.

Yes, totally agree.

So it's a plan design decision. It's allowed, just has to be written in the document. I will check the document. As a default I'm sure that is how I have it. Thanks

I think this might be a no brainer. But then there are so many nit-picky rules. A potential new client is asking questions. Within the email I received there is a bullet item "Rollover funds entirely". I asked for clarity, wanted to know what the intention was. I know they can't just dig into their plan balance and roll out employer contributions whenever they want. That said, if they rolled money into the plan into a designated rollover account from an IRA or a balance they had as a participant in another qualified plan, can they take a distribution from those plan accounts at any time? Thanks

Got a call from a CPA who asked if there is a rule that eliminates the IQPA audit rule for a plan that has more than 100 participants. He said this plan is a SH plan. I told him I didn't think there is any relief. Am I mistaken? Anything?

Is this obvious? RIA sends clients to his insurance business and visa versa? Or is that fine. It's all about providing a "service"... Like a doctors office and a medical billing company. One can't exist without the other. Thanks Zeller, I guess I didn't go as deep as page 45. I'll take a look

Based on the response from the client, there is no control group issue. ASG.... there could be but I need to better understand how to determine if one exists. My head is ready to explode reading about and just scratching the surface of FSO, A-org, B-org and what it all means. Is there a grid or something somewhere that I can use to input all the players to help determine my answer?

Bob owns his own RIA 100% pushing investments. He also owns a 50% stake in an insurance business. No control group. The insurance business has 4 EEs. If they setup a 3% SH 401(k) plan I don't have to worry about Bob exceeding the 415 limit if he maxes out the RIA business. Correct Of course I need to watch the 402(g) limit.

How did you avoid the rules? Amend the eligibility requirements, hours of service?

So can I conclude that what the LTPT rules found in the Secure Act 2.0 are saying is this : If you work between 500~ 999 hours for 2 years then you become eligible to make a salary deferral contribution And... If a LTPT employee does make a deferral we don't need to include them in the ADP test And... they are not eligible for the SH contribution or a profit sharing NEC What it is doing is giving them (LTPT ee's) the ability to put some money away for themself if they want when normally they wouldn't be able to due to plan eligibility requirements? With no real effect on testing? AND, should the LTPT'ee become eligible eventually (because they meet the plan's eligibility requirements due to working more than 1,000 hours) they would enter the plan as normal?

I hear you. I have been telling people they need 2 forms. Figured if I was wrong and could have gotten away with only 1 then all I did was extra work. Appreciate the "free advice"

Sometimes when you overthink something it makes you crazy and unsure of the obvious. I have a participant who has terminated. She had Roth and pre-tax money in her account. Can only one 1099-R be prepared or do I need to prepare one for each money type? Am I reading the 1099-R instructions correctly, do I put the total being distributed in box 1 and in box 5 that is where I indicate her ROTH and/or after tax voluntary contribution distribution? Example... Suzie terminated and took all her money. Her $10,000 Roth account rolled into a rollover Roth IRA. Her $20,000 employer money into a rollover IRA Box 1, total of all distributions - $30,000 Box 2, taxable money - $20,000 Box 5, Roth and after-tax voluntary contributions - $10,000 Box 7, Distribution code(s) - code G and code H Her 1st Roth salary deferral was more than 5 years ago (2012) Or do I need to prepare 2 form 1099-Rs.

So many rules! So is what you are saying is that the in-plan Roth conversion, when it is rolled out of the plan eventually, must be rolled into a "rollover" Roth IRA? AND, if there is an existing rollover Roth IRA established (with it's own 5 year clock) and the in-plan Roth conversion is rolled into it then there is no new 5 year clock that needs to be started for the rollover portion? That is a good work around, that is thinking outside the box if that is what you are saying. Has anyone done this?

Does it matter if after the conversion the plan participant makes regular Roth deferrals into that conversion account? Would it actually be best to put new future Roth deferrals into the conversion account because that Roth account has started it's 5 year rule clock?