Nate S

I don't see an A-org relationship, but you would have to look at the revenue thresholds for a B-org affiliation; and make sure you look at it from both directions: with the Dialysis Center as the FSO; and then compare with the Physician practice as the FSO. Also, ask the physician to explain where dialysis services have historically been performed, I always view that as a hospital, or specialty setting, due to the previous expense of the machines themselves.

If they were mailed, you might check expense records to see if there was a postage purchase from that time. Also review the Resolutions for your Plan Document and any Amendments, and any contribution or filing authorizations; many contain language that reference the distribution of the SPD, SMM, or other notices as part of the execution of the same.

The Cycle 3 restatement does not include CARES and SECURE unless your provider has bundled them into "Good-faith" add-ons. If the Plan will be "Final" by 7/31/2022, then Cycle 3 is not required, but CARES & SECURE must be adopted within 6(???) months of the Final date and not later than 12/31/2022.

If it's not on the 5500, what annual report are you referencing? Also you're switching between auditor and TPA references so I'm not sure who is the source of the bad information and who is questioning it. If the participant share values won't change because of this phantom $22k, or the unreconciled forfeiture, what then is the net change to the plan assets? Contributions are an employer deductibility issue, start with the applicable period's income tax return, and make sure that, the 5500, and the cash flows to the Plan are all in agreement. Any proposed amendments to filings encompassed by the audit will need to be approved by the auditor under the CAP.

Nope, as long as the integrated allocation is the one elected in the document, you don't need to test beyond coverage; the design-based safe harbor is very tenacious. 1.401(a)(4)-2(b)(4)(iii) allows for the use of conditions on the allocations. @C. B. Zeller, (vi)(D)(3) allows for different conditions if one of them is a top-heavy formula, which the safe harbor is in this instance.

@Gilmore ADP/ACP have different inclusion/exclusion criteria than 410(b), OP was originally considering coverage testing only. But yes, according to the definition of compensation, you could have to test the deferrals and compensation in '21.

Yep, keep them out of the test entirely. Last day of service is definitive in my mind. [Soapbox]However, IMO, the whole question of post-severance compensation has been twisted from it original purpose, which was to define which items paid after severance could be considered compensation; BUT they were to be considered in the year of separation if they meet the timing requirements!! It's only due to modern payroll systems and cash-basis record keeping that has led to this bleed-over into the next plan year, and possible improper exclusion from a benefit you normally qualify for. Otherwise, on your last day, you walked with a check for all those items because the employer doesn't want you to return for security/liability reasons. In Belgarath's OP, he's intimating that if there were allocation conditions, then the ppt would not have received an allocation on that comp just because it was paid at a time when the participant could not have had qualifying service. This then takes the benefit decision out of the terms of the document and makes it a discretionary decision of the employer's. Or, you have a flat-out operational failure if one terminee benefitted on that comp because he was terminated on say 11/30, and was fully paid by 12/15; but another employee termed on 12/30, was fully paid by 1/15, but didn't benefit on that 1/15 payout because of an hours condition.

Yeah, umm, ok; I was hoping we'd get one of the attorney's to weigh in here by now... I'm stuck in a kinda chicken vs egg debate over this one, because if you have an ASG, he's an HCE of the ASG as they are all one employer then, but if he's not an HCE... Is it a problem either way? Can you easily prove disaggregation and rely upon separate testing, as if they are an ASG? Or does one entity have a testing problem and you need then to be combined to get it to pass?

If the son last worked for the father's company, during a year when the father was at least 10% owner, then the son would be a highly compensated former employee under 414(q), and yes you have an ASG.

The distinction is in the definition as "performs services for the employer". Accrued vacation, paid leave, or any similar category of passively counted "hours" are NOT performance of service; they are in fact exactly the opposite.

No, in Belgarath's fact pattern there's no allocation conditions, so there's no trigger for the term w/ <500 hours exclusion criteria. And if they're benefitting, there's no mathematical reason to want to exclude them.

As long as they're unrelated entities, (and I think his ownership can't be more than 50% after the first entity); then yes the full 415 limit applies to each employer plan separately. Ditto, only it was contractor supply business's.

Per the plan doc, the full plan year compensation; presuming we are not considering pre-entry compensation exclusions, but for those affected by such you would want to double-check that you are correctly granting entry dates if they had otherwise satisfied eligibility by the 1/1 effective date.

In the guise of a husband - wife arrangement, no. But from a practical standpoint its almost impossible for husband - wife sole-proprietorships to be unaffiliated.

At that age, 412(e)(3); he's a maximum rate tax payee so the deduction value is worth far more than the opportunity cost of the annuity return(might as well be 0% to help drive up the contribution) vs the open market. No DB is going to even approach the deductibility.

Out of the test entirely: 1.410(b)-2(a) says that a plan satisfies section 410(b) for a plan year... "...with respect to employees for the plan year..." 1.410(b)-9 defines employee as, "an individual who performs services for the employer..." The last service day was in 2020, therefore not an employee in 2021 and not to be tested.

You can define the pay credit as being higher than the current year limit, just be careful that you are not trying to fund that "excess" portion. Also, be aware that any freeze won't eliminate any unlimited benefit that a 415 limit increase can unlock, and you can create the need for employee allocations as a result.

The actual valuations would need to be reviewed, but it sounds like you have an overfunded Plan, nothing more.(But no, they do not get returned; although I forget how they figure into the next year's FT and AFTAP). Or is your actuary unable to get within 5% of 2020's results so as not to cause a method change with the takeover? Probably best to let them and the prior actuary squabble over it.

Yes, it gets very messy. A little background, effective 1991 a state university established a private corporation to manage its physical maintenance and food-service operations since the state mandated vendors didn't service the locale except at a significant surcharge. In the mid-90's the DoL posited that these arrangements were governmental, I think it was the California state universities that led that charge. However, this employer did nothing and continued to operate it's two pensions as subject to full ERISA compliance; except that the actuary then refused to sign the new Sch SB. The PBGC took them at their word and agreed they shouldn't be covered; but the DoL & IRS demanded the complete 5500 filings be continued. We applied to the EBSA for an ERISA Advisory Opinion Letter about the Plans status change, and they then dropped their demands for additional filings. Since it doesn't sound like the plan is merging, transferring, or terminating, just a change in sponsor; I would recommend applying for an Advisory letter, and then asking EFAST how to prepare the 5500 filing for the final year. I wouldn't trifle with a rejected filing, especially with the new penalty amounts.

Was it treated as deductible for 1/31/2021? Then it may have to be reallocated as an additional amount; and if so, the source may be discretionary between match & profit sharing. If not previously deductible, then it should all be used towards the plan year 1/31/22 allocations. Only forfeitures and specified suspense transfers may carry forward to future allocation periods. Luckily its a pooled account, any applicable earnings are included for the 1/31/22 balances, and the match vs profit sharing source allocations are just bookkeeping.

Also agree, and for your record keeper's edification, for the reason that these individuals are not employees for 2021. 1.410(b)-2(a) says that a plan satisfies section 410(b) for a plan year... "...with respect to employees for the plan year..." 1.410(b)-9 defines employee as, "an individual who performs services for the employer..." As these 450 individuals did not get called to a job site, they did not perform services for the employer, and therefore are not employees for 2021. Also, job site work sounds like union terminology, are these individuals covered by a collective bargaining agreement?

Not that formula, but definitely more than just what I stated, as I noted, "rough math"; and it'll be above $350k. Regardless, it looks like the actuary is recommending that you limit it for some other reason; but I agree that he's stated the actual deductible amount incorrectly.

This 100%. Attribution of B is through A, at the same proportion since parent-child; A is a corporation, therefore PBGC says spousal attribution is triggered and presto, both are "substantial" owners. Or is anyone trying to argue **insert Miley or Metallica, as preferred, to perform "Nothing Else Matters"**

Once, a family management company was restarted in order to bump-up the benefits for adult children who were last paid during their college years, but the DB was massively overfunded and could support full 415 limit payments. They borrowed enough to pay the three kids three years full salaries but due to death of the actuary, got into a late filer and late restatement situation and went through VCP. Since one was disabled, the other a medical supply company owner, and the third a philanthropist, they were asked to describe the work they did for those three years; but there was not a question as to the amount of service, just that it was for a business related purpose. Also, consider the opposite perspective, think about a self-employed who works 3000 hours, but who has zero considered income. The IRS doesn't care about their service, they don't have any considered compensation.

Definitely push the actuary for more of an explanation, rough math puts the maximum above $350k (1.5 * 900k - 1mm); unless he wants to limit the overfunding by the 415 amount for someone very close to retirement age.