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Looking for guidance to convert 412e3 plan into Cash balance plan. Am a single owner S-corp 44 years with 2 years into 412(e)3 plan with Whole life and Annuities. Life insurance was not required personally and seems foolish now to got sold into policy by the CPA. (should have been a red flag that CPA is the sales agent). I was not even mentioned about the CB plan option that looks more attractive with conservative investment strategies and flexibility compared to 412e3. Can the 412e3 converted into Cash balance plan instead of Termination? Any references for good companies with this kind of experience will be appreciated. Goal is to fund the pension plan in 10-12 years instead of stretching for 20 years.

We have a small k/cb plan that was once administered by a small local TPA/actuary that was bought by a very large TPA/RK. The new TPA did fine the first year (2017) however we started having problems in 2018 when they kept failing to respond to inquiries or making promises to deliver requests but not getting the work done. The client, a sole owner firm with just a couple EEs, had the k/cb plan in place since 2015 and most of the CB contributions go to him (well over 90%). The client found out in early 2018 that his key EE (NOT "key" by ERISA definition, but key to business revenues) was planning to set up shop across town since he had no non-compete, and by Sept he was off the payroll but much of his revenue contributions had long since dried up, so the business saw a profitability shift downwards between by well over 60% through 2018, this after many years of consecutive growth. We were trying to get a plan amendment in place for 2018 but the TPA kept dragging feet. Shortly thereafter we were notified the TPA did not file the 2017 5500 in time, no excuse offered. They offered to pay the DFVCP amount and kept promising to complete work in the next couples of weeks. This went on for several months until we terminated the old TPA and hired a new one. After having the new TPA/actuary working on incompleted valuations going back to 2017, we finally got the contribution requirements which would have been fine when the company was more profitable but it cannot afford it now. Despite our efforts to get the old TPA's act in gear, they never got us those amendments because they never completed the previous work to make the necessary calculations. Now the client has a funding requirement he can't afford and is facing a 10% excise tax of whatever he can't contribute. We have frozen the plan in 2019, but is there any recourse, or any action that can be taken in lieu of the fact that the previous TPA failed to complete work in time preventing us from amending the plan to get his 2018 funding requirement down based on the fundamental change in his business by the loss of the only non-owner key EE? I know it's a stretch, but I'm just wondering if anyone has any specific experience like this and found some option that worked without creating more headache for the business owner? Thanks

Hello, I am a 1099 independent contractor who has incorporated with an S-corp (one person/employee, which is myself). I've set up a solo-401k in order to make salary deferrals and employer profit-sharing (up to 25% of employee gross pay) to maximize the 55,000 contribution limit. This solo-401k is currently with Fidelity. Recently I have learned about the cash balance plan. I thought I could just open an account at a place like Schwab, which offers a Personal Defined Benefit Plan, and be able to contribute some amount each year. I am aware this amount is based on age (currently 32 y/o). Upon some other discussions online, it sounds like the total contributions (401k salary deferral, 401k employer contribution, cash balance plan) may not exceed 31% of payroll. If my annual 1099 income is somewhere in the range of 300-400k, would it make sense to consider adding a cash balance plan? I haven't been able to find clear-cut answers to this. For example, from this calculator (https://www.dedicated-db.com/defined-benefit-plan-calculator/) with a 350k income, I can only do 401k salary deferral of 18,500, 401k employer 6% contribution of 16,500 (not profit-sharing), and the defined benefit contribution of 33,400, which is only 68,400 so not really worth it. My goal is to save up at least 120k annually in these accounts. With Schwab, it would cost $1500 annually for their plan. Someone suggested I find a full service provider to manage both my 401k and cash balance plan to ensure everything is in order. Would these companies run numbers for me and let me know if it's worth it or how much I would realistically be able to contribute? Thank you.