Avg Comp from previous years

[ombskid]

Client has a new corp from which he willtake a small salary. Can a db plan use a high 3 average comp from his previous sch c income to fund for a benefit that is higher than 100% of the current year w-2 income? No previous db plan.

[SoCalActuary]

Is it reasonable to say that his sole-proprietor practice is in the same controlled group as the new business, or that it was a predecessor employer?

This was a rhetorical question, in case you missed it.

You should be able to use that prior information, provided it was not a company over which he had no control.

[flosfur]

Client has a new corp from which he willtake a small salary. Can a db plan use a high 3 average comp from his previous sch c income to fund for a benefit that is higher than 100% of the current year w-2 income? No previous db plan.

Yes.

The IRS was going to take that away for S415 in the pre-final proposed S415 regs but the PPA negated their position by defining the average comp to be the average of comp from the employer - S415(b)(3) as amended by PPA.

Going from sole prop to corp or from corp to sole prop is a continuation of the same employer.