High-3 415 Limit

[JAY21]

Client has over funded plan (believe it or not) based on his high-3 compensation avg from the sponsoring entity (he's at his high-3 415 limit but far below the 415 dollar limit). He recently mentioned he has another entity he also owns 100% of (no employees now or previously) that he used to draw compensation from (apparently at higher level than the sponsoring entity of the DB plan) that is still an active corporation though little activity is going on there now.

Anyone see any problems with me amending the overfunded DB plan to count compensation from both entities for both the plan's def'n of compensation for benefit accruals and for IRC 415 purposes. In fact I believe th def'n of 415 comp is based upon a controlled group basis, and this certainly is, as he owns 100% of both entities.

This doesn't seem particularly aggressive to me but the stakes are high so I just want to make sure I'm not over looking anything.

Do you think it would be helpful to have the other entity sign a co-adoption agreement to co-sponsor the plan ?

[David MacLennan]

415 comp includes comp from a related employer, therefore I don't think the other business needs to co-sponsor the plan. Check your plan document 415 provisions, and your final 415 reg amendment, to see if it correctly reflects this.