Dougsbpc Posted December 28, 2018 Posted December 28, 2018 It appears only current year compensation can be used in determining the contribution credit each year. If that is the case, are we forbidden from general testing based on average compensation with a cash balance plan? Thanks.
John Feldt ERPA CPC QPA Posted December 28, 2018 Posted December 28, 2018 No. And, You should be able to use a formula that is not based on current compensation, if your document will allow.
C. B. Zeller Posted December 28, 2018 Posted December 28, 2018 7 hours ago, Dougsbpc said: It appears only current year compensation can be used in determining the contribution credit each year. The pay credit does not have to be based on current compensation, it can also be a flat dollar amount! Really it could be almost anything else you can think of as long as it satisfies the rate of accrual rules of 411(b). Your document software might not support formulas other than percentage of pay or flat dollar amount, but that is a separate issue. Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
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