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Message Boards Digest

September 2, 2020

Here are the most recently added topics on the BenefitsLink Message Boards:

401(k)athryn created a topic in Church Plans

415 limit in a church plan - special election

"415(c)(7) says that an employer can make a contribution above the 415 limit (100% of pay or $57,000) as long as it does not exceed $10,000 more than said limit. This special election can be made each year, but the total overall amount used under 415(c)(7) cannot exceed $40,000. Questions: 1) This is not written into the church plan document that we use and the document provider indicates that it is simply an employer election. It seems to me as though it should be referenced in the document. Do you all agree that it is simply an administrative election to exceed the document specified 415 election for a given year? 2) Is the $40,000 cap on this limit based upon the participant's entire time working in the religious order, as opposed to just with the church sponsoring the plan? Seems very difficult (impossible) to track if it is a limit applying to all years in the religious order. Thanks!"
0 replies   |    14 views   |    Add Reply

AKconsult created a topic in 401(k) Plans

Related Employer compensation

"Our adoption agreement gives employers the option to exclude compensation from nonsignatory related employers. I am trying to understand the practical implications of that selection. From what I can find, I believe that regardless of whether this selection is chosen, there are some plan purposes for which you must combine all compensation from related employers: 415 testing top heavy minimum contribution calcs determining HCEs and Keys calculating deduction limit minimum gateway allocation rate group testing I believe that for ADP/ACP testing, the plan can choose to only use pay from the participating employer(s), as long as 414(s) testing is passed with that definition of pay, EXCEPT there is a requirement for HCEs that all pay/deferrals must be combined for testing in every plan in which the HCE participates if the companies are related. So it seems that the only practical implication of excluding pay from nonsignatory related employers is that it lets the employer calculate employer contributions on just pay from the participating employers (except for top heavy/gateway). Is that correct? I may be totally off base on this"
1 reply   |    41 views   |    Add Reply

thepensionmaven created a topic in Defined Benefit Plans, Including Cash Balance

K-1 vs W-2 for contribution

"Three companies are owned by husband and wife, two s corps and an LLC. One plan. The owners get a W-2 in each company, also K-1s in the third company. Irregardless of which entity sponsors the plan, K-1 income can not be used for pension purposes??"
4 replies   |    62 views   |    Add Reply

Gilmore created a topic in 401(k) Plans

Startup Safe Harbor Non-elective 401(k)

"I have a last-minute startup 401(k), calendar year, going with 3% non-elective as the safe harbor with discretionary profit sharing. Prior to the SECURE Act we would make the plan effective 1/1/2020 for the profit sharing portion of the plan, and the deferral and safe harbor portions effective October 1 allowing for implementation time and the safe harbor notice. Now that the SECURE Act no longer requires a safe harbor notice (although for now we are going to continue to provide safe harbor notices for non-elective plans), and the nonelective can be added after the fact, is there any reason the safe harbor cannot also be effective January 1, 2020, or does the safe harbor still need to be effective on or after the date the deferrals are effective for the first year? Or let's say they want to wait on the safe harbor until the year is over and are ok with the 4%. The deferrals still need to start 10/1/2020 so we have a 3 month initial plan year for the deferrals, but what date would we make the safe harbor effective in this case? The nonelective must apply to all of 2020, correct, so wouldn't the effective date need to be 1/1/2020? Or possibly I'm overthinking this because the recordkeeper needs the plan design yesterday to set up for Oct 1. Thanks for your help."
1 reply   |    43 views   |    Add Reply

BG5150 created a topic in Form 5500

Owners active, former EE has account: 1 partic plan?

"I don't know why I'm blanking on this, but we have a client where the only active "employees" are the husband and wife owners. There is one former employee who still has an account. Is this considered a 1-participant plan? MY gut says no, because I would think that the existence of that third account would require bonding of some sort."
3 replies   |    39 views   |    Add Reply

Hojo created a topic in Defined Benefit Plans, Including Cash Balance

Sole Prop Net Comp - Unpaid Required Contributions

"Hopefully a quick question that I think I know the answer to..... Regardless of penalties and other fees, filings, etc and assuming a flat $ CB credit for simplicity... If a sole prop reports $200,000 on a Schedule C for 2018 and 2019 and has a $50,000 minimum required contribution to their CB plan for 2018 but does not actually make the contribution, the Plan compensation for 2018 is $200,000 minus 1/2 SE Tax and no other adjustments. If they make a contribution in 2020 of $120,000 for 2019 and 2018 and deduct those contributions in 2019, then the plan comp for 2019 is $200,000 minus 1/2 SE Tax minus $120,000. Is this correct?"
1 reply   |    23 views   |    Add Reply
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