Message Boards Digest

March 24, 2022

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

RayJJohnsonJr created a topic in 401(k) Plans

What's the Maximum Profit Sharing Contribution For...

"For 2021, what is the max PS contribution in these circumstances? 1 person plan, S Corp, age 38, maxed out 401(k) deferrals of $19,500, W-2 of $25,500. I thought it would be 20% X $25,500 = $5,100. But a Contribution Calculator at says $4,740. (If anyone tries out the online calculator, select self-employed, not Corporation, to get the S Corp quote.)"

2 replies so far   |    Click Here to Add a Reply

kmhaab created a topic in Mergers and Acquisitions

Seller's 401(k) Plan Can Be Party to the Sale Agreement?

"Purchaser wants seller's 401(k) plan to be included as party to an asset purchase agreement. The 401(k) holds a significant amount of seller's stock and purchaser wants the 401(k) plan (or trust I presume) to be party the the agreement as a shareholder. This would include the plan making reps and warranties related to seller's business. Is this allowed?

I have significant concerns with this -- first from a fiduciary duty standpoint, but also because the plan cannot make reps and warranties related to the business because the plan has no knowledge. But purchaser's counsel is pushing back. Has anyone seen this before? Am I off base?"

No replies yet   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Spousal Consent Required to Process an RMD?

"Is spousal consent required to process an RMD? I have one being held up by the custodian, due to needing spousal consent. Thanks in advance, and if you could let me know where in the regs I can pull the info from, I'd appreciate it!"

7 replies so far   |    Click Here to Add a Reply

MP CPC created a topic in Cross-Tested Plans

Max Profit Sharing to HCE and $0 to NHCE But Cross Test with SHNEC Seems to Work

"Under a 401k safe harbor profit sharing plan, every eligible participant can defer and also receives 3% safe harbor non-elective contribution. The doctor wants to give himself and spouse up to 6% profit sharing non-elective contribution and 0% to staff. This formula passes 410(b) Ratio Percentage Test, Rate Group Testing and General Test Average Benefits Test, by aggregating non-elective and SHNEC. And Gateway is met with 3% to NHCE and 9% to HCE - 1/3 test. Seems discriminatory, testing says otherwise."

3 replies so far   |    Click Here to Add a Reply

AmyETPA created a topic in 401(k) Plans

Who's The Employer? Insurance Agents Treated as Contractors Have Employees Leased from the Insurance Company

"Insurance company has agents that are 1099 contract employees. These 1099 Agents are not covered by the Insurance Agency's 401k plan nor other benefits of the insurance company and want to start their own 401k plans. The 1099 Agents also lease employees from the Insurance Agency that are licensed employees. The agent has control over these employees' daily activities but ultimately the right to fire or hire them is up to the insurance company. Trying to determine if the employees that are leased to the agents should or should not be included in the plan, and what questions I'm forgetting to ask!"

1 reply so far   |    Click Here to Add a Reply

Dougsbpc created a topic in Retirement Plans in General

New Partner is an S Corporation; Effect on 404(a) Deduction?

"A partnership sponsors a 401(k) plan. Three physicians are the partners. They have about 10 employees who are also participants. A new physician also has become a partner but, rather than him individually, his partnership interest is owned by his S-Corporation. His S-Corporation is now a participating employer in the plan. The 404(a) deduction for employer contributions to the plan is 25% of the compensation of all eligible participants.

Is the S-corporation subject to its own 404(a) deduction limit of 25% of its employees? In other words, suppose the new physician is the only S-corporation employee and he has W-2 salary of $100,000. Is his deduction limited to $100,000 X 25% = $25,000 or is his $100,000 salary added with all other participants of the plan and that total is subject to the 25% limit?"

2 replies so far   |    Click Here to Add a Reply

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