"This one is for the AFTAP gurus out there! Looking at a possible takeover, one lifer DB plan. Effective date 1/1/2010.

I just found out that AFTAP was never certified for this plan. So, each year a benefit accrual was done and funding was based on this (my understanding is that the target normal cost (TNC) needs to be funded separately each year and not the funding target (FT)).

Just by looking at the various valuations provided, looks like the funding may not be an issue, both covering minimum required and maximum permissible deduction so let's leave this part alone for the time being. It is a BOY valuation. The plan document states automatic restoration.

After my research, I think the freeze date is 12/31/2014 - end of 5th plan year. Am I correct on this date?

[1] What I do not seem to find is, how to restore the AB after AFTAP is certified as of 9/30/2022. For simplicity, say the AB is $1,000 per year of participation. So, if frozen as of 12/31/2014, the frozen benefit as of 1/1/2015 and on would be $5,000. This benefit would follow thru 12/31/2021. After AFTAP certification, how would 2022 AB would look like at 1/1/2022 and 12/31/2022.

[2] Another thing I read (not sure if it will fly), I can hard freeze the plan now i.e. before certifying the AFTAP and have the AB frozen at $5,000 until I amend the formula.

I would very much appreciate any comments."

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"Adult Child #1 - Owns 50% of the company

Adult Child #2 - Owns 50% of the company

Mom and Dad both also work there, but make under $100k each. So, based on salary they wouldn't be considered HCEs for testing purposes.

I don't believe the attribution goes 'up,' so they wouldn't be considered HCEs for testing either, right? I know that's how it applies for ownership/controlled groups. I just wanted to confirm it's the same for the testing."

"Say I have 5 companies that all adopted a plan: A, B, C, D, E, F.

The Controlled Groups are:

[1] A B & C

[2] D & E

[3] A B & D

[4] C & E

F is not part of any CG or ASG, so I have a MEP (!)

Do I need to do 5 separate tests?"

"PS Plan has owner and one employee. During the plan year, the employee was paid out. At year end the only participant is the owner. I recall that because at the beginning of the plan year there was an non-owner employee in the plan, the Form 5500-EZ cannot be used. Correct?"

"Has anyone had a state unemployment agency ask whether a past employee has taken a distribution? Are we required to disclose?"

"I think the answer to my question is that this cannot be done but I just want to be sure!

I have a fairly new NQP plan (started in 2022) that allows both participant (limited to only the CEO) and employer contributions (open to other select employees). No participant contributions were elected in 2022 but employer contributions were made.

At the time the plan was established, the plan sponsor elected to pay benefits only at separation from service (with the allowed limited acceleration exceptions) with a lump sum payment option as the default. The plan document did also allow for a 5-year installment option.

The plan sponsor failed to collect payment option elections on the employer contributions made in 2022 thinking that none were necessary so I believe these deferrals have all technically 'defaulted' to the lump-sum payment default at separation from service.

In order to avoid having to get any elections on the employer contributions and to have the plan operate more closely like an older NQP they had in place several years ago, the plan sponsor would now like to only provide for a 5-year installment at separation from service for all contributions -- including those made in 2022. Because no participant contributions were made in 2022, I think this may be an allowable amendment and would not serve to delay anything as no benefit currently exists for this contribution source. I don't think, however, that this would probably be able to apply to the 2022 employer contributions already made as the change from a lump sum payment to an installment payment would seem to be a delay under the 409A rules.

I am looking to see if anyone has any thoughts on (1) if my beliefs are correct or incorrect; and (2) any possible ideas for structuring this to accommodate the plan sponsor's wishes."

"We have a 85 participant pooled profit sharing plan with $17,000 in total assets. Employer wants to amend the plan to 'charge' the accounts of terminated participants an annual administrative fee the year beginning after the year after termination (Term 2020, fees start 2022 if account not fully paid out.)

Because this is a pooled account, would these expenses to the terminated participants accounts become additional earnings to the other participants, or would they be forfeitures to be re-allocated to active participants, or something else altogether?

I know the plan can be amended to allow for the expenses to be charged (must also send a notice to each participant regarding the change). Just not sure how to handle the recognition of the expense charges."

"We have a large client that funds safe harbor non-elective and profit sharing quarterly. So we make YTD calculations in Relius with pre-determined PS contribution rates for a couple classes and have the net cost determined by reducing for prior quarterly allocations.

Getting it then into Ascensus format is a feat for 250 participants. Data entry routine I suppose could possibly work or just hand key, or cut and paste. It will be trued-up for the last quarter after the end of the year since the HCE PS rate is estimated on the low side during the year for discrimination testing purposes.

As an alternative we will attempt to have the client code employees in Paycor for SH % and PS % for those eligible and have a file created by Paycor that can be uploaded to Ascensus automatically each pay period. Sounds idealistic and likely to take an act of God for the plan sponsor and Paycor to get done.

The plan sponsor wants to automate the contribution process and wants contributions to go in dollar cost averaging each pay period. (Did I say it is a large group of doctors?) Anyone doing anything remotely like this?"

"Is there any way to force out small balances of active employees who have never contributed to the plan? We have a plan where a number of employees have balances of less than $1,000 resulting from a one-time profit sharing contribution. The employer would like to cover recordkeeping expenses for participants with less than $1,000 as a perk to newer employees who are just starting to save in the plan, but doesn't want to cover recordkeeping expenses for those who are not contributing and have just profit sharing money. The recordkeeper is unable to do this systematically. Is there any creative way the employer can get these small balances out of the plan altogether if these participants are still active employees?"