"I have a client who is set to terminate their Defined Benefit Plan in conjunction with the sale of their business. It's a stock sale and the buyer intends to continue maintaining the seller's 401(k) Plan. The DB Plan is significantly overfunded. According to the current Plan document, reversions are not an option when handling the distribution of residual assets. Instead, the Plan says any excess should be allocated among participants.

"We intend to reasonably increase benefits in a non-discriminatory manner and transfer the rest to the 401(k) Plan, which will serve as a Qualified Replacement Plan. The buyer's attorney insists that because the Plan does not allow for a reversion, use of a Qualified Replacement Plan is not an option. He's pushing for a determination letter. It is my understanding that IRS 7.12.1.17.1.2 (11-10-2022) explicitly says we can use a Qualified Replacement Plan in the event that a reversion is not allowed or has not been in place for 5 calendar years. The attorney is still arguing that because such language is lumped in with reversion language, the reversion provision is required. The attorney is also arguing that we would need to amend the document to say we're using a QRP for residual assets.

"When making use of a QRP, do you usually amend the document to say residual assets will transfer to a QRP? Also, if you could share any references that clearly specify a QRP can be used independent of a reversion, I would greatly appreciate it."

"I believe this is an easy question but I want to be 100%. Plan sponsor has 2-1% owners who are employed by the business. The other 98% is owned by the mother of one of the 1% owners and she does not work for the plan sponsor. Clearly seems the 1% owner would have her ownership attributed to him then as a 99% owner. I know some nuances changed in the last several years. Comments?"

"Looking for opinions and code interpretations. Takeover cash balance plan. Prior actuary was using UP-84 for post-ret AE and CB conversion. TPA taking over administration changed to Applicable Mortality Table. With the new table, the annuity equivalents of the cash balance accounts are lower, which is not unexpected. There's some disagreement about whether the change to the annuity value would be a 411 violation. While the annuity equivalent is lower, the plan document defines the accrued benefit as the hypothetical account balance, which is not lower. How have others approached this?"

"401k/PS plan. The plan has outside assets for 2 owners. I did not realize that a PS contribution was made to these 2 owners until recently when I started doing their 2024 work. I was told earlier in the year by the CPA that there would be no PS contribution. Their corporate taxes have been filed and they don't want to revise it to include the PS allocation I did yesterday for them. The safe harbor 3% was deposited timely. Do they have options other than making the contribution and amending their tax return? They want to go through a VFCP filing."