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I'd take this one step further. let's say you exclude commissions. you give a base pay of $1000 and $49,000 in commission. even if the person defers 10% of pay the maximum make up match using total comp only brings the person up to $100 in match. but the company gets a top heavy free ride, no adp testing, etc. you can't convince me that is how it is suppose to work.

The issue raised wasn't a cut back but discrimination. Although a large enough reduction in force would most likely result in a partial termination and 100% vesting of those people.

I agree with Flyboyjohn's conclusion but not the analysis. The Seller's plan is a group health plan not individual coverage so there is nothing in the ACA preventing Buyer from paying the premiums. What the parties need to be concerned about is whether this arrangement creates a Buyer-sponsored group health plan itself, which would require Buyer to offer COBRA upon the occurrence of a qualifying event. For instance, if the employee terminates employment with Buyer while covered under Seller's plan, Buyer may have to extend coverage under Seller's plan for 18 months after the loss of coverage as a result of the termination. (EBIA has a good summary of the issue and its uncertain application.) Better for Buyer to pay additional after-tax compensation in the amount of the COBRA premiums for a specified period. This amount can of course be grossed up to make the employee whole.

Others may have different opinions, but without doing any research or analysis, my gut reaction is to file amended returns (with the audit, of course).

As of May 1st, 2017, my status will be RETIRED. And many will say it's about time. It has been a looooong fun run folks.

You mean something actually can be deleted from the interweb - PERMANENTLY? Doesn't that go against a fundamental law of nature?

Apart from the issues 2 Cents raised - especially with respect to the legitimacy of the second beneficiary form (forgery, death bed coercion, etc. - which are WAY beyond scope here), our policy does not "require" receipt pre-death, assuming all the other formalities exist. In many ways, this issue has become rarer because of "on-line" beneficiary designations (which raise their own set of issues), and I can't say I've ever seen a pre-death submission of a bene form when an existing bene form is out there. I'd wait for competing claims and interplead. It's the only to avoid double payment of benefits.

Did the person who told you they could issue a 1099 have a lot of experience with that Company and spoke with confidence? If so, get a new Administrator.

Where is the potential cutback for former employees? Anyone currently employed would be 100% vested according to the OP?

I agree, amend and file with audit.

The Department of Labor is unreliable when it comes to QDROs. The DOL also advises that a domestic relations order must specify the last known address of the alternate payee as one of the conditions for qualification. Check that against the actual statutory requirement. The information in the link that you provided does not address IRC 414(p)(5) and its implications, which is typical for the DOL because the DOL has very shallow thinking when it comes to QDROs. I did not search the site for a discussion of issues relating to the post-QDRO death of the participant; maybe the DOL redeems itself elsehwhere. ERISA has an identical provision to the IRC, so it is not a matter of differences in the statutes. Both statutes also say that an order cannot make the plan pay something that the plan is not designed to pay. When you add IRC 414(p) to the mix, it appears that a typical DB plan has two types of benefit: a benefit that is payable if the benefit starts when the participant is alive (the retirement benefit, e.g. a single life annuity or QJSA), and a benefit that is paid after the participant dies (the death benefit). When the death benefit is a QPSA (which is payable to a surviving spouse), IRC 414(p) says that the order can provide for the AP to be paid some specified portion of the death benefit (by treating the AP as a surviving spouse), but only if the order expressly includes terms to that effect. There are court decisions that adopt this view, although it may not be articulated exactly this way. I know of none that say that a separate interest includes the death benefit without the order mentioning it. If an AP has a separate interest QDRO and there is not express language regarding the death benefit and the AP starts benefits before the participant dies, then the AP is getting the retirement benefit. Once a benefit starts it is paid in accordance with its terms and the terms of most defined benefit plan benefits do not provide for a post-start modification because of the death of a person other than the annuitant. Use of the term "separate interest" is dangerous because it does not have an accepted definition. It is easy to presume too much is included in the term. The presumptions can cause provisions such as IRC 414(p)(5) to be overlooked. It is best to say what the AP gets under relevant circumstances (and the death of either of the AP and the participant are relevant in DB plans) and know the rules rather that rely on "separate interest" to express what is intended. That might lead one to consider and describe what portion of the death benefit is appropriate for the AP. Is the presumed portion the proportion of the death benefit that relates to the share of the regular pension benefit awarded to the AP? Where does that presumption come from (maybe community property states have been influential)? Why is that the appropriate portion in each case?

Watch out for the amendment timing issue in the non-discrimination regulations, however. If the amendment follows a substantial cutback in rank and file employees, it could be considered discriminatory on a facts and circumstances basis.

Yes you can. The amended vesting schedule would only apply for participants that have service as of the date the schedule was amended. There is no cutback for the participants that are not currently in service.

Assuming that there has not been any change in ownership associated with the return to C corporation status, then the holding period of the S corporation stock is the holding period of the C corporation stock. I can't really give you a cite other than the normal basis tracking rule. See IRC Section 1223.