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RTFD! Good Luck!

I agree, but I am jumping in only to mention another point. In addition to the plan and trust having to be in existence before the end of the year, I think the old IRS guidance that says that the plan must also be communicated to employees before the end of year is still in effect. However, I am happy to be proven wrong if I am wrong.

Yeah, this was an issue in "ancient times." Revenue Ruling 81-114 officially recognized this, and referred to Dejay Stores, Inc. v. Ryan, and Tallman Tool & Machine Corp. v. Commissioner. Not a requirement for a VERY long time. Prior to 81-114, it was an issue under Revenue Ruling 57-419. No worries! It doesn't HURT to contribute a nominal amount, but seems pointless and unnecessary to me...you can refer the actuary to the citations, but if you need to keep 'em on your side, certainly ok to contribute if they insist.

You are correct that he is an active employee and may not be paid as a terminated employee.

The SH notice is required to be provided a reasonable period of time before the beginning of the plan year. 30-90 days before is deemed to be a reasonable period of time. For less than 30 days, it's a facts and circumstances determination. See 1.401(k)-3(d)(3).

I''m confused. A calendar year taxpayer/plan. This is September. I could MORE THAN 3 months left until 12/31. What is the problem? You are aware that for a NEW 401(k) plan, you have to set up the SH by 10/1, right? Now, that is separate from the other issue you raised, but it appears the other issue is an issue only because you think you can't have a SH plan, which you can, which I think makes the other issue go away, right?

As always Read The Document. Does the document allow each division to get a different rate of contribution? If so you will pass testing, if not you are probably violating the terms of the plan document.

No. I'm not sure where it got started but it is urban legend. Ask the actuary to provide a cite.

My 2 cents... I don't see the MEP thing truly increasing retirement plan creation. If somebody wants a plan now, I can find or create something pretty good. If they don't want a plan, I doubt whatever savings are available through a MEP are going to change their mind. The RMD thing drives me up a wall! First, changing the table now and then is not going to make a significant difference, and is just one more thing to maintain and update for us. Second, if you don't want the money then, by definition, you don't need it for your retirement security. Third, if you don't buy the first two arguments, this overrides everything - YOU DON'T HAVE TO SPEND IT! You just have to be taxed on it. What is the big friggin' deal here?! You got a benefit from deferred taxation, and the RULES OF THE GAME have always been that you have to be taxed on it, later. This is just more conservative nonsense to minimize/avoid taxes (while we are looking at a trillion dollar deficit) couched in the image of helping poor Grandma, who is being "forced" to take money out of her retirement plan. It disgusts me, and I'm not exaggerating.

You clearly have identified a BIG problem. The plan is not following its terms. Participants have a court enforceable right to defer a percentage. The financial advisor is risking law suits and I guarantee HIS employer would not allow him to make that decision as he is taking on a fiduciary role. And for what? I have not seen any payroll software that does not offer a choice of dollar amount or percentage; I doubt it makes any difference to the CPA, and if it does, that's the CPAs problem!