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Must....grind....out...few...more....years decades...before....retirement!!! ?

Perhaps an ERISA attorney has a different view (I'm not one) but I would simply treat him as a terminated employee and a participant with a balance in the plan. I believe that would be the most conservative approach.

Barring any further regulatory action, I agree. However, a typical class exclusion has the guardrails of the coverage test to prevent it from being discriminatory. With LTPT employees this doesn't apply. I wouldn't be surprised to see something that prevents a class exclusion being used to get around the LTPT rules. It's also possible I am overthinking this.

Don't we? There is nothing in the statutory language that would support making them "untouchable" by an otherwise proper exclusion.

Most 401(k) plans nowadays will contain the Microsoft language, which excludes (as a class) employees who are treated as independent contractors. I don't think we know yet how class exclusions will interact with the long-term part-time eligibility rule. If I had to take a guess I would expect that you would be permitted to exclude them as long as the classification is reasonable and not related to the number of hours they work.

Anyone paid on a 1099 is by definition not an employee and therefore not eligible for any qualified retirement plan, since such a plan must be maintained for the exclusive benefit of employees and their beneficiaries.

Well for one the SPD and SAR wouldn't be required for the owners' plan. If the company is just husband & wife owners plus 1 long term part time employee, they might not want to give the employee a SAR that says "we contributed $120,000 to the plan this year" alongside a participant statement showing $0 of that was for them.

Luke Bailey, my response is that I've read and participated in these discussions many, many times, going back to PIX days and continuing here on BL, am quite sure it has been discussed in ASPPA (maybe ASPA) IRS Q&A sessions, and always the firm conclusion is as Bill Presson described it perfectly. I know the TAM facts don't line up perfectly but it doesn't take much to take them to the logical conclusion that the right to an allocation under an existing formula is earned when the conditions to receive an allocation are satisfied. It's seared in my brain and if the IRS came out with something now that said otherwise, it would take a long time to get it out of my brain. You can think otherwise but I don't think there is any gray area here.

I think you will really have to go Hmmm... The changes are to the Code. As far as I know, the SECURE Act didn't make any changes/exceptions to the ERISA reporting rules, etc., purely with regard to employees covered by the 'Long-term part time" rules. So not only would you have some "Solo" plans that fall out of solo status, but you might end up with more plans requiring an audit. Of course, if the DOL ever gets it together and changes the participant counting rules on 401k plans to not count as a participant someone who is merely eligible but doesn't defer or receive contributions, this might more than offset the participant count increase for the LTPT employees. Must....grind....out...few...more....years...before....retirement!!!

I'll play along Its (mostly) exempt from ERISA because there are no employees to protect. It would be odd to then exempt it from the rules that dictate when employees must become eligible to participate. Unless I have missed something, the LTPT rules will apply, and will turn many of them into former solo's.

I think your issue is beyond the scope of this board. Sounds like you need a competent divorce attorney and you may have to file for bankruptcy as well and start over. Good luck!

@ERISA-Bubs A COBRA qualifying event occurs where a COBRA-prescribed triggering event causes a loss of coverage. Amendment of the plan to eliminate coverage for certain employees who were previously eligible is not one of those triggering events. See Treas. Reg. §54.4980B-4, Q/A-1. I think the point of @B. PARVARANDEH is that the deferred loss of coverage rule should apply. In other words, that COBRA should be triggered on a delayed basis because the loss of coverage was constructively caused by the reduction in hours (i.e., the disability). This would apply as long as the loss of coverage occurs within the 18-month period following the triggering event (reduction in hours). The deferred loss of coverage rule would provide that the additional period of coverage continued after the triggering event (I'm assuming reduction of hours) would apply toward the COBRA maximum coverage period to reduce the period that the qualified beneficiary could continue coverage through COBRA. See Treas. Reg. Sec. 54.4980B-4, Q/A-1(c). That would mean the COBRA maximum coverage period would be 18 months reduced by the period in which active coverage continued prior to this amended to eliminate active coverage eligibility for LTD participants. This example from the regs seems to be on point for that position: Treas. Reg. Sec. 54.4980B-4, Q/A-1(g), Example 5: Example (5). (i) An employer maintains a group health plan for both active employees and retired employees (and their families). The coverage for active employees and retired employees is identical, and the employer does not require retirees to pay more for coverage than active employees. The plan does not make COBRA continuation coverage available when an employee retires (and is not required to because the retired employee has not lost coverage under the plan). The employer amends the plan to eliminate coverage for retired employees effective January 1, 2002. On that date, several retired employees (and their spouses and dependent children) have been covered under the plan since their retirement for less than the maximum coverage period that would apply to them in connection with their retirement. (ii) The elimination of retiree coverage under these circumstances is a deferred loss of coverage for those retirees (and their spouses and dependent children) under paragraph (c) of this Q&A-1 and, thus, the retirement is a qualifying event. The plan must make COBRA continuation coverage available to them for the balance of the maximum coverage period that applies to them in connection with the retirement. I suggest confirming with your carriers (fully insured) and/or stop-loss providers (self-insured), but that is the position I would take.

COBRA requires a loss of coverage on account of a qualifying event. The qualifying event is the termination of employment (you said former employees). That by itself does not trigger COBRA unless there is a loss of coverage. The loss of coverage will occur on the effective date of the plan amendment, and that will trigger COBRA.

Thanks, MWeddell! Of course, I found your earlier discussion right after I posted this question. Very helpful.