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Kind of in Belgarath's court here, the only possible damages incurred would be related to being under withheld on state taxes. I think they would have to have had substantial distributions for that to be the case. The obvious question/issue - and one I would make were I the carrier (not that I excuse them for poor service) - is how/why did the recipients only "discover" this only when getting their 1099? That is total BS. If I'm expecting a $10,000 payout and I know that 20% must be withheld for Federal taxes AND I ELECTED ANOTHER 10% (hello, McFly), then I'm also smart enough (I hope) to know that I should be getting a check for $7,000 and realize that something isn't quite right when they send me $8,000. This lack of personal responsibility drives me nuts - like when a person elects a salary REDUCTION contribution but then doesn't notice (for a whole year even - c'mon McFly!) that their weekly (or whatever) pay did not go down. Anyway, done pontificating, go 'Cuse, in the Sweet 16 baby!

If there are no accruals under the DB plan, then there should be no need to aggregate it with the DC plan for nondiscrimination testing.

There was amendment to create the short plan year indicating that there would be no CB accrual. It's more of a matter of whether the Gateway is for combine plans or the singular PS plan (7.5% vs 5%).

Rev Proc 2019-19 6.02(4)(a) (emphasis added)

I feel that you're reading more into in than is there. "A plan sponsor may elect not to have the amendments made by this section apply to any plan year beginning before January 1, 2022." Is a plan year beginning January 1, 2021 a plan year beginning before January 1, 2022? Yes? If so, then the plan sponsor may elect not the have the amendments made by this section apply.

You can do another amendment to freeze the plan with a date that is 45 days after the 204(h) notice was mailed. You should definitely not terminate the plan until this is corrected. The PBGC will catch this in the audit and will make the plan calculate benefits through that 45 day date and make the plan pay out the difference.

As soon as you can reasonably segregate the deferrals from employer assets. Its going to depend on what the actual process for is, but for something on an ongoing basis, their excuse is not going to cut it. Reasonable is as soon as it should be possible given the facts and circumstances. For example, Owner is traveling and Assistant gets quarantined with Covid and cannot go into the office to mail a check to the plan. The delay is reasonable. Owner is traveling and only deposits once a month because he cannot be bothered to figure out a better solution (like travel with physical checks if they need his signature). Not reasonable. My rule of thumb, absent an unforeseeable intervening event, more than 3-5 days is not reasonable. If that happens every payroll, you should have figured out a way to improve your procedures.

Somehow he ran payroll on time. Should be able to do the same for 401k, traveling or not.

Thank you for the kind words. Using our skills to put a sensible interpretation on an ambiguous statute is why clients pay us.