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Just because somebody "retires" doesn't mean they will start Social Security. Besides, the decision to retire at any age is subject to so many individual data points there is absolutely no way you can state that it doesn't make sense. You just don't know.

I would worry more if the place holder were 666.

Jinx

Balances from all employers are considered together when determining if a participant in a MEP can be forced out.

The plan can not require that your payment occur later that 60 days after the end of the year in which the latest of these happen: You attain age 65 (or normal retirement age under the plan, if earlier); The 10th anniversary of your becoming a participant in the plan; or You terminate employment with the plan sponsor. I agree with Mike that 999 days seems like a placeholder that should never have been included in the final documents. However if the plan's normal retirement age is 65, they could in theory hold on to your payment for a couple more years.

My guess is that the 999 was meant as a placeholder by whoever programmed the website. I would be very surprised if 999 turned out to be an accurate number.

1) Maybe. Review the rules for Qualified Replacement Plan. They can reduce the excise tax on whatever they can allocate within 7 years. They might be able to use up the entire $500K of excess. Make sure they understand it counts as an annual addition. IOW, if they allocate $58K of the excess assets each year, there is no room for any employer contributions. Also, be aware of earnings on the excess assets they transferred also need to be allocated, so most people invest conservatively. 2) Sure, they can start a new one tomorrow. They won't be able to put any money into it, but they can have one. You only get one 415 limit per employer. If they hit the 415 limit in the DB, they are likely done. If COLAs increase the 415 limit in the future, it might make sense in a few years, but not as likely to happen with the current Congress. If they worked for a new employer (less than 50% ownership) they might be able to fund a different 415 limit.

1) Yes, but the entire suspense account has to be used up within 7 years if they want to avoid the excise tax on the reversion. The amounts allocated are still subject to the annual additions limit, so if it's just the two of them, and they are allocating (let's say) $35k each per year that ends up as only $490k allocated after 7 years. Make sure you will be able to fully allocate the amount before you transfer it. 2) No. Assuming that they take a distribution equal to the max lump sum, that is by definition the present value of their 415 limit. The 415 limit is a lifetime limit so any distribution they take now permanently reduces the future benefit they can receive from any DB plan sponsored by the same company (or controlled group etc). If they take the max lump sum there would be zero 415 limit left so no additional benefits could accrue under a new plan.

Specifically, I think this applies to all that had not entered the plan as of the effective date of the amendment - but in this case they are the same as entry was immediate upon satisfaction of eligibility requirements.

The new rules would be used as of the effective date of the amendment. Therefore all that did not meet the eligibility under the new rule would have to wait. Eligibility is not a protect benefit so they new rules can also be used to exclude all participants that do not meet the new eligibility requirements.

Almost certainly there will be other companies owned by the PE fund or investment company. Whether the operating companies are affiliated can be more complex. Some investments may be less than 80%. Some may be through parallel investments, which has been subject to some scrutiny in Sun Capital. Some may qualify as QSLOBs. Generally the fund will be a pass-through entity, so technically the controlled group of corporations rules in 414(b) don't apply, but rather the trades or businesses under common control rules in 414(c). There is a fairly widely held position, at least in the PE context, that because the fund (common owner) itself is not a "trade or business" that the entities it owns are not related. There's also some skepticism of that position based on the wording of the regulations. In my experience, many PE funds don't have the capacity (or desire) to test across all their platform companies.

? There are no two sides on a dilemma. This is all pretty black and white. You just need to do some research and figure out which is correct. Don't take on risk for a client just because they are unwillingly to pay for something outside your area of expertise.

The plan document will specify when a terminated participant is allowed to take a distribution. There is another document called a Summary Plan Description (SPD) which MUST be provided tp plan participants at least once every 5 years. You may find this document on-line. If not, the Plan Administrator (likely your employer) must provide you with an SPD on request. This document should explain any distribution waiting period.

Yes, you can use the corrective amendment rules of 1.401(a)(4)-11(g) to correct a failed non-discrimination test. However please read your plan document carefully. Most plan documents I have seen provide for an automatic waiver of the last day and/or hours of service requirements as needed to pass the gateway test. This would usually apply only if the participant was otherwise eligible for a contribution that would require them to be included in the test, such as a top heavy minimum or a safe harbor non-elective contribution.

He would be considered an HCE and Key employee of B because he is an HCE and Key of a member of a controlled group with A & B by virtue of his more than 5% ownership in A.

Here is the discussion that Lou S. mentioned: In that case, the conclusion was that they could not do it because of a controlled group issue, as the companies involved were owned by a husband and wife. In this case, as long as the brothers' companies are not part of a controlled group or affiliated service group with the company currently sponsoring the plan, then I don't see why they couldn't do it. That said, I agree with the other posters that they would be better off starting new plans anyway. If there is not a controlled group or affiliated service group, then by creating a MEP you would be subjecting them to a combined 415 limit that would not otherwise apply if they had separate plans. And if there is a controlled group or affiliated service group, then you can still add a new plan with additional benefits that you wouldn't be able to retroactively add to an existing plan.

Assuming no controlled and/or affiliated group issues, why not set up a separate plan? Will cost extra but total freedom on what can be done and also not worry about any funding issues in a plan where other participants are involved . Also, if the schedule c has been around for sometime, can certainly use prior salary history to develop a benefit structure. Again, assuming no issues.

Why are you wasting your time trying to assist somebody to do something which they shouldn't be doing? Just have them set up a regular plan including the employee.

So people understand where this is coming from, the IRS told document providers in May of 2020 that discretionary match formulas had to spell out their allocation method, in accordance with the regulation mentioned earlier in this thread. As we discussed the issue with the IRS, this would take away the flexibility, for example, to have different rates of match for different employee groups, or to choose operationally the period used to compute the match. After protests from document providers and the American Retirement Association (and others), the IRS ultimately relented. The settlement required that language appear in the adoption agreement. Originally, that language was to read: To the extent a Discretionary Matching Contribution applies and the Employer makes such matching contribution to the Plan, the Employer must provide the Plan Administrator and Trustee, if applicable, written instructions describing (1) the matching contribution formula, (2) the computation period(s) to which the matching contribution formula applies, and (3) if applicable, a description of each business location or business classification subject to separate Matching Contribution formulas. A summary notice of these written instructions will also be provided to the participants. The instructions and participant notice must be provided no later than the time the Matching Contribution is made to the Plan. This language ended up being modified in early June, allowing for a communication (as opposed to a "notice") to the participants to be delivered no later than 60 days after the date of the last matching contribution. The notice only needs to be given for years the employer actually makes the discretionary matching contribution. There likely is slight modification in each provider's document, but the substance should be similar. The IRS made it clear that this settlement applies to the third restatement cycle. We may see the end of flexible allocation of discretionary contributions in the fourth restatement cycle, but that's down the road. The FIS approach was to offer two different discretionary matching formulas. One, what we called a "flexible discretionary match," is wide open on allocation methodology. You can have tiered matches. You can choose each year the period to be used in computing the match and whether you true it up. You can have different formulas for different groups. But the price of that flexibility is you have to give the notice. The other, what we called a "rigid discretionary match," specifies the computation period and allocates according to a single matching formula applicable to all participants benefiting from the match. You can change the limits on match and the match rate from year to year, but what you choose must apply universally for that year. The rigid match (which is still much more flexible than a fixed match) does not require a communication to participants. To the concern "what's the point of another notice," I understand and sympathize. But the IRS has broad latitude in issuing opinion letters for preapproved plans, and this was their decision. I appreciate their willingness to compromise on this issue. I am writing this as a private attorney, and not as a representative of FIS. The opinions expressed are my own. (That said, I do work as a contractor with FIS and am proud to be a part of their Relius document team. I participated in the design of their documents, including in handling this issue.)