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This is why I retired 😁

Never hurts to confirm rather than assume. Although cleaner, in-plan Roth conversions aren't absolutely necessary as after-tax withdrawals can be made and rolled into Roth.

Beyond confirming that Congress in 2019 enacted the change you describe, what information do you seek?

Yup. We should probably do it more.

Exception is for s corp

I like to prove that people can be BOTH smart AND devastatingly handsome at the same time...

Yes the penalty is from 7/31 even if you had an extension to 10/15. If you know you are filing late file under DFVC for $750 and piece of mind. If it's your client's fault (late data) have them pay, if it's your fault because you are short staffed, consider biting the bullet and paying yourself.

once late, it counts back to the un-extended filing deadline, even if you filed an extension (essentially the late filing nullifies the extension). So it is $250 a day for 75+ days, but that's just the IRS, the DOL penalty can be much more punitive, from the IRS Fix It Guide: The IRS penalty for late filing of a 5500-series return is $25 per day, up to a maximum of $15,000. For returns required to be filed after December 31, 2019, the penalty for failure to file is increased to $250 a day (up to (150,000). See IRC Section 6652(e). The DOL penalty for late filing can run up to $2,529 per day, with no maximum. File through DFVCP immediately!! At $2,529 per day, that "one day" late filing now costs up to $189,675!

Maybe it was too obvious to state, but: The plan has to allow for after-tax contributions The plan has to allow for in-plan Roth conversions If there are any NHCEs, the ACP test will be required (and probably fail)

Assuming calendar year plan, if it's late July and the 5500 hasn't been filed yet, there is no reason not to file a 5558 extension. With that done, if you're a day or two late from the October 15 deadline, the penalty counts days back to the July 31 deadline, so you're looking at a minimum of 77 days late, or a $19,250 penalty. The penalty increase was put in the bill as a "revenue raiser" to offset the loss of tax income from other things they wanted to do, like allow retroactive plan adoption and increase the RMD age.

This is one of the safe harbor allocation methods. If you want to use a preapproved document, make sure the document you're using has it as an option.

For what it's worth, the Relius Cycle 3 adoption agreement provides an option for a fixed profit-sharing contribution in a fixed amount per hour: [ ] Fixed dollar amount/hour. $ _____ per Hour of Service worked while an Eligible Employee.

Don't be late?

For a nonelective (not matching) contribution, there is a wide range of ways to allocate a contribution among participants’ accounts. I’m not seeing how an allocation that is a uniform amount for each hour worked would discriminate in favor highly-compensated employees or introduce a new difficulty in meeting coverage and nondiscrimination conditions. If the employer uses an IRS-preapproved document, you might check whether the desired allocation can be expressed within the adoption agreement’s contours or in some other way that does not lose reliance on the IRS’s preapproval (and does not contravene a collective-bargaining agreement).

You can allocate contributions on pretty much any rational basis that can past testing. And to state the obvious the testing will be based on percentages of compensation. I had an ESOP years ago that allocated 25% of the contribution on Year of Service for Vesting over total Years of Service for Vesting. The other 75% was on comp/comp. It passed all the needed testing so the lawyers signed off on the idea.

It's a good place to come for information and help. Lots of different topics. Everyone is professional. You will usually get an answer no matter how "silly" your question is-no judgment.

Someone who is a 5% owner in the current or prior year is an HCE. I don't see an exception for attribution but maybe I'm missing one. Therefore, assuming a calendar year plan. The sister would be HCE for 2022 and 2023 but not 2024.

...and Employees get W2's.

Partners get K1s, independent contractors get 1099s, but that doesn't mean the entity(ies)/employer(s) are going it right. Who is (are) the employer(s), what is the tax structure, who are the owners, do they have earned income or compensation from the employer and who are the employees? If you have multiple employers, what is the relationship between them? Answer those questions and then you can determine the retirement plan options. And if the income reporting does not properly match the corporate tax structure, you inform them thusly and if they have no interest in proper accounting you punt, not worth the headache IMHO.

Only an S-corp shareholder (i.e., an owner) receives a K-1. The K-1 reflects the pass-through income from the S-corp to the shareholder. This is essentially investment income and can not be used for plan compensation. An S-corp shareholder who is also an employee of the S-corp must receive a W-2. The W-2 compensation is the compensation that's usable for a plan.