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As David correctly notes, the maximum deductible contribution is equal to the greater of the minimum required contribution, or the amount otherwise calculated under 404(o). However, this question disturbs me a little. The actuary who calculated the maximum should be aware of this rule and shouldn't have provided you with a maximum smaller than the minimum. I have to wonder if the actuary did take that into account and the maximum is correct, and you are misinterpreting the results. The minimum is not equal to just the target normal cost - if the value of plan assets (reduced by any credit balances) is greater than the funding target, the minimum required contribution is equal to the target normal cost minus the amount of such excess. Assuming no credit balances, if the value of assets is more than $120,000 greater than the funding target, then the minimum would actually be $0. With the current difference between the ARPA segment rates and the un-stabilized segment rates, it should be very rare that the minimum required contribution dictates the maximum deduction.

The PPP loan forgiveness gives the partner tax basis to take distributions and is considered non-taxable income on the tax return so it will not affect SE income.

As far as I know there is no exception or rule that allows for the return of the funds. I can tell you also if I were faced with this situation I would be saying and my bosses would be agreeing: we want something in writing from the counsel before we help do this. We want written direction from the plan sponsor and trustee also. We would want pieces of paper we can pull out to protect our firm if this gets bad.

From Section 4.01(b) of Rev. Proc. 2021-30: "A Plan Document Failure consisting of the initial failure to adopt a Qualified Plan, or the failure to adopt a written § 403(b) Plan timely in accordance with §1.403(b)-3(b)(3) and Notice 2009-3, 2009-2 I.R.B. 250, is treated as a Plan Document Failure that is not eligible to be corrected under SCP." So VCP, or in your case, Ananda, Audit CAP.

Is anyone going to put up a stink if the owners do not fund the match for themselves? Did they do the Cycle 3 restatement yet? Going forward, they can do a flexible discretionary match under which they can pick and choose who gets what match. Including not including themselves.

Who then actually is the Employer? If the work for the affiliate is indistinguishable from that of the parent, or the work is for the benefit of and under the control of the parent, then they would be considered employees of the parent. Whose name is on the paycheck? No corrective action is necessary then, the Plan is operationally correct.

Thank-you for your comments. Regarding the suggestion to try to obtain "other evidence of adoption" of the plan by the affiliate I'll try to do this. The affiliate is 100% owned and the parent and affiliate are typically treated by the organization as one and the same and that is why the affiliate never adopted the plan. Regarding the EPCRS section stating a "plan document failure consisting of the "initial " failure to adopt is not eligible for SCP correction, I view this as applying to the initial adoption of the plan by the parent company, and as the "initial" adoption this would not qualify for SCP relief if the plan was never initially adopted.. However, the "subsequent" adoption by an affiliate arguably is distinguishable from the initial adoption and should qualify for SCP relief. Alternatively under SCP, I would argue that the plan should be amended retroactively to state that affiliate employees were eligible to become plan participants. Again I would argue that this is an insignificant operational failure and SCP allows operational correction by amendment as long as it benefits the impacted plan participants but there is no longer a requirement to benefit all plan participants. For me, it would be absolutely unacceptable from a Title I ERISA standpoint, if the Service tried to argue that employees of the affiliated company that did not adopt the plan, retroactively are no longer plan participants which would result in inreperable harm to them.

I also think that options can make it so that more than one person can waive their benefit under PBGC rules in a standard termination.

You misspelled "undocumented".

NEC = Non-Employee Compensation If someone is receiving one of these, then they are not an employee. Not an employee means they are not eligible for the plan.

IRC 404(o)(1)

I would tell them to get a second opinion from counsel who specializes in ERISA matters. This sounds like someone taking complex patent law advice from a divorce attorney. Just because someone is an lawyer, doesn't mean they know what they are talking about in all fields of the the law. (Would you ask your gynecologist what to do about Parkinson's Disease?)

As Mike and Cusefan indicted, the otherwise excludable employees do not have to get the gateway, but they would get the DC plan top-heavy minimum (if top-heavy). They don’t get a gateway if you are “testing” the OEEs separately from those over 21/1/1000etc. and if that separately tested OEE group can pass nondiscrimination testing on some basis other than cross-testing. Remember, the gateway merely allows the nondiscrimination test to be done on a benefits-tested basis, that does not mean you pass just because you provided the gateway.

I think you'll find that the latest entry date possible is 7/1/2021. Therefore, Lou is correct.

She has a year of service on 1/20/2021 and enters the Plan on the Plan's next entry date (or 1/1/2021 if the Plan has retroactive entry). Since she has not terminated as of 12/31/2021 she would receive an allocation for the 2021 as she meets the "OR employed on the last day of the year" condition.

Not covered, assuming you are your wife are the only employees of B as you own 100% of B indirectly by virtue of your 100% ownership of A. From PBGC website...

If they are not excluded, then yes you have a failure to follow the terms of the Plan Document if they don't make the match.

There's also a good discussion of this topic in Who's the Employer reaching a similar conclusion based on Rev. Rul. 89-64 and PLR 200036027.

I think this is an instance where common sense does not prevail. Section 416 uses the 318 attribution rules. See IRC sec. 416(i)(1)(B)(I) and Treas. Reg. 1.416-1, Q&A T-16. IRC sec. 318(a)(4) says to treat an option as equivalent to ownership. See also Treas. Reg. sec. 1.318-1. My recollection is that there is at least one PLR that says you don't count an option until it is vested, i.e., has become exercisable.