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Yes, unless you can use full year comp rather than DOP comp for your testing.

1. No. Too late to change 2021. 2. Possibly. If the employer is operating at an economic loss, or if the safe harbor notice provided that the safe harbor may be suspended mid-year, then they could suspend the safe harbor match and adopt the retroactive safe harbor which may be 3% or 4% depending on timing. See Notice 2016-16 III.D.3 and Notice 2020-86 Q&A-8 for more info.

This is ok. I was a little confused by things after that but now I see; all looks good. Except TH has to go to all non-keys.

I don't think this practice is compliant with ERISA, so I'd be surprised to hear from their "compliance" department coming out from behind the curtain on this any time soon. It's probably discriminatory against NHCEs, and an operational failure (not operating the plan in accordance with its terms) to boot. Some problems with not reporting a termination status change or termination date timely can include (1) incorrect vesting if based on elapsed time (unless you override vesting percentages), (2) potentially incorrect census counts for 5500 if not reported timely - such as waiting until distribution (3) not treating the person as terminated could cause you to treat them as "wired at work" inappropriately for DOL electronic disclosure purposes (4) not allowing them to elect a distribution when they should be allowed to. Most if not all of these (except the operational failure part) would not be a problem if it's a grandfathered governmental 401(k), for example. If you are the plan administrator, and they are your recordkeeper, you can ORDER them to cease this practice and to fix it by restoring those amounts to their accounts. If you don't, you may have joined in on a breach.

Is this a situation where the S-corp. 2% shareholder medical deduction is included in Box 1 but not Box 5? Typically I see this question when there are 401k deferrals showing up in Box 5 but not Box 1. This sounds like there aren't deferrals though, so the Box 1 number is the "gross".

"...it seems the client is leaving us." Did the client say as much and direct you to share this data? Maybe chalk it up to a "phishing" scam and tell the client you're ignoring it for their protection! 😇

There is no participant or spousal consent required to pay an RMD. See 1.411(a)-11(c)(7). Once a distribution is no longer immediately distributable (at later of NRA or 62), a plan may distribute the benefit in the form of a QJSA in the case of a benefit subject to 417, or in the normal form in other cases without consent. See 1.411)(a)-11(c)(4).

Here is the section you are referencing, it does not apply in this case. The formula described in the OP is a sum of two formulas, not a greater of two formulas. Aside from that, I am not sure that a safe harbor contribution meets the definition of a top heavy formula described in this paragraph, since it a) is made to both key and non-key employees, b) is made without regard to whether an employee has separated from service as of the last day of the plan year, and c) is made without regard to whether the plan is top heavy.

If the John LLC owns the partnership interest, the loss on outside K-1 reduces SE earnings for retirement plan purposes. A good way to think about this - if John LLC was a partnership with $150k of net income (before the K-1) and the outside K-1 reduces income by $50k, there would only be $100k left to report to partners as income. You situation is not that unusual - it is just the income is reported on 2 different forms on the Form 1040.

The multiple-formula rule under 1.401(a)(4)-2(b)(4)(vi) requires that the formulas be available to employees on the same conditions. Since there are different conditions for the SHNEC and the integrated profit sharing, you can't use it.

Right, you pass coverage but not necessarily nondiscrimination because it's a different nonelective contribution rate for different folks. Failsafe language in the document wouldn't help because you're not failing 410(b). So if your ABPT is a nonstarter in terms of hoping to pass, you're going to need to fix the rate groups for the HCEs by increasing the profit sharing for those NHCEs who got zero. Basically each HCE's rate group is 1/3 NHCE and 2/2 HCE based on their total nonelective contribution amounts. And yes you can impute disparity, so I think it should just mean a 7.38% PS rate for the zeros so that you get to 3/3 NHCEs. (2/3 NHCEs would have been okay if you could pass the ABPT but it sounded like those spousal deferrals are killing you.) Or, for another tack, you could try to cross-test the nonelective contribution amounts by themselves and hope you can pass both rate groups at 3/3. If all the rate groups are at 70% then you don't need to pass the ABPT.

It's possible to have taken COVID Withdrawals from multiple COVID eligible sources, however there was an aggregate limit of $100,000 per individual for COVID withdrawals. The DB would have had to adopt CARES provisions, the participant would have had to be eligible and elected a CARES withdrawal in 2020. The SEP is just a type of IRA so withdrawals taken in 2020 that met the definition of CARES withdrawal could have been COVID related up to $100,000 limit. If the DB plan allowed participant loans up to another $100,000 potentially could have been taken tough repayment was to have started over a year ago at this point.

I guess what i'm saying is that the distribution from the SEP doesn't have to have a designation in order for the client to take funds from the SEP. If the client is 59.5, it doesn't matter if the client took $10,000 because of covid or to buy a new car. If the client is not 59.5 than if the distribution was related to covid, they would not be subject to the 10% penalty. I don't believe that what the client does within his/her SEP/IRA has any role regarding what s/he does in the DB plan.

All the time

I understand "rules are rules" and this would be very important for most investment fund changes, but this happening with a MMF is not hill I would want to die on.

Bri, the rule Bird points us to distinguishes between a plan that provides a survivor annuity and a plan that need not and does not provide a survivor annuity: . . . . If, because of [Internal Revenue Code of 1986] section 401(a)(11)(B), the plan is not required to distribute in the form of a QJSA to an employee or a QPSA to a surviving spouse, the plan may distribute the required minimum distribution amount to satisfy section 401(a)(9) and the consent requirements of sections 411(a)(11) and 417(e) are deemed to be satisfied if the plan has made reasonable efforts to obtain consent from the employee (or spouse if applicable) and if the distribution otherwise meets the requirements of section 417. 26 C.F.R. § 1.401(a)(9)-8/Q&A-4 (emphasis added) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)(9)-8. An individual-account retirement plan (if not subject to funding standards, and not a transferee of such a plan) need not allow an annuity, nor even any periodic payout option. I see many plans that allow a participant a choice only between a voluntary single-sum distribution of the entire account balance and an involuntary distribution (only once a year) of the minimum-distribution amount.

I take a much more draconian position. If an annuity must be purchased then the entire benefit is used to purchase it. Ouch.

WCC- you make an interesting point about auto enrollment into pre-tax v. Roth. My thought is once the funds are in a Roth, it's irrevocable, unlike pre-tax where you can do a IRR and make the funds into a roth. I think it's safer to default to the pre-tax since you have that flexibility. But i like the question.

It's not uncommon for a TPA to give a sponsor options - plain 3% SH, a "3 + 9" where it's exactly as you describe, and then a "5 + max" for small, medium, and large contributions.

If you actually read section 4.01(c) in the FT William basic though, the fail-safe described there doesn't make a lot of sense with respect to 401(a)(26), especially for the meaningful benefit part of 401(a)(26). Their EGTRRA document allowed you to specify a target benefit accrual (usually 0.5%, as per the Schultz memo), and if 401(a)(26) failed, you would increase benefits starting with the participants whose benefit accrual was the largest but less than the specified target amount. The PPA document says nothing about any target amount and instead says that you start by expanding the group of participants to include employees who would not otherwise be eligible. I am with Dalai Pookah on this, I am curious why the old fail-safe was removed in the PPA document as it provides a more sensible default method for correcting a failure. We asked FT about this back when the PPA document came out, but did not get a satisfying reply - they said, basically, they did not think the IRS would approve their document with that language in it. Like CuseFan, we have moved over to relying on retroactive corrective amendments when needed. However that comes with its own issues, including compliance with 1.401(a)(4)-11(g), 1.401(a)(26)-7(c), 436(c), and 412(d)(2).

This is a common way to structure contributions when you have an older HCE and some younger NHCEs. It is not discriminatory, as long as the numerical tests under 401(a)(4) are satisfied (and you said that they are). SHNEC is considered a profit sharing contribution for purposes of 410(b) and 401(a)(4).

It depends, is the Plan subject to the QJSA annuity rules? If so you need spousal consent to pay in a form other than the normal annuity form of benefit to pay in cash. But one way or another the payments need to start to satisfy the RMD rules.

If he has a W-2, that's the amount to multiply by 25% (not 20%). Should be 6,375. Of course, since that would be a 415 problem, he should limit the PS to 6,000. You definitely don't do self-employed calculations for an S-corp. shareholder as you would a Schedule C filer.

Again not an employment expert but to me it sounds like the Old company is the employer until 4/30 and the old plan still covers the employees like it always has. If it was the new company was paying them, then they would be employees of new company and I'm not sure how they continue making contributions to the old plan without the new company becoming an adopting employer or taking over sponsorship of the Plan. And if that did happen you could have successor plan issues with the new company if they tried to terminate.