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Was there a partial plan termination? If so, all of the affected employees would become 100% vested.

They would be on the new schedule, since they weren't a participant yet as of when the vesting formula changed. Much as coffee is for closers, vesting is for participants.

Am I reading this right? The retirees are being paid slower than regular terminated people? If true that is odd if nothing else. I have seen plenty of plans that pay the retirees faster than normal terms and no one tests them. So I am thinking even if it is backwards it might not need testing. What makes me uncomfortable ( and maybe you) is the HCE that is getting the fastest payment is a former owner. The timing of the change looks odd if it was done the exact year that person can get paid. But if the attorney is signing off on it we would get the attorney's opinion in writing and move on. You can have class based differences like this. They just better not change is again in the near future were say everyone has to take installments after a former 5% owner got a lump sum. That would strike me as very risky.

This is not my understanding, but it's possible I've misread something above. Reduction in hours worked is not a separation of service, nor a "suspension" (whatever that is). The NRA definition is NOT 5 years of vesting service, it is "fifth anniversary". Yes, this person will be 100% vested on that fifth anniversary date.

Remember that all the transition period permits you to do is to operate the plan without change even though it might fail coverage testing otherwise. If the plan includes people who are employees of the sponsor with no exceptions, you cannot exclude the newly acquired employees who now work for Company A. However, if they put these employees in an excluded class through the transition period, you are fine. Be careful to read the plan thoroughly.

Are they excludable from coverage and NDT or not? That's not clear. Are they excluded from an allocation under the terms of the plan? it seems they are, and that is why an 11g amendment could be needed, in which case you would have to provide some vesting - whether 20% in total, or 100% on just this PS. BUT - Look at the partial termination rules - it is facts and circumstances. Simple 5500 reporting could certainly lead to a letter of inquiry from DOL or IRS as a PT will be presumed. And it might be a tough case to argue that "yes, believe it or not, all of our NHCEs terminated voluntarily before they were vested, totally unrelated to any actions by the employer." That is why all employees terminating in a year of PT must be fully vested, not just those involuntary terminations (handwriting on the wall ideology). Just my opinion, but I would consider steps now to head off possible future issue, unless other circumstances point to a hard line approach, like bad blood because all employees bolted to a better paying competitor.

That may be true for creditors of the IRA owner (the designated beneficiary of the plan participant that rolls over to the IRA). But creditors of the participant …. ? Why would there be a difference if the distribution is rolled over or not?

Correct - either apply a plan failsafe that is in place (which must be done if there is one) or do an 11g amendment within 9.5 months of PYE.

Well, you can, but you do have to amend the plan up to 9.5 months after the end of the year to provide for the increased benefit.

Don't forget about the ability to use 430(i) assumptions to determine the maximum deduction.....

I figured this was a brand new plan, maybe with a 3% or smaller ICR, and then the employees are all more than 20 years from NRA, so their benefits are getting discounted at 3.29% for Dec. 2021. So you end up with a smaller normal cost than the allocation credit, because all those years at 3.29% are going to overcome the 3.00% rate expected to tack on for such a long time.

You're misunderstanding how the look-back measurement method works. While it's true that employees who were in a limited non-assessment period or otherwise not full-time for all months in the calendar year do not need a 1095-C, that would apply only to new hires. In other words, a new full-time hire can have a LNAP of the first three calendar months. A new variable, part-time, or seasonal hire can have an LNAP based on the initial measurement period and initial administrative period of up to 13 months (plus a partial month for a mid-month hire) combined. But ongoing employees will be in a stability period based on the prior year's standard measurement period. Their status in 2021 is kept "stable" during the stability period based on the prior standard measurement period. For ongoing employees, the most common approach for a calendar plan year would look like this: Standard Measurement Period: 12 months, ending with a two-month gap before the start of the stability period. Calendar Plan Year Standard Approach: November 1, 2019 – October 31, 2020 Standard Administrative Period: 2 months, comprising the two-month period between the end of the standard measurement period and the start of the stability period. Calendar Plan Year Standard Approach: November 1, 2020 – December 31, 2020 Standard Stability Period: 12 months, tracking the employer’s plan year. Calendar Plan Year Standard Approach: January 1, 2021 – December 31, 2021 So even though there's a 12-month measurement period, that would have completed prior to the start of the stability period that applies to determine employees' full-time status in 2021. Ongoing employees' full-time status for 2021 is determined by the standard measurement period that ran from the end of 2019 to the end of 2020. Employees who averaged 30 hours per week (i.e., reached 1,560 hours of service) during that period are full-time for the 2021 stability period. Here's a longer overview: https://www.theabdteam.com/blog/key-decision-points-in-aca-reporting-vendor-setup-questionnaires-part-iii/

That's a tough call. First of all, the employee may no longer by HSA-eligible. That would definitely eliminate the option if it were the case. Even if the employee is still HSA-eligible, the extra contribution will run the risk of creating excess contributions based on how long the employee remains HSA-eligible this year (proportional limit), whether the employee had set elections to reach the maximum contribution limit (statutory limit), etc. But ultimately if the employee is still HSA-eligible and approves the contribution being deposited as a 2021 amount with the understanding of the limits, that probably is the best approach. The employer should consider some form of a missed earnings adjustment to compensate for the time lost. Otherwise, the only reasonable approach would be to refund the contribution (potentially with an interest adjustment) as standard taxable income. The employee could then choose to use the additional compensation to elect a higher pre-tax HSA contribution--which would essentially create an equivalent result. If the employee is no longer HSA-eligible, the employer should consider a gross up. Note that the employer probably has an issue with the 2019 Form W-2 (Box 12, Code W) in this situation that would also technically need correction.