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This is a question every cycle. For the last restatement cycle, IRS allowed you to use a retroactive effective date OR the the first day of the plan year in which the restatement was signed. (We were told that directly by the volume submitter coordinators.) That was a little confusing. We mostly used the latter except for a couple of particular cases where there was a compelling reason to go back six years. When we had our nonstandardized plan approved by IRS for this cycle, they specifically said that the restatement effective date could NOT be earlier than the first day of the plan year in which the restatement was signed. In fact, we were required to add that as a parameter in the document. So, for calendar year plans, the ones we restated last year were effective 1/1/21 and the ones we restated this year were effective 1/1/22. We've found that for changes in the document that were previously covered by an interim amendment, there's no need for a special effective date in the restatement. For clients who are adopting new provisions in 2022, we add the effective date to the pre-approved language. IRS has said that adding an effective date to a provision is not considered to be a modification to the pre-approved language. For example, we have a client on a calendar year plan who is adding Roth deferrals effective 7/1/22. The restatement is effective 1/1/22 but we inserted a 7/1/22 effective date for the Roth deferral provisions.

Even if the law firm is the sponsor it would not be exempt from PBGC coverage. Here is a quote from the PBGC Coverage page: "Lastly, to qualify for the small professional service plan exemption, the professional individual(s) must be engaged in the same professional service as the principal business of the plan sponsor. For example, consider a situation where: Company X is owned by an attorney, John Smith. Company X sponsors a defined benefit plan that has never had more than 25 participants. Company X’s primary business is the sale of insurance products. In this scenario, despite the fact that the company’s owner is an attorney (a profession that’s on the statutory list of professional individuals), Company X’s defined benefit plan would not qualify for the professional service plan coverage exception."

While plans vary (and many are ambiguous), a plan’s administrator (using its powers to construe and interpret the plan) might treat a surviving spouse’s disclaimer as removing the spouse from those of the plan’s provisions that require treating a spouse as a participant’s beneficiary. If so, and especially for a beneficiary designation made before its maker had a spouse, the effect might be to recognize the participant’s designation of a (non-spouse) beneficiary. Depending on what beneficiary designation a participant made and which persons might become direct or ultimate takers under a plan’s provision for a default beneficiary, the disclaimer reasoning and the default reasoning might result in the same or different takers.

Since all company shares are held by the ESOP, the deduction is not an issue since there is no income tax. I would find out how the company (and accountant) are treating the funding. Most ESOPs with S-corp stock only allow cash distributions as the company would not want a lot of ex-employees owning and receiving a K-1 for their share of earnings. In addition, S-corps cannot have more than 100 shareholders but that is not an issue with this S-corp.

Special rules apply if termination is for 410(b)(6)(C) transaction (e.g., merger, acquisition, etc.). • Result: – Plan gets to retain safe harbor status – No 30-day notice mandate and – Still must fund contributions to termination date.

CuseFan is correct. Also, the Employer can make an S corp distribution of earnings to the ESOP (akin to a dividend). The distribution of earnings is not a contribution nor a Sec 415 annual addition, The distribution of earnings is generally allocated to participants based on shares, not compensation. Based on the accountant's explanation that the company is not treating the "contribution" as a "contribution'", this may in fact be what is happening.

I am not in disagreement with any of the previous responses. However, I wanted to make the following point. The QJSA was elected by the participant's own free will whether or not the plan provided for one with respect to an unmarried participant. The Plan had no reason to believe that the facts were false at the time the election was made and therefore there was no duty on the part of the plan's fiduciaries to do an investigation. Since the participant and not the plan made the misrepresentation, why not leave the participant where he lies? I have seen a court case on somewhat similar facts that was decided by a federal trial court in the 1980s. Posthumously providing the participant with the difference between the QJSA and the SLA would amount to unjustly enriching the fraudster. Leave things where they lie!

I am firmly behind Peter's position on this and I would NOT inform the DOL. However, if your client is a fiduciary with respect to the plan with potential knowledge of a fiduciary breach, then either work with your lawyer to write a letter to the allegedly breaching fiduciary threatening suit unless s/he makes any deferrals up to the plan with earnings as soon as possible but no later than a short period of sending the letter or sue the breaching fiduciary for fiduciary breach, in which case you would have to furnish a copy of the complaint to the DOL.

Agree with Calavera, and think that the RE company is not prof svcs and as participating ER there is no PBGC exemption.

probably not necessary unless some are over comp limit and others under. that way each is limited to same max % rather than same dollar amount. example above, but assume the $60k HCE was owner's son. if small plan, consider SH and avoid that worry altogether.

I would actually want to be covered by PBGC. For a really small PBGC premium payment, you get full 401k/PS/CB deduction.

Not in the M&A context. Treasury Reg. 1.401(k)-3(e)(4) allows the sponsor to terminate a safe harbor plan during a plan year. Within that subsection, (i) describes the normal, non-M&A termination rule, which does require 30 days' notice (by reference to the requirements of subsection (g)) but (ii) allows the plan to be terminated in connection with an M&A transaction without imposing any notice requirement (either directly or by reference to (g)).

I'd have a hard time buying the "revival" of a form which was superseded upon the marriage. But, I could readily believe that if the spouse disclaims, that the "next in line" would have then be determined under any default language in the document....which could possibly make the decedent's issue he whom would be next to consider, anyway.

With its lawyer’s advice, a plan’s administrator might consider: Do the plan’s governing documents recognize a disclaimer? Do the documents preclude a disclaimer? Are the documents silent on whether a disclaimer is recognized or precluded? If the documents are silent and the administrator has discretionary powers to interpret the plan, the administrator would prudently consider the plan’s purposes and circumstances to discern whether to recognize a disclaimer. If the administrator decides to recognize a disclaimer, it might require a disclaimer that (at least) meets the conditions of Internal Revenue Code § 2518. See IRS Gen. Couns. Mem. 39,858 (Sept. 9, 1991); Ltr. Ruls. 92-26-058, 90-37-048, 89-22-036. If a beneficiary makes a valid disclaimer that the retirement plan’s administrator accepts, the plan benefit’s will be distributed (or distributable) as if the beneficiary/disclaimant had died before the participant’s death (or before the creation of the benefit disclaimed). See generally Unif. Disclaimer of Property Interests Act (1999, amended 2006), 8A U.L.A. 281–331 (2014) & Supp. (2021); Unif. Disclaimer of Property Interests Act (1978), 8A U.L.A. 333–349 (2014). Also, if a beneficiary makes and delivers, within nine months of the participant’s death, a qualified disclaimer the retirement plan accepts, the disclaimant is treated as not a beneficiary for tax-law minimum-distribution conditions. Prop. Treas. Reg. § 1.401(a)(9)-4(c)(2)(ii). An administrator should read carefully the plan’s governing documents and the particular beneficiary designation to discern the effects of them and whether the surviving spouse’s disclaimer “revives” a beneficiary designation that otherwise might have been precluded by the plan’s provision for a surviving spouse.

It's to keep some HCE from terminating early in the year with all 20,500 deferred but maybe only 60,000 in wages earned to date making a mess of the test and causing ALL the 20,500 people for the year to have to take a refund.

As a practical matter, contemporaneous participant notice is a good idea, but there is no advance notice requirement in the law (either for safe harbor or non-safe harbor plans) in the M&A context. I have heard several recordkeepers tell plan sponsors in this situation that a 30-day notice is required, but in my opinion there is no legal basis for that or any other advance participant notice (although I understand many recordkeepers require a minimum notice to begin processing the plan termination on their end, which is different from terminating the plan as a legal matter).

The best I can add is to listen to what an actuary colleague often repeated to me; "Don't make the client's problem your problem." It may be best for all party's to have the Plan Sponsor engaged a qualified ERISA attorney.

Board resolution is enough for all the interested government agencies. You can amend later if needed as long as there are still assets in the plan's trust. Good luck!

Alternatively, consider that the company C 401(k) plan fails coverage (not to mention nondiscrimination), is deemed not qualified and therefore contributions are returned as not deductible. Need to amend any W2 and tax return(s) based on the invalid deduction. So basically, similar result as presented by Peter but even if documents were signed. You'll need to confirm if document language supports.

Agreed

I don't know if company being an S-corp makes this impossible, but can't the company distribute the shares and then repurchase them directly from participants? I know there is an ESOP guy on this forum, so hoping he'll chime in with a definitive answer for you.

I wouldn't report it regardless, but even if I were otherwise inclined to report it, I REALLY wouldn't report it when you don't even know if there's a PT involved. Just my 2 cents worth.

Same situation many times. No we didn't report it to the DOL. We had a client or two that we fired for that. Up to them to fix it. I would just resign from the plan and go on.

EPCRS has an example for the safe harbor match plan. 2021-30 example 8.

Yes, happens all the time.

Whether or not they choose to defer, the correction for the missed 5 months is the same. https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees "The amount of the QNEC is equal to 50% of the employee’s missed deferral determined by multiplying the actual deferral percentage for the employee’s group (HCE or NHCE) in the plan for the year of exclusion by the employee’s compensation for that year."

I always assumed @K-t-F meant "Keogh to Four 0 1 k" 😁

A business owner, with his or her lawyer’s advice, might consider: Did the bank present a negligent communication? If so, did the communication induce a purported signature on a writing the purported maker did not intend to adopt? Absent a plan document, did the ostensible plan never exist? If the plan never existed, the ostensible trust had no purpose. The trustee would return all amounts. If the plan and trust never existed, the employer or service recipient and the employee or self-employed individual would file or amend all tax returns and tax-information reports to report the correct facts.

The adoption of the solo-k makes the SIMPLE invalid for the years where they overlap. The multiple SIMPLEs are also a problem. A SIMPLE is required to cover all employers of a controlled group and all employees. No other SIMPLE is allowed for that same group of employers.

don't try this at home.... so, while I'm not collecting Soc Sec yet, June 1 I was within 3 months of my 65th calendar year birthday. And as such, that is the earliest date to start the application for Medicare. Supposedly, if you have set up an account on the soc sec website, you can apply there. tried that, the only thing that shows up asked for my medicare number which I don't have so that was no good. So I called Medicare and they set up an appointment, but that call would be late July. I then went to the Medicare site to try to apply on line, and...it gives a link to go through soc sec. When I clicked on that I was back to my soc sec acct, but this time there were a bunch of questions about filling out on line for Medicare. go and figure. A few days letter I received indicating the phone appointment was cancelled. then I received another letter indicating the medicare card would be sent in 2 weeks. And another letter checking to see if I was eligible for supplemental drug coverage. and today, my card arrived at my brothers address...My brother called them and they have no idea why the card was sent there. Seeing how I already received 3 pieces of mail from them, this is a great puzzle. well, at least I do have a number. Now I can get signed up with a health insurance company for supplemental coverage. At the rate I am going, I might just have everything in place by my 65th birthday. I guess word to the wise, start your application at the earliest possible date. good grief.

No problem at all from my viewpoint. Many documents (Relius, for example) you would just specify the effective dates of those changes in the Appendix. So you restate 1/1/2022, with one or more provisions in the restated document not taking effective until 8/1/2022, as noted in the Appendix.