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Agree with Peter. This would be similar to medical malpractice tail coverage.

About (only) the ERISA fiduciary liability insurance contract: The insured fiduciary might ask her insurance intermediary to check with the insurer about whether, and for how much premium, the insurer would be willing to issue extended-reporting-period coverage. Likewise, one might ask whether that coverage could run for up to six years so it aligns, even if imperfectly, with ERISA § 413(1)’s statute-of-repose period.

A major disincentive to allowing all employees to participate immediately is that if the plan is top heavy (or becomes top heavy in the future) then those employees would be entitled to a top heavy minimum contribution, even if they would not otherwise be eligible for employer contributions under the plan. 401(k)(15)(B)(ii) provides that employees who are eligible solely because of 401(k)(2)(D)(ii) may be excluded from the top heavy minimum. It remains to be seen how the IRS will interpret the word "solely" in this context. It could mean that an employer who restricts their employees' eligibility to the minimum allowed under the LTPT rules may come out better in terms of their required top heavy minimum contribution than an employer who allows their employees to participate immediately.

Not quite. EPCRS permits a plan to correct a 401(a)(30) failure, because 401(a)(30) is a qualification requirement. If the limit was not exceeded in a single plan, or within plans in the same controlled group, then there was no qualification failure and hence no opportunity to correct under EPCRS. Mechanically, the way it works is that the participant is limited to a deduction of $19,500 (assuming under age 50) on their 2021 tax return. Therefore, any amount contributed in excess of that is effectively an after-tax contribution. However, when it is distributed in retirement, it will be taxable as a normal distribution from a pre-tax account. So it will have been taxed twice - both going in and coming out.

Yes, they are fairly basic for a plan freeze, but as Jakyasar noted you do need to describe the prior structure as well as the new structure which is the freeze (no future contribution credits). The prior structure description should include the contribution credit formula (either plan-wide or that applicable to the participant receiving the particular notice) and the interest crediting rate methodology.

Is something late if it's never due?

What each of “he” and “she” needs is to get work from a good estate-planning lawyer. To get candid, unconflicted advice, each needs his or her own lawyer. Planning of the kind your post describes is mainstream, and need not be expensive. That’s especially so for a client who is intelligent, educated, and well organized. Much of what one might seek can be accomplished by supporting a retirement plan’s, IRA’s, or non-retirement investment’s beneficiary designation or transfer-on-death registration (or a bank account’s pay-on-death registration) with a premarital agreement or after-marriage consent and a trust (whenever and however created) to provide the differing beneficial interests a retirement plan’s, IRA’s, or investment’s beneficiary regime does not provide. (I’ve never seen an employer’s retirement plan that restricts a beneficiary to an income-only distribution. And many or most retirement plans do not determine income in the sense of the fiduciary accounting concept of distinguishing between income and principal.) For an ERISA-governed retirement plan, a good estate-planning lawyer would recognize that a premarital agreement alone is not enough for a qualified election (with the spouse’s consent) to negate an ERISA § 205 survivor annuity or death benefit. For a governmental retirement plan, one would look to the plan’s provisions (which often are, but might not be, stated or explained in a comprehensive document or summary) to discern whether the plan provides a participant’s spouse a survivor annuity or other death benefit, whether one may elect out of that benefit, and what is required for a valid opt-out. To simplify some planning and implementation steps, a participant entitled to an ERISA-governed retirement plan’s distribution might consider a rollover into a non-ERISA plan or IRA. Likewise, one might consider a rollover from a non-ERISA plan into an IRA. (There are several creditor-protection, investment, expense, and other factors that, depending on the surrounding facts and circumstances, might point in other directions.) Of the three retirement kinds—ERISA, governmental or church, or non-plan IRA, an IRA is most likely not to apply a protection for a spouse in the IRA’s administration. (For a non-ERISA plan or IRA, that a protection is not applied in a plan’s or an IRA’s administration does not defeat whatever rights a spouse has under one or more States’ laws.) For a trust that provides a surviving spouse income but not principal, one could design a trust so a trust’s beneficiary is treated as a designated beneficiary for a retirement plan’s or IRA’s minimum-distribution provisions. While the proposed rules do not yet apply (and are not even effective), one might design and document a trust to follow both the proposed and current rules. If the spouses ever will or might reside in a community-property State (or otherwise invoke a community-property law), either or both might want a premarital agreement that undoes community property for some or all of the property interests. If any State’s law for a spouse’s elective share might apply (which is almost everywhere in the USA if community-property law does not apply), either or both soon-to-be spouses might want a premarital agreement that undoes a surviving spouse’s elective-share right. If either would-be spouse imagines a possibility of divorce before death, he or she might want a premarital agreement to specify what property division applies on the divorce. Either would-be spouse might want a premarital agreement to specify how the spouses share or divide household and other living expenses. If you have access to 403(b) Answer Book, 457 Answer Book, Governmental Plans Answer Book, Roth IRA Answer Book, or SIMPLE, SEP, and SARSEP Answer Book, my Beneficiary Designations chapter in each book gives a reader further details on many of these points. Beyond the property-rights, tax, and other law issues involved, a good lawyer can help her client with practical aspects of the planning. This calls for foresight when the planning must or should consider the circumstances and personalities of his-and-hers families.

Agree with Peter and Bill. I'll also add that tail coverage has been required by the purchasing entity in several M&As that I have been involved in.

Every time we have a discussion like this, "I'm just bill" starts playing in my head....

I had a similar situation about a year ago. An employer that was governmental filed a late 5500 for their 403(b) plan on the advice of their platform vendor's rep. I corresponded with IRS and told them that the employer was governmental and should not have filed. Took a few months, but the IRS abated all penalties. The Service Center person with whom I spoke prior to sending letter seemed to understand that penalties should not have been assessed if form should not have been filed. Employer has stopped filing.

The Form 5500 Instructions include this: If the filing due date falls on a Saturday, Sunday, or Federal holiday, the return/report may be filed on the next day that is not a Saturday, Sunday, or Federal holiday. https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2021-instructions.pdf

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As long as that is applied consistently without discrimination I don't see a problem and agree that 2 1/2 months can be vague and open to interpretation (which then should also be applied consistently without discrimination). It appears then this is what the TPA is essentially suggesting, that the Plan Administrator adopt an interpretation that 2 1/2 months for this purpose is 75 days. I think most view as half month as 15 days, one could argue 14 if February is involved or 16 days for 31 day month, not to mention the number of days in respective full months, so formalizing a plan policy at 75 days and coding the administrative system makes sense.

Without doing any research, I would agree with you, and I think the IRS person is full of (something). I'd ask to speak to a supervisor. But, I may the one who is full of it...

Lou No, you have to provide prior benefit structure and new benefit structure as of amendment date on the notice. Plan termination date is not required on the notice. Cusefan provided the additional requirements under PBGC coverage.

Presumably the plan was offered but everyone said no. I think we had a plan like that years ago where a Dr. had a plan for his union employees and he had to maintain a deferral only 401(k) Plan for them. In that case it wasn't zero as I think 2 people put in de minimus contributions but when they left no one else ever signed up. The plan ran a number of years with no new contributions. But I think that was than 10 or more years ago that plan terminated. Assuming you have a valid plan that is actually offered to the employees but no one ever signs up I believe you can keep it going as long as you want as long as you keep the Plan document up to date, give the participants any required notices and file the 5500. I'm not sure why you'd want to as a Plan Sponsor but maybe there is some valid business reason for having a Plan that no one uses.

I am getting pretty rusty on 4k plans as I haven't worked on one since 2012.... But do you have missed deferrals strikes me as a better question? If the plan was adopted and people entered the plan they should have been given the ability to defer and it sounds like they haven't been give any such election. Or am I not understanding something?

Can't they be pretty basic. Something like... PLAN NAME NOTICE UNDER ERISA §204(h) Benefit accrual under "the Plan" will cease effective (enter date). "The Plan" will be terminated effective (enter date). Plan Sponsor or Plan Administrator Contact Info Date of Notice

I don't think so, but I'm more on the CB side of the equation so I don't know that unequivocally. What possible advantage would they get to do this? Just retroactively adopt the PS-only 002 for 2021 with the desired allocation formula, merge it into the existing plan 001 at 12/31/2022 and prior to 12/31/2022 (or earlier if you still send notices) amend the existing plan 001 effective 1/1/2023 for the SHNE and PS allocation formula from 002. And of course, timely adopt your new CBP 003 effective for 2021. Isn't this standard operating procedure? If they're trying to get deferrals out of 001 and into 002 for 4Q2022 to save on the SHM and get cross-testing benefit of SHNE, I don't think that flies. It's a trap!

If the plan is less than 100 participants and not covered by PBGC, then yes, 15 days. If freezing benefits before the termination date, then 15 days before that amendment. If >100 participants, 45 days, and if PBGC covered then a Notice of Intent to Terminate is due 60-90 days in advance (and PBGC has a model). If you use a pre-approved document that provider should have 204(h) statements, I know FTW does.

Whatever one thinks of the public policy of ERISA’s requirement for a lifetime-income illustration, let’s put the responsibility where it belongs: Congress amended ERISA to impose the requirement. The Labor department made a rule to implement the statute Congress made. And even that rulemaking is commanded by an Act of Congress.

By the way, a request for guidance on the LTPT rules was the very first item (actually the first two items) on ARA's recent letter to the IRS: https://araadvocacy.org/wp-content/uploads/2022/07/22.06.03-ARA-Comment-Letter-2022-2023-Priority-Guidance-Plan.pdf

The use of conditions other than age and service are still limited by the coverage test of §410(b). In effect the coverage test provides "guard rails" against the (ab)use of class exclusions. However, §401(k)(15)(B)(i)(II) provides that the employer may elect not to apply §410(b) to long-term part-time employees. Without the coverage test, I would want some other guidelines by which to determine that a particular exclusion is not abusive. Otherwise, an employer could come up with a classification that would allow them to exclude all, or nearly all, of their long-term part-time employees, which seems contrary to the intent of the law.

It sounds like they had restated to their document rather than Schwab's, so it would be one plan document and two custodians.