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truphao made an important distinction which I believe is frequently lost on DB plan practitioners. A plan is required to define a normal retirement age, which is important for certain calculations under sec. 411 and other requirements under sec. 401. Reg. 1.401(a)-1 offers some guidelines for selecting a normal retirement age. When doing funding calculations, an actuary has to make an assumption about when a participant will commence benefits. 1.430(d)-1(f)(3) requires that actuarial assumptions, other than those specified in law, must be reasonable and must offer the actuary's best estimate of expected experience under the plan. Nowhere in that section or any other is there a requirement that the actuary assume that a participant will retire on the plan's normal retirement date. Indeed, if it would not be reasonable to assume that the participant will retire on the plan's normal retirement date, then the actuary may not make that assumption.

There needs to be 80% common ownership for a controlled group to exist. If the wife only owns 50% of another business, and the other 50% is owned by an unrelated party, then I don't see how a controlled group exists. If the businesses provide services to each other, or are regularly associated in providing services to third parties, then you could have an affiliated service group, but that is a different question. As to your other question, the term "Employer" for 401(a)(26) purposes is defined in 1.401(a)(26)-8 which references 1.410(b)-9. That section says Hence the term "employer" for 401(a)(26) purposes includes all other employers in the same controlled group or affiliated service group.

I never started a thread like this for any other legislation. This is different. It's insane. It's impractical. I promise you when I tell clients they have to auto enroll and auto increase participants they are not going to start a plan. Heck half of my new start-ups are SH Match based on the idea that participation will be lousy. That and the fact that automatic enrollment is completely beyond the <50 population. I have clients with 300 employees who could not handle auto enrollment (generally because they have enormous amounts of turnover). We are not overreacting. IT is every bit as bad as we say.

I am not an attorney, just a lowly TPA, but when I started reviewing the ACT, I thought I would create a spreadsheet that I could sort by the code section, effective date, etc. This was just my first run through and obviously needs to be updated, but please feel free to take it and make it your own. Secure 2.0 Provisions.xlsx

Yes, you are missing something. Refer to the Vogel Fertilizer decision of the Supreme Court from 1982. The "same 5 or fewer" owners must each own something in both/all companies that you are analyzing for control. Since non-related owner wife does not own anything in Husband medical practice, she is not included as one of the same 5 individuals. By the way, prior to Vogel the IRS regulations included any 5 individuals (not necessarily the same) for the 80% threshold -- the same interpretation that you are now making. I was practicing back in 1982 and the Vogel decision was a big deal...many groups that were deemed to be controlled all of a sudden found out that they were not!!

That might be true for state law in MD but for purposes of federal tax law I would take the position this distribution is done. In tax law there is a concept known as "constructive receipt". The wife had control of the check even if for a short period. She had constructive receipt. I am confident the IRS would say the late wife had a taxable distribution. Most of the time once the check is mailed constructive receipt has happened. That is why a check mailed on 12/30 but not received say until 1/3 the following year is on the 1099 for the year mailed. The only question would be is if the husband can roll it over to an inherited IRA or not and I can't cite anything one way or another.

As noted - two separate issues: (1) NRA definition in plan document which has specific statutory requirements and (2) funding assumptions which must be reasonable. For (1) - anything before age 62 must prove/satisfy typical industry standards, not expectations at the company level. If law firm partners typically retire at 62 or later, then 55 doesn't work even if the partners are 40 and said they don't plan on working past 55. Which, if that is the case, then 55 as the assumed retirement age for funding valuation is certainly reasonable. I think you have troubling issue with the former here but not the latter.

They could do a SIMPLE - nothing for non-employee contractors, W-2 employees would be offered if they met the eligibility rules being established, and the owners' contributions "from the company" beyond their deferrals would be a function of their net earnings from self employment (since they're owner-employees not getting W-2s).

Peter, there are definitely a lot of open questions. Section 305 does seem crystal clear on removing the three-year limit for significant errors. I.e., if a plan administrator discovered a significant error going back 10 years for which the correction is clear under the IRS's current guidance, then the employer can self-correct now. I think Congress also tells the IRS in Section 305 (although this is not as clear) that it wants IRS to publish principles-based correction guidance, perhaps so that if an error is not precisely included in any of the prefabricated corrections, an employer could proceed anyway with SCP by applying the newly articulatyed general principles. Whether the IRS will give this part of Section 305 an expansive interpretation, e.g. providing general guidance regarding what to do about missing data or documents, for example, is uncertain. Regarding the requirement of having established procedures, as well as the issue of whether having a VCP compliance letter is important for deal work, I think this may make attorney involvement in correction even more attractive than it has been in the past. An attorney can advise, or even give an opinion, in some cases, that self-correction "should" be available, and that a particular correction "should" fix the error. And that advice will be protected by attorney-client privilege. And unless in such a case the accountants (in the case of a large plan) can require the plan administrator to inform them of counsel's opinion (and I don't think they can) and the fact that they applied SCP, the advice and correction could remain secret. Moreover, unless the acquirer in a deal specifically asks whether the plan has used SCP in, say, the preceding 5 years (as opposed to what I typically see, which is just that the plan sponsor has no reason to think that the plan has failed a document or operational qualification requirement), maybe the employer is good to go. I'm not saying this is the most conservative course or that it is what all, or even most, employers will want to do, but it does seem to me to be a possible course of action under Section 305. But to go down this route the employer would definitely need a lawyer to be in charge and have all the experts working for the lawyer, as often do now anyway. Finally, regarding your point, AKowalski, I totally agree that a broad interpretation of Section 305 really puts the ball over in the DOL's court, if they devote the resources to dealing with it. I have always thought that EPCRS should work the way Section 305 now seems to require, for two reasons. First, the penalty of disqualification is inappropriate in many ways (that I will not go into here) for the types of errors that can be corrected under SCP as broadened by Section 305, even if one gives Section 305 its broadest possible effect. Second, in difficult cases, VCP's can involve a lot of practical compromise between the plan sponsor and the IRS, and because the VCP compliance agreement is confidential, neither the DOL nor the participants are informed of what the compromises were. And the IRS works solely from correspondence, and may not have seen all of the employer's cards, even though the employer may have been able to provide the penalties of perjury representation without risk.

Agree, but I think there is a valid argument to be made that a successful high profile trial attorney can be expected to retire earlier than 62. Yes, I am stretching but what I am trying to say is falls into "facts and circumstances" area. I strongly feel that the answer is "yes". For example, husband and wife run a successful real estate business (or mortgage company) together with the wife being 5 years younger. Can I really assume they both would be working until their individual age 65 (as NRA being age 65 in the plan doc)? Or do I assume (after learning that they want to be done when the husband is 65) that that is my assumed retirement date for both of them?

So we learn something together: Imagine a defined-benefit pension plan provides a normal retirement age of 55. Imagine the plan’s sponsor asserts that age “is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed[.]” 26 C.F.R. § 1.401(a)-1(b)(2)(iii) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR6f8c3724b50e44d/section-1.401(a)-1#p-1.401(a)-1(b)(2)(iii). May an actuary do her work assuming the plan-specified normal retirement age? Or do professional standards require an actuary to make her own estimates about when the plan’s participants are likely to retire?

There are clients with 30 employees who would screw up auto enrollment, I don't think its a size issue. I have had auto enroll clients with more than 1,000 employees and lots of turnover handle them just fine, with an issue here or there. And you know, if you need cash to pay for the ambulance for that hangnail, we have a provision for that in Secure 2.0 as well

If you call a lack of guidance hypochondria then sure I'm a hypochondriac. We've seen the IRS side in favor whatever their deepest convictions are of the meaning of something (whether we agree with them or not (best example was that QNECs couldn't be funded with forfeitures)) with zero regard for what is practical and/or. So I'll feel better when I hear it from them. Now if you'll excuse me I have a hang nail and I believe it requires some stitches so I've just called an ambulance 🤪.

Solo 401(k), Uni-K, etc are all marketing terms. Not technical terms at all. It is one of my pet peeves that people think these kinds of plans are special or exempt from something because they are called 'solo' plans. Not trying to rail against you, I know you didn't invent the term. Just expressing my distaste at some of the marketing and sales things in general. Those plans are regular 401(k) plans subject to the same rules, reporting, discrimination testing etc. I agree with the others, if the plan allowed for deferrals immediately you likely have a missed opportunity to defer, but it is document specific.

Has anyone read Atlas Shrugged? Or am I the only one thinking about the perils of over-regulation?

Sure thing. I posted it more for the structure than the content.

Here's a 20-page chart from Seyfarth Shaw that includes effective dates and whether a plan amendment is required. And a 10-page "Pocket Guide", organized by effective date, from Proskauer.