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Nope, those are 415(c)-induced catchup contributions. Which then excludes them from the test.

When was the document signed? Deferrals can never be made retroactive, so at most, the deferral opportunity would start when the document was signed - and then, there is some "administrative leeway" in order to begin deferrals....

I don't think that an amendment to change the testing method can be adopted retroactively. In other words, if they wanted to change from current year to prior year testing for 2022, they would have had to do so by December 31, 2022. For determining the earnings on excess contributions that are being refunded, the regulations allow a plan to use any reasonable method, but you need to check your plan document to see what method it specifies.

I think you would probably be fine with the correction you propose as fixing a data entry error. Though you'd probably be on even stronger ground if you simply removed the erroneous deposit from participant, left it in plan, and used it to offset the next deposit. Same result, but the money never leaves the plan to go back to the employer.

If I am understanding you correctly, Jane has never been a 5% owner in any year. So her required beginning date would be April 1 of the year following the later of: The year in which she attains the applicable age (70½, if her date of birth was before July 1, 1949), or The year in which she retires from employment with the employer maintaining the plan Since it is clear she has already attained the applicable age, the question is, has she retired? Neither Code section 401(a)(9) nor the regulations thereunder provide a definition of "retires" for this purpose. Your question indicates that she is still performing some personal services for the business. It might be reasonable to consider her to still be an employee (and not retired) in any year in which she receives earned income (within the meaning of section 401(c)(2) of the Code), although that could be problematic if is is not known whether she received earned income until after April 1 of the following year. Another possibly reasonable approach might be to simply ask the plan sponsor whether they consider Jane to be retired, within the common meaning of the word. Ultimately this will be a matter of the plan administrator making a reasonable interpretation of the law and regulations.

With the expanded eligibility have you tested otherwise excludeable employees separately? If not it may help your testing results. Or you may have already tried and it still fails.

For Key/HCE determination purposes, I believe the answer is no. Ownership is attributed under 318 for Key/HCE determination, and 318(a)(2)(B)(i) excludes stock owned by a qualified plan trust. Since you have access to Who's the Employer, also see chapter 13, example 13.3.17.

IRC 401(b)(3), as added by SECURE 2.0 sec. 316, says that for an amendment meeting the requirements, "the employer may elect to treat such amendment as having been adopted as of the last day of the plan year in which the amendment is effective." I am reading this to mean that you treat it as if it were actually adopted on the last day of the plan year. So there would be no need to worry about 1.401(a)(4)-11(g) or 1.401(a)(26)-7(c) issues, since those only apply to amendments adopted after the end of the year. If the plan's valuation date is the last day of the plan year, then the amendment would also be taken into account for minimum funding and maximum deduction purposes. If the plan's valuation date is not the last day of the plan year, then a 412(d)(2) election would be needed if you wanted to take the amendment into account. Reminder that this is only my best guess at this point, we will have to wait and see what the IRS comes out with.

At least under SECURE 2.0, if a goof is made, it can be corrected with "only" a 10% penalty. Some small consolation, anyway... And I agree that the plan sponsor should make the formal decision as to whether or not she is "retired."

If there is doubt, ambiguity, contradiction, or vagueness, the plan administrator should have authority to interpret and should do so in a way that is consistent with the law and proper administration.

No. It doesn't matter what you call it, it is not an RMD until the first distribution calendar year, and for a non-5% owner, that means the later of the applicable age or the year of retirement. Since they have not retired there is no RMD. This is assuming that the plan terms do not require participants to commence RMDs earlier than the latest possible date allowed by law. Only if the distribution was actually contrary to the terms of the plan; if the plan permits participants to take amounts in such amount and at such time as they may choose, and the participant affirmatively consented to the distribution, then there is no reason to treat it as a mistake that needs to be corrected.

Agreed, but also know the minute there is an HCE, the match rate that includes that HCE must satisfy coverage. No problem if the lower rate, but this isn't just a set it and forget it design unless by design no HCE can be covered.

I assume that there is no limit on how much salary deferrals are matched. (If there isn't, it makes me wonder why a true-up is necessary ...) If there is and you do a payroll period match, the owner's deferrals to be matched will be subject to the limit. E.g., if the plan said that it matches deferrals up to 6% of pay, only 6% of that one payroll period for the owner can be matched. If that is not enough to get him the match he wants, then it's a problem. If you need to use a "true-up" technique to get the owner what he wants, then it needs to be nondiscriminatory. You can't have a "no true-up except for the only person who is self-employed, who does get a true-up" provision.

For what it’s worth, this is the only relevant Q&A I could find in the Gray Book (discontinued after 2015). QUESTION 2003-37 DC Plans: Receivable Contribution and Top-Heavy Determination Q&A T-24 of the 416 regulations says that if a plan is not subject to 412, then the account balances are not “adjusted” to reflect a contribution made after the determination date. Most practitioners have taken this to mean that non-412 plans (profit-sharing) should not take into account contributions actually made after the end of the plan year, but that such receivables should be taken into account for 412 plans (money purchase) along with adjustments for waived contributions. Is this a correct interpretation? If not, what is supposed to be excluded? RESPONSE The term "account balance" in the regulations includes contributions credited to the account of a participant as of the determination date, not just the contributions actually made. This is the balance communicated to plan participants as opposed to a cash basis of accounting reflecting actual assets on hand at that date. The rule addressing adjustments to the account balance for contributions made after the determination date, applies to any waived funding deficiency that is not considered part of the participant's “account balance” until paid.

One would hope that the loss of the top heavy exemption was discussed with the plan sponsor before they decided to remove the safe harbor match from their plan. Therefore, they should not be surprised that they are now subject to the top heavy minimum. As you noted, there is the 2002 IRS Q&A suggesting that they would accept the use of an accrual method for determining the top heavy ratio in a profit sharing plan, even though that is contrary to the text of the 1984 regulations. You might want to explain the situation to the client and let them decide if they are comfortable relying on the opinion from the Q&A, if it means they can save the cost of a top heavy minimum contribution for 2022.

Participants in an excluded class typically continue to earn vesting service as long as they remain an employee of the employer, they just can't accrue additional benefits.

As I understand it his comp is "earned" on 12/31 and his "payroll period" for lack of a better term is the plan year, so his "per payroll" match would be the same as and annual match and not technically a true up..

1. Assuming he's not making deposits based on draws through the year and only deposits once, that really is his only pay period. 2. With that said, I really don't like when employers don't do a true up and I would highly encourage him (if he was my client) to do a true up. The employer needs to have budgeted the full match anyway and an employee shouldn't be harmed if they have to structure the timing of the deferrals differently through the year.