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If part-time employees might put a plan over a threshold and call for engaging an independent qualified public accountant, is it feasible to divide participations into two (or more) plans? If an employer anticipates a meaningful number of employees will become eligible because of § 401(k)(2)(D)(ii), one might—to facilitate efficient coverage and nondiscrimination testing, or for other plan-administration reasons—organize two distinct plans: (1) a plan for those who meet eligibility conditions without any to meet § 401(k)(2)(D)(ii), and (2) another plan for those who are eligible only by meeting eligibility conditions provided to meet § 401(k)(2)(D)(ii). One would design and administer the plans to meet required aggregations and disaggregations, and to rely on only permitted aggregations and disaggregations. Or is this where BenefitsLink mavens remind me I don’t know enough about how services are provided to small plans?

What Paul is addressing is 409p testing. It is very complex. At the risk of coming across as a bit self serving but failing 409p can't happen. You need to get solid advice from an ESOP service provider who knows what they are doing to help you with the 409p rules. The family attribution in 409p is much broader than any other testing. But no it doesn't apply to 401k plans.

Bonding is a Title I requirement. Plans which are exempt from Title I, including plans which cover only a 100% owner and their spouse, or only partners and their spouses, are therefore exempt from bonding. Prior to 2020, these were also the only plans that were able to file 5500-EZ, but that distinction has been modified slightly with the new rule for 2% shareholders in an S corp.

I think you need to push back and clarify what they mean by "late." If you are on extension to Oct 15, then completing the contribution by that date is not "late" for...anything. I'm guessing they didn't realize you were going on extension or else just didn't spend any time thinking about the answer.

Correct.

Some prior commentary from the Gray Book: QUESTION 1999-21, Other DB Issues: Definition of Retirement or Termination of Employment A number of qualified plan rules hinge on a participant's retirement status. Examples include the ability to receive a benefit distribution prior to separation from employment and the requirement to commence distributions at the later of age 70 1/2 or retirement. How are these requirements addressed for participants who view themselves as "semi-retired" or "retired, supplementing pension with part-time work for the same employer"? Would application of such rules hinge on discretionary elections made by the employee (as opposed to the employer)? RESPONSE The §401(a)(9) guidance did not address what constituted retirement. Once the status of worker changes from common law employee of the employer sponsoring the plan, the employee has retired. Other situations will be addressed on a case-by-case basis. Not having enough hours of service to trigger the suspension of benefit service rules is not sufficient to be considered retired. For purposes of the minimum distribution requirement, once the employee has had a bona fide quit, any subsequent re-employment with the same employer does not allow for further delay of the minimum distribution requirement. Similarly, re-employment does not inhibit the ability to permit a distribution on account of "separation from service" based on the earlier termination of employment. QUESTION 2004-42, Other DB Plan Issues: Date of Retirement and Required Minimum Distributions Treas. Reg. §1.401(a)(9)-2, A-2(a) provides that except in the case of a 5%-owner, the “required beginning date” is April 1 of the calendar year following the later of the calendar year in which the employee attains age 70-1/2 or the calendar year in which the employee retires from employment with the employer maintaining the plan. If December 31, 2003 is the employee’s last day at work, and the last day for which he is paid or entitled to payment of wages, is that the date of “retirement”. Or is January 1, 2004, the first day he is not employed, the retirement date? When is the employee’s required beginning date? RESPONSE “Retirement” is the last day worked, not the definition of retirement date in the plan. What date is an employee’s last day worked is a facts and circumstances determination. The facts and circumstances are based on the employer’s practice concerning the last day an individual is considered an employee.

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.

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.

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.