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I think your terminated NHCE is nonexcludable. You can treat a terminated employee as excludable if they terminate in the current year and worked less than 500 hours, and only if they did not benefit in the plan solely because they terminated with less than 500 hours. In your case they worked more than 500 hours so they have to be included in your coverage and nondiscrimination test. If the plan has a last day requirement to receive a contribution, then you will either need to rely on a 410(b) failsafe (if the plan has one) or do a 1.401(a)(4)-11(g) amendment to waive the last day requirement for this employee.

I think that's in reference to a missed participant, not a missed change by an existing participant.

Understand wha ...SQUIRREL - LTPT.... oh yea - audit requir ...SQUIRREL -Roth employer contributions ... Yea, I get it, money savin ...SQUIRREL - PLESA accounts... Yea. Not much else going on....

Side note: why even have a SHM?

https://www.napa-net.org/secure-act-tax-credit-qas Found this with the applicable Q&A shown below. Note that 2.0 just expanded what was available on this. Q3: How do not-for-profit organizations receive the 403(b)-start-up credit for offering new plan? Is the credit applicable to non-profit organizations? A3: The credit is not applicable to tax-exempt entities because it is not a refundable credit. Therefore, the credit is not available for the adoption of a 403(b) plan. The types of plan that can qualify for the credit (for plan sponsors that are subject to taxation) are qualified plans under 401(a), annuity plans under 403(a), simplified employee plans under 408(k), and SIMPLE plans under 408(p).

CuseFan has the information right. I can think of two situations in which Internal Revenue Code § 404 might be relevant: A charitable organization has some activities that result in unrelated business taxable income. Such a charity might want a § 404 deduction for the portion of retirement plan contributions allocated to the business that produces the UBTI. An employer—considering everything that counts together as one employer under IRC § 414(b)-(c)-(m)-(n)-(o)—includes not only charities and other exempt organizations but also taxable organizations. Contributions for employees of a taxable organization would be to a plan other than a § 403(b) plan. There can be accounting and tax-allocation issues when compensation of executives or physicians who perform services used by several charitable, tax-exempt, and taxable organizations of an employer is allocated to the organizations.

Oh for sure. I think there is a bit of a trade off with the audits themselves becoming more detailed (and more expensive), but probably not enough replace the income from the no-brainer audits of plans with 200 eligible but only 20 accounts balances. I also wonder what impact the auto enroll mandate will have since we will surely see an increase number of participants with a balance.