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I don't see any reason why you couldn't amend the definition of compensation mid-year for employees who have not yet entered the plan. However, the plan's definition of compensation for allocations does not (usually) control its definition of compensation for testing. You can use post-entry comp for testing without amending the plan. You can also use comp net of deferrals (remember to also net out sec. 125 deferrals if you do this). Just double check that there isn't something in your plan document that would lock you in to a particular definition of comp for testing. If you think about it, though, allocation comp for deferrals is always post-entry comp; you can't defer on comp that was paid before you entered the plan.

Are you sure that's what the plan says? Read the exact wording in your plan document. I bet it actually says something to the effect that non-resident aliens with no U.S.-source income are excluded. If someone worked in the U.S. then they would not fall under that excludable employee classification, even if they are not a citizen and not a permanent resident.

In a controlled group, they could leave accounts behind, but once the other entity leaves the seller's controlled group those employees would have a distributable event. So, unless they did a plan-to-plan transfer to the buyer's plan, the former employees could keep their balances in the seller's plan or roll them out like any other terminated employee. Paul, I've seen similar situations before as well. On occasion we handled with a self-directed brokerage account in the buyer's plan and a plan-to-plan transfer. That obviously won't work if the buyer does not have/want a plan.

I suggest that the definition of Professional Services is limiting. The definition is limited to "a retirement or other employee benefit plan". Arguably, "rendering of advice, recommendations, findings, or opinions" further limits the definition that involves the personal exercise of professional judgement. Consider a Member who two jobs. One is working as a call center rep for a lawn care company and the other is as a call center rep for a recordkeeper. The recordkeeper requires all call center reps to get QKA credentials. Both jobs require the Member to stick to the script, and any freelancing or going off script is grounds for dismissal, the Member meticulously has stuck to the script and has not exercised professional judgement. Is this Member providing Professional Services when performing either job? If the Member goes off script with a lawn care client and offers advice, is this a violation of the Code of Conduct? If the Member goes off script with the recordkeeper client and offers advice on a topic the Member knows about from the Member's QKA studies, and the Member meets the other standards in the Code of Conduct, is this a violation of the Code? Again, I suggest at some level the definition of Professional Services is limiting which means it creates boundaries. The conundrum often is the interpretation of where are those boundaries.

Even to explain one plan, the Employee Retirement Income Security Act of 1974 permits a plan’s administrator to use more than one summary plan description, making them distinct by clearly identified classes. Each SPD may omit information that cannot apply to the class of participants or beneficiaries to which that SPD is addressed. 29 C.F.R. § 2520.102-4 https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/subpart-B/section-2520.102-4. But your focus on which benefit a participant enrolled in seems inapt. Rather, an SPD must describe each benefit its addressee could elect.

Agreed, the maintenance of the Plan for that length of time would endanger the tax-qualification of the termination, especially as there are no participant benefits left to be paid. Also, isn't the reversion deemed to have occurred once the participant benefits are fully satisfied? I read that AO as allowing for the treatment of settlor expenses, in conjunction with the plan termination, as fiduciary expenses. If the thought here is that the PBGC always audits plan terminations, the the service provider should be able to anticipate that cost and the charge of a retainer upon termination would be a reasonable fiduciary expense. The trust should be taken to $0 in an administratively expedient timeframe immediately following the final benefit payment.

As an initial response, PBGC requires assets to be distributed within a prescribed period of time and final 501 to be filed. IRS also states all assets to be distributed within 1 year of termination, assuming no pending determination letter for plan termination. So, how do you plan to get extensions on these? Just thinking out loud.

Peter, your questions so very often require taking another look at what is taken for granted and makes us question what is the real intent. One thing stands out with the Code - the definition of Principal says nothing about former clients or employer's of the Member. Also, the definitions speak to the Member providing to the Principal "retirement plan services" but this term is not defined in the Code of Conduct. You suggest assuming the work is Professional Services. The Code does define "Professional Services: services provided to a Principal by a Member, including the rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan." Professional services as defined in the Code are vastly different from the services provided by many employees of a recordkeeper where the employee's job is to follow a fixed set of administrative steps with no rendering of advice, recommendations, findings, or opinions related to a retirement or other employee benefit plan is involved. The Code also notes that "A Member shall render opinions or advice, or perform Professional Services, only when qualified to do so based on education, training and experience." People in our industry more often than not try to help out a participant that is struggling with understanding plan provisions and available options. To quote Dirty Harry, "a man has got to know his limitations."

ROTH-IRA or ROTH-401(k)? Contributions or conversions? Whether it is a ROTH-IRA or a ROTH-401(k) if all of the money is contributions plus earnings than the distribution is a qualified distribution and there will be no taxes. It does not matter if some of the contributions are less than 5 years old, unless they are conversions in which case each conversion is subject to the 5 year rule. The beneficiary would have no taxation on the distribution if she dies since it is all a qualified distributions.