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You don't need to amend eligibility entirely, you can target the amendment to waive eligibility for employees hired as of XX/XX/2022.

I would just do the 11-g amendment as long as this person s an NHCE. If you retroactive amended the plan for everyone, you would have to re-amend to bring it back to 21. Unless they WANT to make it 20.

Easy correction under EPCRS by amending plan retroactively to permit early participation for the one affected employee: Rev. Proc. 2021-30, App. B, section 2.07 - (4) Early Inclusion of Otherwise Eligible Employee Failure (a) Plan Amendment Correction Method. The Operational Failure of including an otherwise eligible employee in the plan who either (i) has not completed the plan's minimum age or service requirements, or (ii) has completed the plan's minimum age or service requirements but became a participant in the plan on a date earlier than the applicable plan entry date, may be corrected by using the plan amendment correction method set forth in this paragraph. The plan is amended retroactively to change the eligibility or entry date provisions to provide for the inclusion of the ineligible employee to reflect the plan's actual operations. The amendment may change the eligibility or entry date provisions with respect to only those ineligible employees that were wrongly included, and only to those ineligible employees, provided (i) the amendment satisfies https://checkpoint.riag.com/static/23.05.0503.21/v2018/images/doc/link.gif § 401(a) at the time it is adopted, (ii) the amendment would have satisfied https://checkpoint.riag.com/static/23.05.0503.21/v2018/images/doc/link.gif § 401(a) had the amendment been adopted at the earlier time when it is effective, and (iii) the employees affected by the amendment are predominantly nonhighly compensated employees. For a defined benefit plan, a contribution may have to be made to the plan for a correction that is accomplished through a plan amendment if the plan is subject to the requirements of https://checkpoint.riag.com/static/23.05.0503.21/v2018/images/doc/link.gif § 436(c) at the time of the amendment, as described in https://checkpoint.riag.com/static/23.05.0503.21/v2018/images/doc/link.gif section 6.02(4)(e)(ii) Document Title:Rev. Proc. 2021-30, 2021-31 IRB 172 -- IRC Sec(s). 401; 403; 408, 07/16/2021 Checkpoint Source:Revenue Procedures (1955 - Present) (RIA) © 2023 Thomson Reuters/Tax & Accounting. All Rights Reserved.

Short answers, yes each plan files a form, and yes it is wise to file and seek relief.

Sounds like a perfect use of self correction by plan amendment to conform the plan's terms to it's operation. (again assuming this is an NHCE and not the owner's kid)

Here is another analysis https://1npdf11.onenorth.com/pdfrenderer.svc/v1/abcpdf11/GetRenderedPdfByUrl/01_05-ERISA-Litigation-Update.pdf/?url=https://www.goodwinlaw.com/pdf%2Fen%2Finsights%2Fnewsletters%2F2023%2F01%2F01_05-erisa-litigation-update The Sompo is an insurance company and seems to be sounding a general alarm that the litigation is out of control and that other insurance companies have stopped writing coverage for plans. Goodwin is a law firm with an ERISA Litigation practice and seems to be noting trends that "smaller" plans are now being sued (although the smallest of the small plans are described as having under $250,000,000 in assets). My takeaway is the success of lawsuits that picked the low fruit by suing the biggest of the big plans provided a road map for others to file lawsuits against mid-sizes plans. On the other hand, the plans that have successfully defended themselves from lawsuits have provided a road map for a plan to follow to succeed in fending off litigation. As the litigation continues, the courts also seem to have more precedents that guide them to earlier dismissals of the copycat suits. Hopefully, we reach the point where plans that do not fulfill their obligations to participants are held accountable, and plans that do fulfill their obligations are not alone in the fight against predatory lawsuits. My personal view is this speaks to opportunities for ERISA attorneys (and I am not an ERISA attorney) to educate plan sponsors and service providers on best practices and risk management.

With a few more filters the number of plans gets much lower. For example, applying filters for Codes 2J (401(k) feature) and 2T (total or partial participation direction) for plan assets above $300 million (where ~90% of litigation occurs per their infographic) and the 2021 form year, the result is a little over 3,000 filings. Not an exact count, but maybe closer to the universe of plans that may actually be sued.

I looked into support for the notion that the renewal commmission arrangement you described is both NQDC and an ERISA pension plan. Here is a link to an IRS memo issued in 2007 holding that the arrangement was deferred compensation for FICA purposes. https://www.irs.gov/pub/irs-wd/0813042.pdf Please note that the memo does not address the application of Code Section 409A, even though final regulations were issued in 2007. This is because the memo was prompted by the employer's application for a refund of the FICA taxes paid on such amounts, which the IRS denied. Regarding the issue whether the arrangement is an ERISA pension plan, the case law seems to go in different directions. Please note that the outcome of this issue may well turn upon the actual language of the renewal commission arrangement in question as well as the agent's work or residence location. Also, since I do not have the benefit of an online citation service, it is possible that some of these cases may have been reversed or overruled by decisions in higher courts or subsequently issued case law. Finally, do not overlook the fact that the DOL issues Advisory Opinions from time to time which may have dealt with this particular issue. That being said, for the proposition that the arrangement is an ERISA pension benefit plan, see Petr v. Nationwide Mutual Insurance Company, 712 F. Supp. 504 (D. Md. 1989) For cases holding that the arrangement does not constitute an ERISA pension plan, see Fraver v. North Carolina Farm Bureau Mutual Ins. Co., 801 F. 2d 675 (4th Cir. 1986), cert. denied, 480 U.S. 919 (1987); Wolcott v. Nationwide Mutual Ins. Co., 664 F. Supp. 1533 (S.D. Ohio 1987). In light of my statements in the foregoing paragraph, please consult with counsel on whether and how the renewal commission arrangement in question is considered an ERISA pension plan.

Be careful with the overwrites, they are dangerous especially if you do not document what you do. Good thing about Datair, all the overwrites are in color blue but once updated to the next year, they are no longer blue. Another way approach is to determine what the net salary would be after all deductions and adjustments for 1/2 se tax for the K-1 and make that entity a corporation by making the owner as a salaried employee and test all together, much better than overwriting and less dangerous. Datair has a master test module so you create all entities separately and include them all for testing under one umbrella (assuming all entities are adopting employers). You can also individually check each entities deductions separately. Just my 2 cents. Other great advise, contact Datair, they will help you set it up and/or provide some direction - this is what I would do rather than going crazy with the set up (too late for me)

You mentioned that "it provides for a deferral of income past retirement". But presumably a commission for 2023 becomes payable only if/when the previously acquired business relationship actually continues into 2023. Doesn't this mean that it was not yet earned as of the prior year in which the salesman retired, so its payment in 2023 is not payment of deferred compensation?

I think I've seen separate pre-approved documents do it differently (PBGC method for a non-PBGC plan, majority owner forgoes receipt - or a pro rata for all method)

Have both entities adopted the Plan? I'm assuming yes. If so why wouldn't you simply aggregate his comp from both entities, limiting the aggregated comp to 401(a)(17) limit for 401(a)(4) testing? I don't use Datair but it might be an issue where it's having trouble reconciling the same individual in the plan having both SE compensation and W-2 compensation. You might get a different result for deduction purposes since in ASG each entity has it's own deductible limit based on camp paid by the entity

karl’s description of the facts suggests the participant’s ex- is neither a current nor former spouse of the participant. And the ex- might not be a child of the participant, and might not be a current dependent of the participant. The court with jurisdiction of the participant and the ex- might be acting under law other than domestic-relations law. And the court’s order might not “relate[] to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of [the] participant[.]” ERISA § 206(d)(3)(B)(ii), 29 U.S.C. § 1056(d)(3)(B)(ii) http://uscode.house.gov/view.xhtml?req=(title:29%20section:1056%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1056)&f=treesort&edition=prelim&num=0&jumpTo=true. A court’s order that is not a domestic relations order (as the statute, and so the plan, defines it) would not be a qualified domestic relations order. Congress in 1984 might not have anticipated how often State courts are called to reorder money, contract rights, and other property rights between nonspouses in circumstances that otherwise seem somewhat similar to domestic-relations proceedings.