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The company is the plan sponsor even if the company is a sole proprietor. If it is a sole proprietor they are required to get an EIN if they haven't before. If one person owns both companies, then it's a single employer for retirement plan purposes and doesn't matter what the businesses do.

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

There are two places to look for guidance. One is 1.411(d)-2(d)(1), and the other is the plan document. Within the reg you will find: "Among the factors to be considered in determining whether a suspension constitutes a discontinuance are: (i) Whether the employer may merely be calling an actual discontinuance of contributions a suspension of such contributions in order to avoid the requirement of full vesting as in the case of a discontinuance, or for any other reason; This item suggests you can suspend contributions for a short time and not have to fully vest everyone. The IRS weighs in on the topic here https://www.irs.gov/retirement-plans/no-contributions-to-your-profit-sharing-401-k-plan-for-a-while-complete-discontinuance-of-contributions-and-what-you-need-to-know with: "Employee Plans Exam guidelines state that if the employer hasn’t made contributions in three of the past five consecutive years, the plan may have incurred a complete discontinuance of contributions. When a complete discontinuance of contributions occurs, the plan sponsor must treat the plan as a terminated plan and fully vest all participant accounts for the plan to remain qualified. Determining if there’s been a complete discontinuance of contributions is based on facts and circumstances, for example, the plan sponsor’s history of profitability, and the probability of future contributions from the sponsor." If you are using a preapproved document with an Adoption Agreement, definitely read the Basic Plan Document. Some document providers include provisions with more explicit language or with other terminology than is found in the regs that would require full vesting. This may be done to avoid the ambiguity of a determination based on facts and circumstances. If you find such language, then you must follow the terms of the plan. With regard to this specific situation, if a "few years ago" means three or more years ago, you likely will have a hard time convincing an IRS agent that everyone should not be fully vested.

We have had similar conversations. We point out that not only is there a threat of personal liability, we also note that their ERISA fidelity bond does not cover their fiduciary liability.

Yes!!! But sadly, for some fiduciaries, only the threat of PERSONAL liability for a fiduciary breach keeps them in line. This is one of the things we emphasize when a plan fiduciary seem disinclined to follow the rules, and it is usually the one thing that finally moves them to comply - seems to work far better than the possibility of IRS penalties.

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.

EBECatty, thank you for your helpful sorting! Even in the universe described, fiduciaries are not sued for almost 80% of plans. If we filter for individual-account retirement plans but not by plan-assets size, might the percentage approach 99%? How many fiduciary-breach lawsuits have there been on retirement plans: below $300 million? below $100 million? below $50 million? I’m an advocate for all plans’ fiduciaries putting more attention on one’s decision-making. But I hope also that advisers might put the numbers of lawsuits, and which plans’ fiduciaries are likelier to be sued, in a sensible context. Fiduciaries should “do the right thing” because it’s the right thing.

If they have self-employment income subject to the self-employment taxes then yes they can defer from that. If they only have pass through income not subject to self-employment taxes then then don't have "pensionable" income.

From the Pension Distribution Answer Book. QJSA can be waived w/o spousal consent provided there is a court order documenting the separation and there is no QDRO. From your description it appears that each of those conditions have been satisfied. Q 11:29,Are there circumstances when spousal consent to a participant's election to waive the QJSA or the QPSA is not required? Last Updated: 10/2022 Yes. If it is established to the satisfaction of a plan representative that there is no spouse, or that the participant's spouse cannot be located, spousal consent to waive the QJSA or the QPSA is not required. If the spouse is legally incompetent to give consent, the spouse's legal guardian, even if the guardian is the participant, may give consent. Also, if the participant is legally separated or the participant has been abandoned (within the meaning of local law) and the participant has a court order to that effect, spousal consent is not required, unless a QDRO provides otherwise. Similar rules apply to a defined contribution plan not subject to the minimum funding standards of Code Section 412, which pays the participant's vested accrued benefit to the surviving spouse upon the participant's death. [ Treas. Reg. §1.401(a)-20, Q&A-27] A participant may elect out of the QJSA in favor of an actuarially equivalent alternative joint and survivor annuity that satisfies the conditions to be a QJSA, without spousal consent. [ Treas. Reg. §1.401(a)-20, Q&A-16; Notice 2007-7, 2007-5 I.R.B. 395, Q&A-11] (See Q 11:17.) Because a QOSA (see Qs 11:38 – 11:46), by definition, satisfies the conditions to be a QJSA, no spousal consent is required if a plan participant elects a QOSA that is actuarially equivalent to the plans QJSA. If the QOSA is not actuarially equivalent to the QJSA, spousal consent is required for the participant to waive the QJSA and elect the QOSA. [ Notice 2007-7, 2007-5 I.R.B. 395, Q&A-11]

State domestic relations law does NOT supersede ERISA's spousal benefit protections - except in the case of a QDRO that affects parties rights to the plan benefits. The separation agreement may exhibit an intent to waive plan benefits, but only the QDRO can accomplish the task vis-à-vis the plan. As between the parties, if the spouse refuses to actually do that which is necessary to waive rights (consent to a distribution or whatever), the court can sanction that party - but this is external to plan operation.