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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.

Yes, as long as the SHM is the only employer contribution made to the plan, and the match rate does not increase with the increases in the rate of deferrals. Here are a couple of "gotchas": A plan that allows deferrals to be made before participants become eligible for the SH contribution/match is subject to the TH rules. A plan that allocates a discretionary nonelective employer contribution is subject to the TH rules in a year for which the contribution is made. A plan that reallocates forfeitures to participants on the same allocation basis used for contributions is subject to the TH rules in a year for which the reallocation is made. I have not seen a definitive answer to the question whether QNECs made to correct a missed deferral opportunity, a failure to implement deferral elections, or other operational issues would cause the plan to lose the TH exemption.

I would recommend stepping back and understand why this is a takeover situation in a first place. If it is a client who is uncapable of following directions, walk away. If it is a client who needs a lot of handholding (aka babysitting), charge the premium price. If it is a prior vendor issue, have an open candid conversation with the client to get him to understand that the takeover issues will be billed separately as OOS work. Whatever time you think you are going to pend multiply by at least 150%.

What's stopping you from contacting the participant and asking them? If they're unlocatable or unresponsive, how do you expect them to cash the check (in whatever form ends up being paid out)?

Ultimately the filing needs to be completed correctly. The pathways to get there could be submitting an amended filing (hopefully) or submitting a late filing after taking corrective actions. Technically an incomplete filing could be rejected and plan considered not to have filed, so you would want to determine if a good-faith effort was made to file a complete and accurate form. If this is not a new plan, I suggest asking for copies of the last 2-3 years' filing and actuarial reports. Review them to see if the filings are completed correctly, and see if there is anything in the actuary's report that signals funding, timing of funding or other issues. Since this is a prospective client, you do not want to help fix problems due to a prior service provider without being fairly compensated for your services. If it seems the prospect is the cause of the problems (no census or bad census, ignoring funding instructions, being unresponsive...), respectfully decline the engagement. Some relationships are just not worth the time and frustration.

Yes. You always have to fila a final form.

You have the cite that describes the IRS position. All of the safe harbor cures require that the participant has the opportunity to make themselves whole or otherwise mitigate the impact of being left out of the plan. A terminated participant does not have that opportunity, so there is no other remedial action to giving them the 50% QNEC.

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.

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