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Notice of Intent to Terminate must be distributed to participants at least 60 and not more than 90 days prior to termination in DB plans covered by the PBGC. Rocknrolls2 covers the 204 h notice requirement of pension plans, generally DB, Cash balance, Money Purchase and Target Benefit. As he notes, section 204(h) does not apply to profit sharing plans. There may be a best practice to notify participants in advance of the termination of a profit sharing plan, but I don't think you are going to find an IRS citation to that effect.

For a profit-sharing plan, there is no notice that is required to be issued to participants in advance. If, however, the employer is applying to the IRS for a determination letter that the termination of the plan does not adversely affect its qualified status, there is an advance notice requirement that is applicable in that instance, much of which appears to be driven by when the employer files its Form 5310 with the IRS. Notice of intent to terminate is a term used in the context of PBGC-covered defined benefit plans and has to be provided to participants in advance of the anticipated termination date. In addition, if the employer is amending the plan to significantly reduce benefit accruals under a defined benefit plan or money purchase plan, there is also an advance notice requirement that generally varies from 15 to 45 days, depending upon the type of plan and the number of participants covered under the plan. See ERISA Section 204(h) and Code Section 4980F. However, neither of these provisions apply to a terminating profit sharing plan.

If the only nonelective contribution is an even percentage of compensation for all participants, that formula meets the requirements of the 401(a)(4) design-based safe harbor. There is no maximum under 401(a)(4), but of course the 415(c) limit and 404(a)(3) maximum deduction limit need to be considered.

This is a 2 year old plan and how can it have only insurance policies? Did they rollover some other policies into the plan? Something is amiss here, at least for me.

This is the text from the link justanotheradmin posted. Notice 2016-16 doesn't say "or vice versa" in the final bullet point below, but the commentary on the website does. Prohibited mid-year changes The Notice provides the following list of “prohibited mid-year changes” that may not be made to a safe harbor plan, unless the change is required by applicable law or court decision. A mid-year change increasing the years of service for the vesting schedule for a safe harbor plan consisting of a Qualified Automatic Contribution Arrangement (QACA); A mid-year change to reduce or narrow the group of employees eligible to receive safe harbor contributions; however, this does not limit the ability of the employer to amend a plan mid-year to change eligibility service crediting rules or entry date rules for employees who have not yet become eligible to receive safe harbor contributions; A mid-year change to the type of safe harbor, for example, a change from a traditional safe harbor to a QACA, or vice versa;

Try looking at defined benefit preapproved plans authored by specialty actuarial firms. We work with some actuaries that have plans documents that offer tremendous flexibility in describing the benefit formula, including factors such as groups, service and compensation. The IRS provides a list of preapproved plans on the IRS website in case you want to go "shopping". You may find you already have a relationship with one of these firms. https://www.irs.gov/pub/irs-tege/ppa-listdb3.pdf

Review the incidental benefit rules?

Yes.

Excess Deferral = 402(g) refund. Excess Contribution = ADP refund Excess Aggregate Contribution = ACP refund. With an excess deferral the amount over the 402(g) limit is taxable in the year deferred but the gain/loss is taxable in the year received. With an excess contribution or excess aggregate contribution both the refund and the gain/(loss) are taxable in the year received.

See the instructions for the Form 1099R: "Losses. If a corrective distribution of an excess deferral is made in a year after the year of deferral and a net loss has been allocated to the excess deferral, report the corrective distribution amount in boxes 1 and 2a of Form 1099-R for the year of the distribution with the appropriate distribution code in box 7. If the excess deferrals consist of designated Roth contributions, report the corrective distribution amount in box 1, 0 (zero) in box 2a, and the appropriate distribution code in box 7. However, taxpayers must include the total amount of the excess deferral (unadjusted for loss) in income in the year of deferral, and they may report a loss on the tax return for the year the corrective distribution is made."