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With all due respect, I think you run into a problem there. First, the obvious - ERISA preemption only applies to some state law that is inconsistent with ERISA. It works in tandem with state law that isn't inconsistent. Determining who is the "estate" is purely a state law function - and if an affidavit which on it's face is adequate under state law to determine that an individual (or several individuals) are the "estate" or a substitute for one, then it is so. Keep in mind that most people think of an "estate" as a formal probate court created thing - it is not. An estate is the corpus of one's assets - both when alive and when deceased - the only questions is, who controls it. When alive, it's the individual, unless under guardianship (of the estate), and when deceased, it's whatever state law says - sometimes it's an appointed administrator/executor, and sometimes its individuals who step in under small estate laws (some of which only require an affidavit, some require a simple filing with the probate court). Second, if the bene is the "estate," and state law determines under its small state affidavit who the estate is, then those so deemed to be the stand-ins for the estate *are the beneficiaries* if the estate is the bene of the plan. Changing the rules by imposing a lower limit for acceptance of a small estate affidavit is contrary to the state law that determines the estate - and once these people become the "benes" of the plan, they have an ERISA right to the benefits PERIOD. Who the creditors of the estate are is of no concern to the plan. UNDER NO CIURCUMSTANCES CAN THE PLAN PAY ANY OF THE CREDITORS. It's a simple anti-alienation issue. Once the money hits the hands of the "estate" even if no formal admin is initiated, then it is their problem to settle debts under state law, and assuming the plan administrator reviewed the affidavit to determine that on it's face it complies with state law, the creditors will NOT have any recourse against the plan. In my experience, by the way, there is a rather short time to present claims for debts once an estate is formerly open - but there is no requirement to actually open an estate - ever (and as a parenthetical, one of the great joys in my professional life came when I told a creditor of my step-father's estate that we would not be opening an estate - as there were no probate assets witrh which to pay their claim - and that they were welcome to do so if they wished). In many cases, the time limit to make such claims may be extended until an estate is opened. Creditors can, at least in the jurisdictions I've practiced in, open an estate and force an administrator to be appointed to handle settlement of claims. In any event - it has NOTHING to do with the plan. Once a bene is determined - the bene has ERISA rights to the plan benefits, and the creditors be damned (from the plan's perspective).

In my experience, an unwinding of a ROBS brings plenty of billable hours; but no prospective client ever has been willing to spend even a small amount to set up correctly a retirement plan's investment in a new business.

They are co-employers. The PEO just picks up some functions and legal responsibilities as the employer of record. Unless they do something with the DB Plan, the newly hired employee will enter the Plan under whatever eligibility the DB plan has in the document. Hopefully it has some service requirement that is not immediate so you can make some recommendations before they become eligible. Likely they will have to cover the employee and all that entails or consider terminating the Plan before the employee becomes eligible.

Just curious, how are assets in the employee plan #3 invested? Do they have individual brokerage accounts? If not is there a BRF issue?

For reference, here is the IRS snapshot on this issue: https://www.irs.gov/retirement-plans/issue-snapshot-403b-plan-application-of-irc-section-415c-when-a-403b-plan-is-aggregated-with-a-section-401a-defined-contribution-plan I don't see any special exemptions for the type of 403(b) sponsor (educational, medical, governmental or otherwise) or for the nature of the other business carried on by the participant. If a 403(b) participant owns or is deemed to own another business, and that business sponsors a 401(a) qualified plan, the 403(b) plan and the 401(a) plan are aggregated for purposes of 415.

If this would result in the daughter getting a smaller allocation, then no. 411(d)(6) prohibits amendments which would result in the cutback of an accrued benefit, even if it only affects HCEs. Unless the plan has a last-day requirement, or a service requirement which hasn't yet been satisfied, then you couldn't even make that amendment effective in the current year. It would have to take effect as of the next plan year. I would recommend that the plan be amended to put each participant in their own group going forward. This will give the plan sponsor the ability to give different allocations to each employee at their discretion each year. Regarding the testing issue, could restructuring the plan into component plans help?

I would not want to take such a situation to court where a fiduciary defines "estate" as something other than what the state defines it as. The simple solution is to merely defining the beneficiaries in the plan as "the duly authorized and fully administered estate as determined by a probate court having jurisdiction without regard to any exceptions for small estates" or something to that effect. But when you use a term that has an accepted meaning, it usually has that meaning. I will, when I have time, review the cases you cite - but the fact that they are case borne of "litigation" - best to be conservative and follow common sense (lest my own retirement get padded defending such things that are avoidable...).

Totally in agreement with Paul. Here is one rule of thumb I use when hearing "iffy" questions. If somebody asking a marginable question which does not pass the smell test it is very likely they know the answer to begin with but do not like the answer....If it walks like a duck...

It is tempting to offer an opinion because as a TPA we try to be helpful, but we do not advise clients on whether holding a particular asset is allowed or is prohibited. We do not have the expertise to make that assessment. Providing such an opinion very likely would be not be covered within the scope of our E&O coverage should the investment be found to be prohibited or it is a total bust and the investment adviser starts looking for deep pockets to recoup the taxes and penalties or to cover the loss. If an investment adviser is asking, then likely the question also is beyond his areas of expertise. Consider pointing out to the adviser a need for competent legal advice.

I have not researched this in quite some time and have thankfully not had to deal with it. My understanding would be the 10% penalty for failure to meet minimum funding does apply and at this point would likely have penalties and interest for late filing of Form 5330. But with respect to the 100% penalty, I though that was imposed by the IRS ONLY if the funding deficiency wasn't corrected by the time they contacted you. If you are making up the 2021 funding deficiency and the 2022 MRC that should all be 100% deductible as required contribution unless something odd is going on like that is more than a Self-employed individual's earned income. I think the instructions for Schedule SB Q19 tell you how to discount the contributions; your unpaid minimum from the prior year goes into your reconciliation in Q28.

I can't speak to California law in specific - but I think if you dig deep enough, there is probably a provision that indicates 1) the claimant has to attest that there are no known claims against the estate, and 2) the claimant is liable - to the extent of the distribution received, should any claims arise. In any event, it isn't the plan's responsibility. The plan and it's trust are not required to turn claims over to creditors (401(a)(13)) - and the small estate affidavit only provides a short cut for bene's to make claims. If under state law no formal estate administration is required, then the plan is insulated in making payments to the claimant (provided the affidavit is consistent with the provisions of the law).