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I don't think it does if X is a corporation. From the PBGC site - Substantial owners plans A private-sector qualified defined benefit plan is exempt from PBGC coverage if it is established and maintained exclusively for substantial owners of the plan sponsor (i.e., if all participants are substantial owners). A participant is a substantial owner if, at any time during the last 60 months, the participant: Owns the entire interest in an unincorporated trade or business, or In the case of a partnership, is a partner who owns, directly or indirectly, more than ten percent of either the capital interest or the profits interest in such partnership, or In the case of a corporation, owns directly or indirectly more than ten percent in value of either the voting stock of that corporation or all the stock of that corporation. The constructive ownership rules, including spousal attribution rules, of IRC § 414(c) and § 1563(e) apply only in the case of a corporation.

the actual source of the rule is Treas. Reg. 1.415(f)-1(f)(3).

There are two types of domestic partnerships at play: Registered domestic partnerships (RDPs); and Company-defined domestic partnerships. For RDPs, some states will require that fully insured plans sitused in that state treat RDPs and spouses equally as a matter of state insurance law. California is a prime example. The employer is not involved in the RDP status determination, that's simply a function of the employee meeting the state conditions and registering with the state. For company-defined DPs, the employer has broad discretion on how to handle. Cohabitation requirements are common in these definitions. It doesn't matter what state RDP conditions are for purposes of the company definition of a DP. Here's an overview: https://www.newfront.com/blog/registered-domestic-partners-and-company-defined-domestic-partners Company-Defined Domestic Partners: Employer Discretion Many employers prefer to offer domestic partner health plan coverage more broadly than what is required for RDPs. RDP status is the functional equivalent of marriage in California (including community property), and many employees do not want to enter into a serious, state-recognized relationship with significant rights and obligations to enroll their “domestic partner.” As a recruiting and retention matter, it can be difficult to limit domestic partner eligibility exclusively to RDPs because many employees expect the ability to enroll an individual based on a relationship that meets a lower standard than the formal RDP status. Company-Defined Domestic Partners: Domestic Partner Policy Employers that choose to offer domestic partner coverage more broadly can develop their own domestic partner policy that permits employees to enroll their domestic partner simply by meeting the company’s definition of a domestic partner. These domestic partners are typically referred to as company-defined domestic partners or non-RDPs. The insurance carrier (or stop-loss provider for self-insured plans) will almost always defer entirely to the company’s definition of a domestic partnership. Note, however, that some carriers require employers to declare in the application or renewal that they are offering coverage more broadly than the RDP requirements. Company-Defined Domestic Partners: Verification Although some employers choose not to require any form of verification, most employers require employees to complete an affidavit whereby employees attest to their relationship meeting the company-defined domestic partner status in order to enroll the domestic partner in the health plan. This approach generally serves two primary purposes: 1) ensuring that employees are aware of the company’s domestic partner definition, and 2) preventing potential fraudulent enrollment to some degree. Note: The equal verification rules for RDP relationships do not apply to company-defined (non-RDP) domestic partner eligibility. Employers commonly require employees to complete a domestic partnership affidavit to establish eligibility of a company-defined domestic partner regardless of whether they request verification of a marriage or RDP relationship. Company-Defined Domestic Partners: Common Requirements Company-defined domestic partner policies typically require all or some of the following elements to establish an eligible domestic partner: Ongoing and committed relationship Relationship has existed for a set period Both individuals are at least 18 years old and competent to contract Neither individual is currently married or in a RDP relationship with another Intent to remain in the relationship indefinitely Not related by blood in a way that would prevent marriage/RDP relationship Share the same residence for a set period Jointly responsible for each other’s financial obligations Are not in the relationship solely for the purpose of health plan eligibility Slide summary: 2023 Newfront Health Benefits for Domestic Partners Guide

If a “MAY” letter results in someone submitting a claim, consider following carefully ERISA § 503 and the plan’s claims procedure, including notices about time limits to seek a review and a time bar on a challenge in court or arbitration.

Tell him to find an IRA to take the note or whatever it is for the 2 remaining payments and roll it to that IRA. He may need an IRA custodian that holds non-traditional assets, not your problem. Tell him to provide an independent valuation for the the value of what was rolled to the IRA. Report that value on 1099-R. File final 5000 series return. Direct him to ERISA counsel.

If a plan provides beneficiary-directed investment, a fiduciary might want its recordkeeper or other service provider to divide a deceased participant’s account into the beneficiaries’ segregated-share accounts on the earlier of any beneficiary’s claim for a distribution or any beneficiary’s delivery of an investment direction. Further, if a plan provides beneficiary-directed investment and a fiduciary wants an ERISA § 404(c) defense that a beneficiary has control over investments for his or her account (or a similar State-law defense regarding a governmental plan or a church plan), a fiduciary might want its service provider to divide a deceased participant’s account into the beneficiaries’ segregated-share accounts as soon as any beneficiary is identified (and the maximum number of segregated shares is known or determined). A fiduciary might want its service provider to send an identified beneficiary a “welcome” package that includes the summary plan description, the most recent 404a-5 disclosure, notices, other communications, preliminary identity credentials, and instructions about ways to submit investment directions. Among several purposes and reasons, that a beneficiary received such a package might set up that the beneficiary then had control over investments for his or her account. Some recordkeepers do not “split” a participant’s account until at least one beneficiary is sufficiently identified with (at least) a name, a Taxpayer Identification Number, and an address. Some recordkeepers do not “split” a participant’s account until there is a name, a TIN, and an address for each of the segregated-share accounts. But some recordkeepers might allow filling-in placeholder information for a not-yet-identified beneficiary with a placeholder, the plan administrator’s EIN, and the plan administrator’s address.

Loan payments can be suspended while a participant is on an unpaid leave of absence for a period of up to one year, so assuming that they expect the participant to return to work within one year, I would say that it probably is allowable, unless the plan's loan program doesn't allow for such a suspension. The loan would need to be amortized starting when the participant returns to work, including interest through the end of the leave of absence, to be fully repaid no later than 5 years after the loan origination date.

Yes, the eligibility requirements in this case may be retroactively corrected by amendment under SCP.

I don't think it matters. The ultimate answer will depend on how the plan is invested (pooled vs. self-directed) and if self-directed, who is the recordkeeper. I don't think I'd be in a hurry to split it unless and until a bene requested a distribution.

I think that amending the W-2 makes the most sense. If they are going to effectively retroactively create W-2 income, then they should be able to create the deferrals (that did in fact happen). Otherwise, there is no earned income to apply the deferrals against, and then the only option is to use the money deposited as PS.

It seems to me that if you are going to retroactively become an S-Corp for 2022 (and show W-2 income), then the rules for W-2 employees should also apply for 2022: Did the individual make a proper deferral election in 2022 with respect to the compensation deferred prior to earning this compensation? If the answer is yes, then you can amend the W-2 to show the 401(k) contribution. If the answer is no, can we recharacterize the 22k as a profit sharing contribution for 2022?

If she had a deferral election in place when she was still unincorporated, that should still carry over after the change in tax structure. And since unincorporateds are allowed to pre-fund deferrals before the EOY "income declaration day", I think that it would still be reasonable for the funds to stay in the plan as subject to the (if it does exist) proper election. Of course, I'm no lawyer....

401(a)(17) is based on BOY so 2022 limit. 402(g) an catch-up (if applicable) are both based on calendar year so if all pay for the fiscal year is paid in June of 2023 then only the 2023 limit and catch-up come into play. 415 is based on EOY so 2023 limit.

Still, if employees are not given same general investment opportunity as owners, isn't that discrimination in BRFs?

A few thoughts off the cuff, probably not exhaustive and definitely not fully formed: Does this convert $3/hour for everyone (whether they choose the $4 to the plan or $3 in cash) into a CODA? It's essentially giving everyone a $3/hour raise, with some subset of people electing to defer it into the plan (as an elective deferral subject to 402(g) limits, etc.) and some taking it in cash. If so, does that make the additional $1/hour going into the plan (for those who elect it) a match? If someone chooses to defer $3/hour into the plan, the employer makes an additional $1/hour contribution, which cannot be a PS contribution without violating the contingent benefit rule (i.e., you cannot offer $1 in profit sharing only for participants who contribute $3 in deferrals). Not sure how you would draft the match formula ("a $1 match on every $3 deferred, but only if you choose the option offered by the employer and capped based on the participant's hours of service during the year"?) or who would be designated as the employees eligible for the match. Presumably most people who choose the plan contributions will skew toward HCEs, which could affect ADP and ACP and match coverage if the extra $1 is treated as a match. The employer will still get a deduction, either for contributions to the plan or compensation paid via payroll, but employer-side FICA would surely increase as a result of people choosing cash over employer contributions.

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.