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I can't help but comment: THERE IS NO SUCH THING AS A SOLO 401(K) PLAN! There is just plan documents that are crippled and probably screwing up clients all the time (we know that's true: they often end up on our doorstep and we have to "fix" things). If he never hires a real employee, his existing plan document can do all you need to. If the plan was well drafted, there should be a provision that says HCEs don't need to get the Safe Harbor allocation (but you CAN give them a PS allocation if the client desires). You can amend the plan to eliminate the safe harbor provision, but it likely doesn't matter. Hopefully, as noted by another, there is the standard 1 year/ age 21/ semi-annual entry date provision, which a lot of so called "solo 401(k) plans" have hard wired as immediate entry; that's a problem if, g-d forbid, he hires someone for even one day. They also tend to be hard wired for immediate 100% vesting; also should be avoided just in case they ever hire someone. Again, the "solo 401(k)" document is just a crippled document with bad provisions. Bottom line: if your plan document is a good one, then just modify anything you really don't want and keep it. As far as moving it to a "new vendor", if you are just talking about the investment, a non-participant directed, pooled plan would make the most sense for this situation and those changes can be made to the plan document and you can invest the funds with anyone you want.

Austin, I like to call it the "No Notice Notice".

I do believe we need to wait for more guidance for to make something more than an educated guess. There also is the need for Congress to undo the unintended repeal of all catch-up contributions which should spur some more information coming sooner than later. A reading of this provision is everyone must have the ability to make Roth catch-up contributions and the High Paid employees can only make Roth catch-up contributions. This translates into if you want catch-up contributions in the plan, you have to add Roth. There is the conundrum that you cannot make Roth deferrals until the plan specifies the effective date, and this concept of make an administrative decision today and formally amend the plan later. Is it a fantasy to think the IRS could be that explicit about Roth deferrals?

Excellent questions! and you probably will not be thrilled with the information available to us. Here is the relevant Section from SECURE 2.0: "SEC. 603. ELECTIVE DEFERRALS GENERALLY LIMITED TO REGULAR CONTRIBUTION LIMIT. (a) Applicable Employer Plans.—Section 414(v) is amended by adding at the end the following new paragraph: “(7) CERTAIN DEFERRALS MUST BE ROTH CONTRIBUTIONS.— “(A) IN GENERAL.—Except as provided in subparagraph (C), in the case of an eligible participant whose wages (as defined in section 3121(a)) for the preceding calendar year from the employer sponsoring the plan exceed $145,000, paragraph (1) shall apply only if any additional elective deferrals are designated Roth contributions (as defined in section 402A(c)(1)) made pursuant to an employee election. “(B) ROTH OPTION.—In the case of an applicable employer plan with respect to which subparagraph (A) applies to any participant for a plan year, paragraph (1) shall not apply to the plan unless the plan provides that any eligible participant may make the participant's additional elective deferrals as designated Roth contributions." The yellow highlight says we uses the definition of wages in section 3121(a) for determining who is High Paid earning over $145,000. This may not be the same definition of compensation defined in the plan as plan compensation so payroll has some work to do. The orange highlight says the $145,000 is based on the preceding calendar year. Forget about off-cycle plan years. The light blue highlight references participants "for a plan year" to whom the High Paid definition in subparagraph (A) applies. It is not clear how reference to plan year is applicable (any part of a plan year? all of a plan year?).

Effen is absolutely correct. If plan did not have immediate lump sum already, you need to add immediate annuity along with it. As noted, you need to state how that is valued - do you use ER factors to ER age and then actuarially reduce thereafter or just actuarially reduce if not ER eligible? We usually do the latter but some clients do chose the former. Also, be careful how you amend for the lump sum as you won't want a general lump sum feature (if you don't already have one) that needs to be included in a deferred annuity contract - makes placing/pricing contracts more challenging.

Some plan documents do not contain the proper language regarding how to determine the immediate annuity or what forms of payment are offered, and therefore, if you are amending the plan to offer lump sums upon termination, you will also need to address how to determine the immediate annuity. Many times early retirement factors only go to the earliest retirement age (typically age 55). If you are paying a LS to someone younger than the earliest retirement age, your amendment should also address how that annuity benefit will be determined, and what optional forms of payment will be offered. You at least need to provide the QJSA and QOSA.

Read the document. It will already confirm the YES answer, with the caveat that a LS less than $5000 (or some other lesser amount defined in the document) is not subject to this J&S requirement.

yes