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In a overly simplistic summary, the required ERISA fidelity bond is coverage for any plan official who receives, handles, disburses, or otherwise exercises custody or control over plan funds. This can include employees who handle payroll-based deferrals, pay expenses out of the plan, or process other similar transactions. The purpose of the ERISA fidelity bond is to protect the plan against fraud or dishonesty. Fiduciary Liability coverage is not required. It provides coverage for individuals who are fiduciaries of the plan, and as fiduciaries are personally liable for their actions or inaction. Cyber Security coverage is not required. It provides coverage to the plan or to the plan sponsor for losses attributable breaches in cyber security. This coverage often requires that the covered entity has implemented and actively manages cyber security controls. The ERISA fidelity bond is cheap relatively speaking and often is used as a foot in the door to offer the other coverages. The cost for each of the other two coverages is increasing as losses continue to mount, and it pays to shop this coverage together with similar coverage for executives and for company cyber security coverage. CB Zeller is on target - ask questions before you buy. If this is all new to you, shop around, and talk to at least three providers. Buy with eyes wide open.

EOY count is your BOY count.

Let me just add that deductions under section 404 must also be "ordinary and necessary" business expenses that are deductible under section 162. It isn't likely that contributions for the benefit of INC's employees are ordinary and necessary for LLC or vice versa. Therefore, unless some unusual facts are present, each employer's return should claim a deduction only for the cost related to its own employees.

IRC 414(b) says: So you determine the deduction limit as if all members of the controlled group were a single company, and then allocate the deduction using some reasonable method. Note that the "regulations prescribed by the Secretary" referred to in the statute do not exist. It is probably reasonable for each entity to take a deduction equal to the amount of the contribution allocated to its employees in the DC plan. In the DB plan, the contribution might be allocated in proportion to the benefits accrued in the current year by the employees of each entity. There are likely other reasonable ways to allocate the contribution as well. I'll also point out that the deduction limit is usually higher than 25% in a DB+DC combo situation. Since it appears the DB plan has more than 25 active participants, it should be covered by PBGC. Therefore, the deduction limit is probably 25% on the DC plan, plus the amount determined under 404(o) on the DB plan. If the DB plan is not covered by PBGC, then the combined deduction limit is usually 31% of compensation, or if the contribution on the DC plan is not more than 6% of compensation, then it would be the 404(o) amount plus the DC contribution.

About code 3D, the 2022 instruction does not mention § 403(b), but the 2023 instruction will include § 403(b). “The list of plan characteristics codes for Lines 8a and 8b of Form 5500 and Lines 9a and 9b of Form 5500–SF are being amended to add ‘‘403(b)’’ after ‘‘403(a),’’ to read as follows: ‘3D: Pre-approved pension plan—A pre-approved plan under sections 401, 403(a), 403(b), and 4975(e)(7) of the Code that is subject to a favorable opinion letter from the IRS.’” Annual Information Return/Reports [final forms revision], 88 Federal Register 11984, 12000 n. 49 (Feb. 24, 2023), available at https://www.govinfo.gov/content/pkg/FR-2023-02-24/pdf/2023-02653.pdf.

Good communication/consulting with the client is the key. This really doesn't matter now unless the plan is terminating or one of the two owners is exiting and plan is sufficiently funded to pay out. Otherwise, I would continue as is until some event triggers needed action to realize desired outcome.

Drop to 99 - can file as small plan, drop to 79 - must file as small plan. Agree with other comments above. Also, plan audit scheduling and timing can often be a challenge, we see 5500 filing audit not completed issues in this space all the time, and I think moving in and out of audit years (doing/not doing) increases the risk of late audit completion in the years required.

I'll jump in the deep end: when it is at 99 on the first day of the plan year. But most wouldn't file as a small plan that year if the likelihood is it would be back to a large filer within a year or two. The 80-120 rule is to help avoid audit whiplash.