Leaderboard

Yes, all but $600 is an annual addition in excess of the section 415(c) limitation. Rev. Proc. 2021-30, Appendix A.08, provides that an excess annual addition caused by elective deferrals can be corrected by refunding the excess, adjusted for attributable income. There's no need for a "mistake of fact" argument.

My understanding is once you have $1 dollar allocated that doesn't meet the exemption, the Plan loses the "deemed not top-heavy status", there is no distinction in the code as to whether that allocation goes to key employees or non key employees. A work around though possibly not practical is to set up a 2nd plan profit sharing only that covers only the participant getting the allocation and spin his policy into that newly created plan. That only works if the participant is an NHCE or you'll violate BRF but I'm hoping he is an NHCE already or you might have the same problem within the current plan.

Yes

This is what distribution Code E was made for on the 1099-R.

It's not just fixable as 415(c) excess?

Right, and to clarify, earnings can not be used as contributions.

I would think the gains would be allocated to the participants in proportion to their employer match.

Data mining is much more accessible now though. I could download the IRS list of approval letters and do a data dump of the 2023 5500 with a couple of clicks and have a table of all plans with 2023 returns and who their document provider is. If I was still with a small TPA firm, that would concern me.

The 5500 instructions does not link the two check boxes. "Line B –Box for Amended Return/Report. Check this box if you have already filed for the 2022 plan year and are now filing an amended return/report to correct errors and/or omissions on the previously filed return/report. See instructions on page 6. Check the line B box for an “amended return/report” if you filed a previous 2022 annual return/report that was given a “Filing_Received,” “Filing_Error,” or “Filing_Stopped” status by EFAST2. Do not check the line B box for an “amended return/report” if your previous submission attempts were not successfully received by EFAST2 because of problems with the transmission of your return/report. " "Line D –Box for Extension and DFVC Program. Check the appropriate box here if: ... • You are filing under DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program." It seems almost certain that some of the information for the filing for the plan year ended 6/30/2021 was changed and hence the filing is an amended filing. If that filing was incomplete, then it technically was not valid anyway and would not necessarily have stopped penalties from accruing. It makes sense to include it in the DFVCP and get the bargain rates for multiple filings.

Every company in a group of companies will be in a QSLOB if any company is in a QSLOB, and a company must be in only one QSLOB. In this case, you will have a QSLOB for Company A and a QSLOB for Company B. Note that QSLOBs (Qualified Separate Line of Business) are all about the companies and not about the plans. You cannot have Company A's 401(k) plan tested on a QSLOB basis and have the DB excluded from than QSLOB. Once all companies meet the conditions to be a QSLOB, you can then pretty much separately look at each QSLOB and its plans without regard to the other QSLOBs and their plans. This is an oversimplification but may help suggest a path forward for you.