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I don't think that works as you sill need the 3 month effective deferral to be SH, It's not like you can put in a new 401(k) on 11/30 with 3% NEC and say you are a SH. I guess some might argue there is 3 months if the first October payroll is after 10/5 but I'm not sure I'd want to argue that position.

You pretty much have all the steps down. The amounts transferred to the spin-off plan are not rollovers, so the spinoff plan should include all of the money types that are transferring over from the MEP. You can look at freezing future types of contributions to try to keep things clean going forward. Stepping back, it seems the participating employer just wants to do their own thing. They could consider withdrawing as a participating employer, setting up a new plan for their company for future benefits, and leave their accounts in the current plan until they have a distributable event that would allow a rollover. These are simple thoughts and warrant a deep dive into what the existing plan allows, what a new plan would look like, and how much annoyance both employers are willing to tolerate.

IMO everything ties to the paydate, not the payroll ending date. (And I don't think it is just my opinion; you provided the cite.) The thing I find really odd about this is the extra work they must have gone to to come up with this result. I mean, we would just compare the payroll reports to the deferrals. They are apparently adding and subtracting to get their numbers, which is downright baffling but then again nothing surprises me too much. Unless...whoever entered the deferrals used the pay period ending dates instead of the payroll dates. OK, if so, that just gets corrected and you move on. (And if that is indeed the case, then the TPA should have figured it out. Again, nothing surprises me and "large insurance company" is a red flag. Often wrong but always arrogant.)

This is correct, you cannot do retroactive SH if you did not meet the requirements for SH inthe first place.

post-mark date governs. Have a client in a similar situation (the client is doing everything very last possible minute and I am about to resign on that reason). Told him to run to the post office on 9/15, mail it with the certified receipt and save everything for documentation in case of audit. After seeing the mailing date of 9/15 I am comfortable signing SB with 9/15 contribution date.

It is definitely feels like an ASG. Therefore, all the plans sponsored by ASG must be treated as a single plan for compliance purposes; without the employee being covered and not getting the employer-paid benefit you either failing coverage or non-discrimination or both. As a practical recommendation I would approach that as a total redesign opportunity rather than trying to "squeeze" it in into Plan # 1 or Plan #2.

I think IRS/DOL position would be yes, because the benefit was due and not paid and the plan had the use of the assets. If the plan had actual contact with the beneficiary, had a valid address, SS#, etc. (which should have been collected and verified up front) then why wasn't the survivor benefit just started? IRS/DOL might raise that question as well.

The other problem I see is how this distribution was transacted. Was the employee able to directly request and receive payment after being reported as terminated, without the employer having to authorize payment? Something like this, and maybe the issue with the titling and ownership of the account creates constructive receipt blows up the tax deferral? Also, if indeed a rabbi trust, there should be a trustee who should ensure proper reporting. If the trustee doesn't facilitate W2 reporting then the best practice, in my opinion, is for the trustee to transfer funds to the employer's payroll function for proper reporting. Silly rabbi trusts are not for kids!

Yes, appears this will be ASG. If separate plans, there will be aggregation needed to satisfy nondiscrimination and either the new company #3 will need a plan for this employee or they will need to be covered under the plan of #1 or #2. Maybe have #1 and #2 participate prospectively in plan #3, essentially freezing their respective plans, unless they are similar enough to merge into a single plan #3. Any separate benefit structures, rights or features will need to satisfy coverage/nondiscrimination, which makes keeping an active owner only plan within the ASG difficult.

The debate over how to apply plan year limits when a payroll period spans the end of the plan year keeps coming up when situations like this one comes up. At the end of the day, a plan can pick a method and apply it consistently from year to year. Some thoughts: The application of limits to plan year should be consistent with the reporting of the deferrals and compensation for a plan year. In this case, it the deferrals and related compensation are reported on the 2023 W-2, then the they should be included in the application of the 2023 deferral limit for the 2023 plan year. This policy should be followed for each plan year. Just to be overly technical, if the situation was the company payroll took deferrals in excess of the deferrals limit, then this is a 401(a)(30) violation that should have been corrected by the April 15th following the end of the plan year. If a 401(a)(30) violation is not timely corrected, then the plan would need to file a VCP. The company was aware of its responsibilities and appropriately monitored the limits. If the TPA's service agreement said it would monitor the limits, the service would have value only if the issue was raised in time to make a correction by April 15. This thought also is applicable where the participant (not the company) was responsible for a violation of the 402(g) limit. The TPA has no regulatory authority over the plan. The TPA can point out what it thinks is an issue and can work with the plan to research the issue, but the TPA does not get to force its opinion on the plan. Any service provider that thinks otherwise can be replaced.

Whenever we use the term "deemed", we are referring to a legal fiction - we are calling something a thing because the law says we can. A deemed distribution is just such a fiction. A deemed distribution is just a taxable event, but it does not end the loan, which continues to exist on the plan's books and continues to accrue interest, impact vesting, outstanding loan balances, etc. That would prevent a participant from taking a second loan until the first loan is paid off (assuming the plan limits participants to no more than one loan at time). As Bird notes above, a loan offset distribution terminates the loan. Once the loan offset occurs, the participant does not have an outstanding participant loan and should be able to take a new loan pursuant to the plan's terms. The framework for this is found in Treas. Reg. §1.72(p)-1, Q&A 13(a)(2), which provides:

Interesting. I just reread the instructions and your coworker seems to be correct. I have always attached regardless of quarterlies. Probably still will, but definitely would be comfortable not doing it based on the instructions.

Thanks. In this case, modesty is inappropriate, so a FULL fee would seem indicated!

Right. Any citation would be a complicated and convoluted review of controlled group rules. One has to wonder what would make the buyer opine on this anyway.

An otherwise LTPT EE turns 21 after 1/1 and before 7/1.

What does the plan document say? I have seen pre-approved documents with a checkbox option to limit the beneficiary to the participant's spouse. I don't know that I've ever seen that option used, but strictly speaking a DB plan isn't required to offer any forms of benefit other than what's required under the QJSA rules, and QJSA means spouse.

I am not aware of an explicit rule that says so. A few thoughts: Does the plan or loan policy explicitly address this situation? If yes, follow the plan/loan policy. Generally, it is not good loan policy to allow a new loan if an existing loan is in default because: A defaulted loan is an outstanding loan. It continues to accrue interest. If the plan or plan's loan policy only permits one loan at a time, the defaulted loan is that one loan. The Plan Administrator should know about the defaulted loan and likely should not authorize a new loan because the participant is not credit worthy. If the plan or loan policy requires that loans must be repaid by payroll deduction, then what would argument would support taking loan repayments for a new loan and not taking loan repayments for the defaulted loan? If the participant is an HCE, there is a possibility that the defaulted loan is a prohibited transaction. If the additional loan is permissible, then the defaulted loan is taken into account when determining the amount available. If the loan is offset after a distributable event, then that loan is no longer considered an outstanding loan. Depending upon the circumstances, this may not get the PA off the hook for authorizing the loan.

You also need to consider the nature of the income. Earnout payments from the sale should be capital gain, not compensation. Consulting or receivables would be a different story. Obviously, there needs to be a W-2 or K-1 to the individual for 415 purposes.