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Until the IRS specifically blesses establishing a SHNEC for a new plan with less than 3 months of deferral with some official guidance saying that is OK, I wouldn't do one.

If you've been paid for 2022 AND if the 2023 5500 will be for a period of less than 7 months, can't you file the 2022 5500 and indicate the audit will be on the next 5500? Doesn't actually solve the problem but kicks it down the road a bit. You'll still need to get someone to sign.

If you haven't seen Milliman's projections for 2024 yet, we've unearthed Tom's old spreadsheet to estimate the 2024 COLAs. The CPI-U for July 2023 was 305.691 and August was 307.026 (July and August of 2022 were 296.276 and 296.171). We have two of the three months needed to determine the 2024 limits. September is scheduled to be published on Thursday, October 12 at 8:30 A.M. Eastern Time. The sum of the three CPI-U's from last year, July through September of 2022, was 889.255, for an average of about 296.418, giving us an inflation increase last year of about 8.33%. This year we're looking at an increase of about 3.43% if the 2023 September CPI-U is also 307.026 (unchanged from August). This rate puts two limits just under the jumping up point: the Compensation Limit and the DC plan Annual Addition Limit. If inflation from August to September increases by a mere 0.065% for that one month interval (that's under 7 hundredths of one percent, or an annual rate of about 0.79%), then these limits both move a step up. Once the September CPI-U is released, the expected limits for 2024 will be posted here, all based on Tom's spreadsheet (not official limits). ESTIMATED LIMITS, based on September CPI-U equal to the August CPI-U, plus the possible step higher for the two limits as mentioned above: Deferral limit: $23,000 (up from $22,500) Catchup: $7,500 (unchanged) Compensation Limit: $340,000 (up from $330,000), or possibly $345,000 Annual Addition Limit: $68,000 (up from $66,000), or possibly $69,000 DB Limit: $275,000 (up from $265,000) HCE: $155,000 (up from $150,000) Key Employee: $220,000 (up from $215,000) Here are the unrounded figures for your reference, if the 2023 September CPI-U is equal to the 2023 August CPI-U: These limits both get rounded down to the next lower $500 increment: Deferral: $23,360 and Catchup: $7,786.50 This is rounded down to the next lower $1,000 increment: Annual Additions: $68,984 These are all rounded down to the next lower $5,000 increment: Compensation: $344,920 DB: $275,936 HCE: $155,856 and Key Employee: $224,198

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.

I think this falls under the timely mailing is timely filing rule and 9/14 would be the date. https://www.law.cornell.edu/uscode/text/26/7502 But be prepared to defend the timely mailing part upon audit.

I had a similar situation years ago. I think that unless they have grounds to pierce the corporate veil under state law piercing principles, the penalties apply to the corporation, not the shareholders. That was my analysis and experience was consistent with analysis.

I did not know we could do this! So we can file the 5500 without the Opinion saying it will be on the next (final) filing? That filing will be for 1/1/2023 to 5/15/2023, which is the actual liquidation date. Without getting into details about the closing of the firm, we understand that there are several lawsuits and investigations pending. Sounds messy and we have nothing to do with those issues, so we are steering clear there. We were paid since we knew they were closing, as did the accountant, but we demanded payment before taking any action so we got paid. The accountant also knew what was happening, especially since the amount due is for several years. Why they didn't demand payment earlier is beyond me. Luckily, I was finally able to get the owner's home address. It took some kicking and screaming but a certified letter is going today deatiling item needed, potential penalties, and use of DFVCP. Thanks Mr. Presson. I have found your input very helpful over many, many years.

Follow 318 for constructive ownership rules for 401(a)(9). Anyone who is a more than 5% owner in the first required distribution year, remains a 5% owner afterwards for purposes of 401(a)(9) even if they sell the stock and remain an employee.

I agree there are no OE rules in ERISA. That's a good point. So in theory the employee could be prevented from moving to a new health plan option annually. But virtually all employers have employees contribute the employee-share of the premium through the Section 125 cafeteria plan on a pre-tax basis. My point was those rules prohibit the employer from requiring the employee to continue to participate in this plan option (via the pre-tax contribution election) year after year. So at a minimum the employee is going to be able to revoke that pre-tax contribution (and thereby health plan participation) election annually. And, assuming this isn't a very strange plan/eligibility arrangement, the employee will have the option to make other alternative plan option elections at that point.

That is odd that they have concerns. That is a standard provision in almost every plan (except the 80 is typically 40). No idea why they would have a problem with it, but also no problem if you want to remove it. Now that the plan is terminated, I don't know why the sponsor would care anymore about retirees returning to work, but if it is a union shop, the union might have a concern.

After you file the 5500-SF, you have to go to the DOL site and to the DFVCP Penalty Calculator (Google will find it for you). You will input information about the 5500s that were filed with the DFVCP box checked and the calculator will tell you how much you owe (which for 1 filing is the $750). From that page, you can click to the payment box where you can enter payment information. They take credit/debit cards and possibly electronic checks. FYI, they don't care who pays as long as they get paid.

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.

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.

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.)

If a plan year and employer fiscal year don't match, I find it more common that the plan year is calendar year and the employer fiscal year is not.