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Differing benefits, rights, and features are also subject to nondiscrimination testing. See 1.401(a)(4)-4. You have “current availability” that you can test, and “effective availability” that you can smell.

Green, you need to provide some additional information that is fundamental to making a decision about what to do with this plan. You mention pension plan, but do not say if the plan is a pension plan in the ERISA sense (defined benefit, cash balance, money purchase plan) or you are using pension plan in the generic sense which would include 401(k) and profit sharing plans among others. You only mention an owner but do not indicate if there are other participants in the plan. The plan very likely uses a pre-approved plan document, and the authors of pre-approved plan document are fastidious about provisions regarding who is the Plan Sponsor, what are constraints on the employers who adopt the pre-approved plan, and sometimes what happens when a Plan Sponsor is not available (e.g., an abandoned plan, or a sole proprietor dies and there are employees remaining in the plan). Repeating mantra along with everyone else - read the plan document, and most importantly, this includes the basic plan document that accompanies an adoption agreement. Assuming the owner finds a viable path forward to keeping the plan, the owner needs to consider if the cost of maintaining a plan is worth it to preserve the opportunity to take a loan in the future. Minimally, there is a cost to keeping a plan document current with regulatory and legislative changes. There is a cost to filing 5500s. There is a cost to deliver various recurring notifications. There are administrative fees. Is the opportunity to take a loan in future really worth the time, cost and effort? All of this being said, a potentially simple answer may be to merge the plan into a Pooled Employer Plan. The Pooled Plan Provider is the Plan Sponsor of the PEP, the PEP files the 5500 and sends out required notifications, and if the employer ceases to exist, the participants remain participants in the PEP. To meet the objective of the owner, the PEP would have to allow loans to terminated participants, the account balances would have to be large enough to not be subject to cash-out rules, and the cost of administration must be tolerable. These comments leave out important details about specific steps to take and potential compliance issues that cannot be known until the additional information is known, so please take these comments as food for thought.

There may be other parts of the document that you didn't show that would be relevant. You should contact FTW for guidance.

That's why I sort by EIN+PN instead

Ha! Especially when it makes it just long enough to need a second line! And then some forms don't have a second line and the IRS complains about a name mismatch...

Correct. There's no requirement of which I'm aware. We have some plans, sponsored by a couple of related, but not controlled, entities and the name is a unique descriptor of the relationship. I've also worked with some that wanted to keep as much anonymity as possible and merely named the plan "401(k) Plan" without anything else. I've never had any pushback from any IRS or DOL person. The one thing I do try to encourage is brevity in the name choice. "and Trust" at the end burns me up.

The IRS website says "Some RMD failures may be eligible for self correction" it further goes on the say the participant excess tax can't be automatically waives, that is you need to pay it and request a refund. It goes on to say that under VCP you can ask for a waiver of the penalty. I'm not sure which RMD failures are eligible for self correction and which are not. Given this is 1 participant who is being corrected in the same calendar year, my guess is the Plan would be eligible fore self correction, but I can't guarantee that. You should check the current EPCRS Rev Proc. https://www.irs.gov/retirement-plans/correcting-required-minimum-distribution-failures

Read the document. It may already have something to say about this.

let's think about the meaning of the "business' closure". If the business is sold (stock transaction), then yes, it is closed from the original Owner perspective. And the plan btw follows the business. If it is sold as assets sale (or simply stopped the business activity all together), the original business still exists albeit not doing any business activity. In that case I think there is some grace period (1 year? may be even more) before the Owner has to do something. But this really becomes a question for the CPA.

How about setting up a sole prop with a minimal activity.? Must file schedule c every year though

If everything is identical, then permissive aggregation very, very likely should not pose a problem for either plan. Under permissive aggregation, the more vulnerable test may be testing the NECs if Company B has a disproportionately large number of employees who, on applying allocation conditions like 1000 hours and a last day rule, are not benefiting but are considered nonexcludable (think for example terminated with more than 500 hours). Again, not likely. Looking forward to the 2023 5500s, there is a new compliance question asking if the plan used permissive aggregation.

kinda feel like we want to give the TPA the benefit of the doubt that they meant they pass by permissively aggregating, figuring everybody who mattered was in at least one of the plans. Getting the right result but the wrong reason, as anyone who likes pension credential exams may be used to seeing as a multiple choice option....

Assuming they are not currently employed or they are 5% owners... Joe turns 72 in 2023 and under SECURE he was not 72 in 2022 and therefore did not have a 2022 RMD. Under SECURE 2.0 Joe does not turn 73 until 2024 and has a 2024 RMD with an RBD of 4/1/2025. The 2nd RMD for 2025 would be due by 12/31/2025. Mary turned 72 in 2022 (70 1/2 in 2021 after SECURE so no 2021 RMD) and under SECURE she had a 2022 RMD with an RBD of 4/1/2023. Under SECURE 2.0 she can not further delay her RMDs because they have begun and has 2nd RMD due for 2023 as of 12/31/2023.

It looks like you are hoping to pass the Ratio Test. Keep in mind that when you are testing a plan for coverage within a controlled group, the numerator is the count of individuals benefiting in the plan, and the denominator is the number of nonexcludable individuals in the controlled group. For A, you have 25 out of 100 HCEs and 100 out of 1350 NHCEs. The ratio is (100/1350) / (25/100) = 7.41% / 25% = 29.63% < 70% = fails. For B, you have 75 out of 100 HCEs and 1250 out of 1250 NHCEs. The ratio is (1250/1350) / (75/100) = 92.59% / 75% = 123.46% > 70% = passes. (Please double check the math). You can test the plan together (permissibly aggregate) the plans and get a ratio of 100% = passes, or try using average benefits testing on A. Also keep in mind, when it comes to coverage testing, Elective Deferrals are a "plan", Match Contributions are a "plan" and Nonelective Employer Contributions are a "plan".

For Cycle 3, the IRS required that the plan document explicitly specify the determination period for calculating matching contributions, including safe harbor match. Take a look at item C.18 in the adoption agreement. If the adoption agreement says the determination period is annual, and the employer calculates and deposits the match each pay period, then a true-up will be required. If the adoption agreement says the determination period is per pay period, then a true up would not be allowed unless the plan were amended, and then the rules for mid-year changes to safe harbor plans would come into play. If memory serves me right, FT had a FAQ sheet about this back when Cycle 3 came out. It is probably still on their website somewhere. Or I'm sure they would be happy to send it to you if you contact them, as Bill suggested.

There should be a message on EFAST if an attachment is not displayed because it is under review. It is likely that this is the case since it is difficult to submit a filing without the correct attachments using major provider software. There are so many flags and warnings that it is almost impossible to do by mistake.

Double check everything with the vendor to confirm that everything that was submitted with the original filing was handled correctly. The most common cause of this type of problem is human error. Assuming there was an issue with the attachment (wrong file, empty file, not a pdf...), then make sure the vendor has the correct attachment uploaded. With most 5500 software, you can view the attachments and a pdf of the filing before it is transmitted to EFAST2. If all looks good, consider sending an amended filing. When an amended return is filed, the amended return gets a new AckID for the EIN and plan number pair and the original return is replaced by the amended return on the EFAST2 web site. There is no crosschecking of the numbers on the amended return against the original filing. Filing amended return likely is the least time consuming approach. Keep all of the documentation including the confirmation than the original return was accepted with no errors and the same confirmation for the amended return. Note that when an audit report is missing or unreadable, the plan likely will get a letter saying that the report is missing and the plan must file a complete form package by the deadline specified in the letter. If the complete filing is not made by that deadline, it triggers the next communication the plan receives is the penalty notice.

This is an interesting conundrum. There is one element of loan administration that is a protected benefit, but it likely will not help with allowing loan rollovers. The distribution of an employee's accrued benefit upon default under a loan is a protected benefit under 1.411(d)-4 Q&A 1(c), but nothing else related to loans is protected. An IRS Issue Snapshot regarding loan offsets notes: "Plan loan offset Treas. Reg. Section 1.72(p)-1, Q&A-13(a)(2) provides that a distribution of a plan loan offset amount occurs when, under the plan terms governing a plan loan, a participant's accrued benefit is reduced (offset) in order to repay the loan (including the enforcement of the plan's security interest in the participant's accrued benefit). A distribution of a plan loan offset amount can occur in a variety of circumstances. For example, a plan loan offset can occur where the terms governing a plan loan require that, in the event of a participant's termination of employment or request for a distribution, the loan be repaid immediately or treated as in default. Treas. Reg. Section 1.72(p)-1, Q&A-13(b) provides that, in the event of a plan loan offset, the amount of the account balance that is offset against the loan is an actual distribution for purposes of the Internal Revenue Code (IRC), not a deemed distribution under IRC Section 72(p)." All may not be lost. The ability to take an in-kiind distribution is a protected benefit under 1.411(d)-4 Q&A 1(b)(2) which says: "Example 8. A stock bonus plan permits each participant to receive a single sum distribution of his benefit in cash or in the form of the property in which such participant's benefit was invested prior to the distribution. This plan's single sum distribution option provides two optional forms of benefit." Technically, the participant who has a loan earmarked to the participant's account is holding that loan as an investment. If the plan allows for in-kind distributions, then the in-kind distribution of the loan note could be considered a protected benefit. A final note. A recordkeeper's system limitation does not take precedence over the plan document, nor does it take precedence over the IRC or agency regulations. If they wish to cop an attitude, then ask the IRS to ask the recordkeeper about the recordkeeper's system limitations.

Joe can go to work for an unrelated company and roll his balance into their plan before 2025. If Joe and Joe's wife's combined ownership drops below 5% and Joe's son is married, Joe's son could transfer his shares to his spouses name. Then Joe would no longer be a 5% owner since you don't double attribute. Or Joe, Joe's wife, and Joe's son can sell off such that Joe no longer owns directly or indirectly more than 5% of the business but continues to work there. So yes there are ways, just probably not the most practical.

https://www.irs.gov/pub/irs-drop/n-23-73.pdf Thanks Slider - This is the link.

Notice 2023-73 just released with 417(e) tables for 2024.

When I worked for a CPA firm, our policy was archive after 12 months and purge after 7 years for emails (unless we were notified of litigation, in which case those emails would segregated and saved past 7 years if necessary).

As an attorney, the iron-clad "attorney-client privilege" is full of holes as applied to employee benefits law. The reason is that the courts consider the attorney's client to be the participants and beneficiaries of the plan and not the employers retaining those attorneys. There are exceptions, of course, that I do not want to drag out and confound this forum with. That being said, the attorney's notes and communications to HR officers and top executives of the employer are generally not protected by privilege. Consequently, both the real client and the attorney are better served by not creating excessive notes that can be discovered by a disgruntled participant with an axe to grind. This fact argues strongly in favor of a document retention policy and strict adherence to it. That being said, however, plan documents, restatements, amendments, SPDs, participant communications and the like should most probably be retained forever (or pretty close to it).

Certainly one side of the coin is to find that email and say "see I told you so". But regardless I have heard from many many people that this is not such a great approach. Also, theoretically, that "I told you so" email is saved in my workpapers, and those we do not get rid of.

Depends on whether you were right the first time...