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Agree. This is no different from a school teacher, postal employee, customer service rep, setting up a 401(k) for themself based on their wages/salary. A partner cannot adopt up an employer plan. The OP needs to engage someone to communicate with Schwab on their behalf, otherwise it might get worse. The Schwab employee who answers the toll-free line might not understand enough to provide the right solution- all the more reason to engage someone who can translate for them.

For plans that aren't at recordkeepers, the trust for that plan quite often DOES get an EIN to use to identify assets and to use when paying people out for tax deposits and 1099 reporting. With independent paying entities providing distribution services, it's becoming less common but we still use it pretty frequently.

I think truphao is correct. But I'd also check the document language that coordinates 416 and confirm that it only gives him 3% and not 5%.

I think Joe gets only 3% rather than 5% in yuor example. If I recall correctly the regs refer to "participation" or "accrual of benefit" concepts. I would reread 416 regs Q&A Part M?

IRS Publication 1635 does a decent job explaining the use of EINs. See https://www.irs.gov/pub/irs-pdf/p1635.pdf Plans do not get EINs. A Plan Sponsor gets an EIN. Each plan that the Plan Sponsor sets up gets a unique Plan Number (e.g., 001, 002,... 501, 502...) The pairing of the Plan Sponsor's EIN and PN creates a unique identifier for each plan. If the Plan Sponsor is designated as the Plan Administrator, there is no need for the Plan Sponsor to get another EIN for its role as Plan Administrator. If someone or some group separate and apart of from the Plan Sponsor is designated in the Plan Administrator, then that someone or group should get its own EIN. This may be an individual or a committee or a professional services firm. This EIN will not be an identifier of any of the plans the Plan Administrator serves, and the Plan Administrator does not have to get a separate EIN for each plan they serve. One way to look at it is the Plan Administrator's EIN is like a social security number for the Plan Administrator - it is a unique identifier for Plan Administrator and not the plans the Plan Administrator serves.

These above comments and observations are accurate. Whether or not to have an audit for a plan year where it is not required is a business decision for the plan sponsor after taking into consideration the potential of returning to the plan being required to have an audit. One factor to take into consideration when the expense of the audit is being paid from the plan. Consider whether it is appropriate to charge the cost of a plan audit to the plan if an audit is not required.

Correct. No principal credit in years where he is in the excluded class.

Right, but they should also consider the cost of going back and forth. Lets say that 2022 was audited but not 2023. They now need and audit for 2024. Guess what year the auditor will need to audit anyway in order to state that the 2024 BB is correct? 2023... I have had this discussion with several auditors, and some said they would be willing to do a simplified review (less expensive, maybe half?) in off years to keep the engagement rolling. This would make it easier for years they need to audit, since there would not be an interruption during off years. Some auditors may even reject the client if its not an ongoing engagement... so that's something to consider as well before saying why pay anything for off years.

I think you are referring to a plan EIN rather than an EIN for the plan admin. You would use this to establish accounts, prepare Form 1099/945, etc. These EINs are plan specific. Otherwise, you wouldn't know which plan an account was established for, what plan issued a distribution, and so on.

You can always be more generous than the law requires, if the plan document is amended to so provide. Otherwise, for participants with less than 3 years of service as of the date of plan merger, those participants have to be given a vesting percentage no less than their existing vested percentage as of the date of the merger. Thereafter, they could be subjected to the surviving plan's vesting schedule even if the predecessor plan's schedule was more generous at a later point. As applied to participants with 2 years of service under Plan A, such participants have to be at least 30% vested. After 3 years of services, and so on, their vested percentage would be determined applying the provisions of Plan B's vesting schedule, unless the plan is otherwise amended to either continue the Plan A schedule to their Plan A accounts or their vested percentage is otherwise increased under Plan B.

This process is common among the very large recordkeepers. I agree with you that it appears to be an interest-free loan, and it certainly gives the big guys an advantage over small recordkeepers who do not have the financial resources to front payrolls. I have raised this point at conferences that have included IRS and DOL staff and at conferences with a room full of ERISA attorneys, and the reactions have been tepid at best. The DOL surprisingly were a little less troubled by this because of the overall speed of getting funds into participant accounts. This does not meet the criteria for being a mistake of fact that you will find in plan documents and regulations, so the recordkeeper is off base on that point. From what I have heard from recordkeepers is they treat the ACH failure/transaction reversal more like a failed trade.