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Does this previous discussion help? Oh, look who started the thread! By the way, I still stand by my recommendation: do nothing, or use the default investment. The plan is doing the investing, not the individual.

From TH regs, M12 - you just need to provide 3% DC. M–12 Q. What minimum contribution or benefit must be received by a non-key employee who participates in a top-heavy plan? A. In the case of an employer maintaining only one plan, if such plan is a defined benefit plan, each non-key employee covered by that plan must receive the defined benefit minimum. If such plan is a defined contribution plan (including a target benefit plan), each non-key employee covered by the plan must receive the defined contribution minimum. In the case of an employer who maintains more than one plan, employees covered under only the defined benefit plan must receive the defined benefit minimum. Employees covered under only the defined contribution plan must receive the defined contribution minimum. In the case of employees covered under both defined benefit and defined contribution plans, the rules are more complicated. Section 416(f) precludes, in the case of employees covered under both defined benefit and defined contribution plans, either required duplication or inappropriate omission. Therefore, such employees need not receive both the defined benefit and the defined contribution minimums. There are four safe harbor rules a plan may use in determining which minimum must be provided to a non-key employee who is covered by both defined benefit and defined contribution plans. Since the defined benefit minimums are generally more valuable, if each employee covered under both a top-heavy defined benefit plan and a top-heavy defined contribution plan receives the defined benefit minimum, the defined benefit and defined contribution minimums will be satisfied. Another approach that may be used is a floor offset approach (see Rev. Rul. 76–259, 1976–2 C.B. 111) under which the defined benefit minimum is provided in the defined benefit plan and is offset by the benefits provided under the defined contribution plan. Another approach that may be used in the case of employees covered under both defined benefit and defined contribution plans is to prove, using a comparability analysis (see Rev. Rul. 81–202, 1981–2 C.B. 93) that the plans are providing benefits at least equal to the defined benefit minimum. Finally, in order to preclude the cost of providing the defined benefit minimum alone, the complexity of a floor offset plan and the annual fluctuation of a comparability analysis, a safe haven minimum defined contribution is being provided. If the contributions and forfeitures under the defined contribution plan equal 5% of compensation for each plan year the plan is top-heavy, such minimum will be presumed to satisfy the section 416 minimums.

Hmmm. In your situation, all interns would be LTPT, but would all LTPTs for the plan be interns? Intern isn't service based exclusion, so I wouldn't jump straight to not valid. Would there be other employees that enter as LTPT that are not interns? Its makes for a more reasonable argument if you are not excluding all LTPTs, just the interns

We got one recently and also have an ACK number and the filing was listed as FILING RECEIVED on www.efast.dol.gov though in blue. In our case it was the SB attachment missing and we supplied that in response to the penalty notice and hoping for the best.

In order to recognized the ROTH conversion for 2023 they would need an election to make after tax, a deposit of said contribution, and an election and conversion all completed on or before 12/31/2023. You would then need to issue a 2023, 1099-R for the conversion. If the election is made in December but the deposit is not made until January, then the earliest you could do a conversion is in 2024 since I do not believe you are allowed to "convert a receivable".

Election form has to be signed by 12/31/2023 and after-tax contributions deposited by 30 days after the end of the plan year to be counted for 415. Obviously can be done within the plan year as well, but deposit deadline is not the tax filing deadline. Not sure what you mean in (2), but the 1099 should be created for the plan year in which the conversion occurs.

Starting to work my way through this. Welcome news that certain class exclusions can apply. But, they cannot be a proxy for for an age or service requirement. Consider the following: plan currently excludes interns. ALL interns work between 500 and 999 hours. My reading is that this exclusion would not be valid, and LTPT rights would need to be granted to interns that otherwise satisfy the LTPT age/service requirements. Agree/disagree? Now, if interns work various numbers of hours - some 500-999, some over 1,000, and interns are an excluded class, then it should be permissible to exclude them from LTPT requirements. Agree/disagree? Thanks.

I'll add 2 or 3 cents here. : ) First, you ask if the plan can be amended, but you don't specify who is adopting the amendment - the employer or your firm on the employer's behalf (which sponsors of a pre-approved plan have the authority to do). Your firm can't adopt the amendment on the employer's behalf because they aren't on your plan. That may be an issue when it's time for the next interim amendments and may be reason enough to restatement onto your pre-approved plan prior to the next restatement cycle. My guess is that in this case it's the employer that will be adopting the amendment. There's nothing that can stop the employer from doing so. That then raises the question as to whether the plan is still a pre-approved plan. If the amendment isn't deviating from the pre-approved language, then I'd say they have reliance. The IRS doesn't care who does the amendment - it's only a matter of whether you have deviated from the pre-approved language. If they are doing something that's allowed in pre-approved plans but not offered in this specific pre-approved plan then you're covered because at the next restatement you can get retroactive reliance (it may require submitting for a DL if it's still not offered in the pre-approved plan you use). If it's a provision that can't be in a pre-approved plan, then you'd treat the plan as individually designed and you can submit if the plan never received a prior DL.

Thank you very much.

You can try FORM 945-X. Also IRS Publication 15," Employer's Tax Guide" may have some relevant information.

Not a big deal but part of my thinking is with the knowledge that Form 5500 asks about transfers between plans, including details on plan name, tax id, and amount, I assume or at least think that their computers cross-check. I'm sure it could be explained without any problems but to my way of thinking, having to explain is a loss.

Perhaps these two rules might help you answer some aspects of your question. Interpreting the Employee Retirement Income Security Act of 1974’s title I: 29 C.F.R. § 2520.104b-31 https://www.ecfr.gov/current/title-29/part-2520/section-2520.104b-31#p-2520.104b-31(a); Interpreting the Internal Revenue Code of 1986: 26 C.F.R. § 1.401(a)-21 https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)-21#p-1.401(a)-21(a). These rules set conditions for using electronic communications to meet some notice requirements. But a communication that meets these rules might not be enough for a communication about a plan’s end and final distribution. Among other points, a plan’s fiduciary might evaluate risks that some participants, beneficiaries, or alternate payees might fail to read an electronic communication.

As Luke Bailey suggests, I imagine the situation you describe involves an IRS-preapproved documents set and the IRS’s opinion letter on it. While we haven’t seen the plan documents, service agreement, and other facts of your situation, here’s another point that could become relevant in some situations. Even if both old and new TPAs are licensees of the same plan-documents publisher, don’t assume a document would be constant. A publisher (ASC, Datair, FIS Relius, ftwilliam, McKay Hochman, etc.), working from the same “chassis” for a kind of plan document, might make many different versions. Even with nonexclusive licenses, different TPAs might have licensed different versions. Further, a recordkeeper or third-party administrator (perhaps a “bundled vendor”) might get a publisher to make a custom version. For that version, the TPA might get the whole copyright, share the copyright, or get rights to enforce the publisher’s copyright. Either way, some versions omit choices a service provider doesn’t want its user to select. Some versions add provisions a service provider insists its user include. Many have customizations—beyond names and identifying information—that relate to the service provider’s business. You might be surprised by some of the plan provisions a service provider seeks to influence. To be confident that what you hope to accomplish is feasible, you’d need to look into the exact details. Or if you or your client has any doubt, might it be simpler to start over? Whatever someone might assert about lacking reliance on an IRS opinion letter when a user no longer gets a service from that document’s sponsor or licensee, one doubts another provider’s service agreement would preclude your client from relying on an IRS opinion letter issued to you (or the publisher you license from) when your client adopts a plan-documents version you licensed. Nothing I post here is tax or legal advice. TPApril, you should ask your firm’s lawyer.

This won't help RamblinWreck, but it might help future readers. Traditional Cash balance plans are great, but when you have multiple owners you run into these types of distribution problems that are generally not fully explained at the front end of the engagement. If the cash balance plan is overfunded, the exiting owner wants a piece of the excess, and if the plan is underfunded, the remaining owners don't want to give them full value - or in this case, the exiting owner can't be paid at all until the funding level meets the 110% rule. There are other types of plan designs that handle these situations more efficiently. "Market based" cash balance plans can be a better solution, but you still end up with overfunding/underfunding at different points in time. They are a better solution, but still not perfect. There are also "Direct Recognition VIP Retirement Plans", or VIP plans which are not based on the cash balance regulations but look very similar. In a VIP plan, the value of the assets is always equal to the sum of the account balances because the benefit is based on the number of "units" and not a stated dollar amount. Each of these options comes with a little higher price tag, but the extra administrative cost can save a lot of expense and frustration if one of the partners wants to leave before the others.

TPApril, are you talking Determination Letter or Opinion Letter?

RamblinWreck24, I completely agree with Peter's legal analysis and with the other posts as well, but I will add the following from the standpoints of business and fairness, based on my experience in similar situations: -- Suppose 10 people form a partnership at the same time and are all of the same age and get paid the same (I know, stupid assumptions, but bear with me). They form a cash balance pension plan under which everyone has the same benefit and there is perfect consensus among the 10 partners regarding how it will be designed and invested. If the plan also covers non-owners, assume there is equal staff cost/utilization by each partner in the practice. Each year, the same reduction occurs to the partners' taxable/distributable profits to fund their benefits (and possibly the benefits of any staff participants). Then one of the partners pulls out early and an additional amount must be contributed to fund that person's distribution. The other nine will forge ahead and make contributions to fund their benefit on a going forward basis, just as before. -- In the above situation, it might make sense that the partner retiring early would need to make a contribution to fund his/her benefit fully (although as pointed out by justanotheradmin and truphao above, if there are non-owner participants, it generally would not be possible to fund a full distribution for the early retiree even if an amount is contributed equal to the allocated underfunding for the one departing partner). On the other hand, in virtually any real-life situation, where there may not have been equal buy-in by all participants regarding plan design, crediting rate, annual contributions, and investment policy, where different partners will have had larger or smaller demands on staff (assuming staff participation in the plan) and different shares of firm profit, and where partners of different ages will have come and gone at various points in the market cycle), reaching a consensus about handling the departing partner's share of the underfunding may be difficult to achieve. But again, the above is just an intro to the business/fairness aspect. As Peter points out, the legal documents govern, most critically the partnership agreement.

At least from the individual-account plan, and perhaps from the defined-benefit plan too, the partners might consider a spin-off in which a new plan for Joe’s new firm accepts a symmetry of assets and obligations allocable to Joe and those who follow Joe into Joe’s firm. The partners ought not do a spin-off until Mary, with her lawyer’s and her actuary’s advice, and Joe, with his lawyer’s and his actuary’s advice, each finds that the split is fair. If the partners agree on a spin-off, might they prefer transfers-out with December’s year-close and transfers-in with January’s beginning?