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No, they are not required to fully restate. The only requirement is to provide good faith amendments. You need to contact the provider of the document to obtain these amendments. This assumes that the current document is of pre-approved nature. Please keep in mind that these amendments are good faith (not IRS approved) and if you want absolute certainty of full compliance then either convince your client to fully restate or file for a determination on termination (which is a frivolous attempt if the document is already preapproved and might end up being more expensive and time consuming). Whatever you/client decide to do, make all is done by termination date. On a side note, I try to get my clients to fully restate and provide them the reasons why especially if they have millions in the plan. But this is me. FWIW

There should be information in the letter on how to contact the IRS, including a telephone number. If not, try calling the number which appears in the instructions 800-829-4933. Have a copy of the letter in hand when you make the call and explain the situation. It is difficult to know what possibly may have triggered the message in the letter without seeing the information submitted with the application. EINs are used by many entities and for many purposes, and a single entry can throw the process off track.

I think you can send in a letter stating "no distributions from the Plan ever, Form 945 not required"

These are whole life policies so the cash surrender value should be reported as part of plan assets. Is that correct?

You did have a plan in place "as of the day after termination date". My issue with your hypo is that you also had a plan in place before the transition year (the period beginning after the termination date and ending on the last day of the calendar year during which the termination occurs". Sec 332 adds adds 408(p)(11), which lets you terminate the simple mid year, and allows you to accrue benefits in the qualified plan during the "transition year". By making the plan effective 1/1 for profit sharing, you are maintaining the qualified plan while also maintaining the Simple. The reason you are allowed to terminate the Simple mid year is because you replace it with a qualified plan. It seems clear to me that the intent is for one arrangement to be maintained at any point in the year, rather than allowing both to be maintained at the same time. So, while I agree that 408(p)(11) does not specifically preclude the SH plan from being effective 1/1, I argue that 408(p)(2)(D)(i) already precludes you from doing this.

If I am not mistaken, SECURE only allows retroactive election if and only if the plan is a new plan established by 4/15/2024 (no extension allowed). I am not aware of any retroactive election for deferrals for already existing plans i.e. elections had to be made by 12/31/2023. If no election was made (or an older one exists), PS only i.e. stuck with 25% limit. I might be wrong and curious what others will say.

Time to have them lay all the cards on the table.

Is it possible, the policy is supposed to be allocated to a single participant? Probably the one paying the premium personally? which shouldn’t be happening.

If possible - the request should be in writing, even if just a quick fax to the agent asking for more time. I think there are a few different things that might be going on - is the audit notice just a request for information? Or does it have an appointment date (for either in-person or over the phone)? If it includes an appointment date, its possible the date is far enough in the future that the auditor isn't able to justify an extension? If just an audit notice / information request with no appointment date, then how far out is the date that the information is due? standard extension for the due date for an information request is only 10 days. More than that and a manager definitely has to be involved. At least that's been my experience the last few years. The last few years it seems auditors have come from all around the country to audit plans and they make several appointments for a single trip, so those ones have been less flexible when a change of date has been requested by the sponsor. Agents from the local office, if they are doing the audit, are able to be more flexible for accommodating requests to change the appointment dates. Just my experience.

In the past I've found that most IRS auditors are flexible if you need an extension for a valid reason, which it seems this client has. Especially if the request for extension has a specific time you will respond. Like the initial letter says supply this information by X date and the client says "due to (reason) we request a extension to X +20 days" or something like that. I have not had a problem in the past, but every auditor can be different. I think though that if the client believes the auditor is being unreasonable, they can can contact the manager to discuss the situation

Tax-exempt entities do no have deduction limits but individual 415 limits apply.

Safe harbor and profit sharing are both nonelective contributions provided by the employer. So they're tested together - you get one but not the other, you nevertheless benefited. So the T<501 exclusion does not apply, basically because the person literally benefited.

The rule is that they may be excluded if: They terminated employment with less than 500 hours of service; They did not benefit in the plan; and The sole reason they did not benefit is because they terminated with less than 500 hours of service. In your case #2 is not satisfied, because they did benefit. Safe harbor non-elective is aggregated with profit sharing for 410(b) and 401(a)(4) purposes, so they are considered benefiting for PS because they received a safe harbor contribution. So they can not be excluded.

See Notice 2023-54, particularly the bit about guidance for plans that did not make a "specified" RMD.

see this related thread with similar question earlier today.

I could be wrong but I think the limitations are using the Form 5305 does not have coordinating language with a qualified plan, mostly on top-heavy which is I believe the #1 reason why the IRS does not allow any other plan I think but there could be others. So you are allowed to use a proto-type SEP which then gets treated like a "quasi-profit sharing plan". Most of the ramifications I believe all revolve around deduction of the combined employer contribution to SEP and DB plan or discrimination testing which isn't an issue if it is 1 man shop. So if you have no SEP contribution for the year, you are fine even if SEP account still exists holding the IRA assets. At least that's my understanding. As to Q4, I don't know the legal answer. That is if your DB funding is $0 for 2023 (say by deducting the MRC in 2024) but the plan is in existence, does that cause a problem with the 2023 SEP deduction or its qualification if it is on Form 5305?

What do you mean the sponsor has "opted" for a loan offset? The plan has a written loan policy, the sponsor needs to follow those procedures which will dictate when a default and offset will occur. A distribution upon plan termination would apply to a participant's entire account, including their outstanding loan. So the loan offset should just be a matter of reporting correctly. If the participant elected a cash distribution (not a rollover) don't forget to take the amount of the outstanding loan into account when calculating the amount of withholding.

Yes, you add Code M to whatever other code normally applies to the Offset. Also know the difference between Loan Default and Loan Offset. They have different technical meaning when it comes to participant loans in qualified retirement plans. A loan default is not eligible for rollover. A loan offset is eligible for 60 rollover. A qualified plan loan offset is eligible for a rollover for an extended period of 9.5 months to 17.5 months depending on when QPLO happens.

Yes. From a reporting perspective it works just like a 60-day rollover.

You can't have a loan in an IRA, so they would not be allowed to roll over the loan itself to the IRA and continue paying it back in installments. However, a loan offset due to plan termination is a qualified plan loan offset (QPLO) so they could do a roll over by repaying the amount of the offset to the IRA before their tax filing deadline. Of course, this requires them to have enough cash on hand to contribute the amount of the offset. Which would be functionally the same as repaying the loan, just with an extended deadline. So if they don't want to/can't repay the loan in full, then the option to roll over the QPLO probably may not interest them either.

See the rules for Qualified Plan Loan Offset (QPLO). Plan Termination generally qualifies. Summary version - participant would then have until the extended due date of their tax return for the year in which the QPLO happened to rollover some or all of the QPLO to an IRA to avoid current year taxation. So for example if the Plan was terminating today and Joe has an outstanding loan balance of $10,000 for which the plan will issue a 2024, 1099-R for the QPLO, see instructions to Form 1099-R for proper distribution coding, then Joe would have until October 15, 2025 to come up with $10,000 from other sources to deposit to his IRA as a Rollover contribution.

Never going to happen. Trustee or custodian MUST issue 1099-R if a distribution (serious penalties for not filing and another for not furnishing**). There was/is no employer and there is no SEP (because employer was ineligible). The distribution s being made from an IRA. His or her argument (basis) is with the IRS. The basis in an IRA is "[g]enerally...zero."" [See Conference Committee General Explanation,* ERISA Sec. 2002, see "Taxation of distributions--in general"] But what about the 6% tax on excess contributions (on amounts over his allowable limits)? The amount contributed over the amount "allowable" as a deduction ($0) may also be subject to the tax on nondeductible contributions (IRC 4972). But see 4972(C)(6) exception "[i}ndetermining the amount of nondeductible contributions for any taxable year, there shall not be taken into account—...so much of the contributions to a ... simplified employee pension (within the meaning of section 408(k)) which are not deductible when contributed solely because such contributions are not made in connection with a trade or business of the employer." Under the EPCRS VCP there could be sanctions. The defect (ineligible employer) is not eligible for SCP. Hope this helps. ~~Gary * See CCH, Pension Reform Act of 1974--Law and Explanation, p. 368. ** See IRC 6721 and 6722.

There is far less peace of mind in assuming the IRS closed a case as compared to confirming that the IRS has closed a case. The client should have in hand a copy of the IRS notice and of the response, and then call the contact number on the letter. The agent likely will ask for information on the IRS notice including the EIN, plan number, plan name, notice number, notice date... and then search for it in their system. If the response is not associated with the IRS notice, then the client may need to provide information from the response to see if it can be located. This may include the address where the response was sent, date mailed, delivery service (USPS or overnight)... to see if it can be located. Since the client has not receive a follow up notice, more than likely the case is closed.

Unless I misunderstood, during the ERISApedia Secure 2.0 Grab Bag webinar, the speakers indicated you could add profit sharing back to first day of the year. However, they also indicated you could not add an additional plan (i.e. CBP). Anyone else hear it that way?

As far as I am concerned, the Tru Up is the same as an annul match calculated at the end of the year, and the timing of the deposit is the same as any other er contribution, by the time the tax retrun is due plus extensions. If the er files his return on 9/15, that is when the deposit is due, w/o interest