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I aslo recommend carefully reviewing the "stable value" contract language with the insurance carrier to see if there are any exceptions applicable to MVA trigger on account of special circumstances (such as merger, benefit payments, etc.)

I agree, IF there is an ASG but not convinced that there is. Unless it was a management company situation, I thought there had to be at least some ownership overlap.

The IRS gave some guidance on this topic in Rev. Rul. 2002-45 (https://www.irs.gov/pub/irs-drop/rr-02-45.pdf). The question comes down to whether the fiduciary reasonably determines that there is reasonable risk of liability for a fiduciary breach as a result of the surrender fee/MVA. From 02-45: I cannot make that determination for you or the plan, but the fiduciary's justification (or lack thereof) for purchasing the SVF with the MVA, the facts that gave rise to the change (i.e., an unanticipated merger), and the participant's opinions regarding the MVA would weigh into that decision.

I had a client a few years ago with 300 employees where the employer gave 1/3 of them a 1.5% match. I discovered in an annual client meeting that they were providing the wrong compensation for a >1% owner which then put his plan comp over $150,000. He was a long-time employee who had a large balance. I had a dreadful summer contacting different industry people, an ERISA attorney, etc. It was not our fault, but you always have to ask - how can they pin this on us, did we not ask enough questions, etc. It was a $150,000 issue. The company fortunately is very successful where owners make a couple million and so they took it rather matter-of-factly and actually thanked me for keeping the plan clean. But I was concerned about not just that plan year but the 2 following that had already passed! Then we are talking $500,000 with earnings. Fortunately, fixing the one year by adding $150,000 to the non-key group moved the plan into non-top heavy status for the following two. Lucked out. It all turned out fine but I can tell you, it affected my summer and not in a good way. I REALLY wish the top-heavy rule would be repealed. It is the worst thing about retirement plans in my opinion. I'm going to consider the "innoculation" above for several clients. Fortunately, the vast majority of our plans are small, professional and safe harbor nonelective.

Yes, if you purchase a retroactive bond that covers the period you are filing for, you check yes.

Plan participation doesn't impact that determination.

No, I think you are correct.

Correct - there is a circular function to split the total earned income between ER Contribution and plan compensation. Assuming you need some amount of compensation to produce the benefit that is creating the contribution requirement, it w/b rare that the entire Sch C amount goes to deduction, but it is certainly possible if the high 3 is already established, or if you have a fixed dollar formula in a cash balance plan. This could easily create a 415 limit problem. There is also a special adjustment for 1/2 of the SE tax, and you have comp limits that can also come into play, so be careful.

If it’s an ASG, she’s key and so are the kids.

In general, I agree with your sentiment. However, for an owner-only plan the situation is different. There are no effective availability issues, no operational failures, and no fiduciary concerns, etc. Since the owner is the participant, it really is a just a plan where the participant(s) has elected to not defer, as opposed to a plan where the employer decided to not facilitate, implement, or promote to the employees a plan feature the employer agreed upon when adopting the plan document. In short, I'd suggest that the document include the delayed special effective date for deferrals, but IMO, it is not a hill to die upon.

The required contribution might be more than the Schedule C income, but deduction is limited by the Sch C. Normally you'd have a non-deductible contribution subject to the excise tax but the excise tax is waived for a Sole Prop whose MRC would drive his income negative but you still have a non-deductible contribution to the Plan.

I would save all documentation, and then do a typical missing participant search. The plan/plan sponsor/plan administrator hopefully has an administrative procedure for such and if not, now would also be a good time to develop one.

Yes, I agree. For purposes of the POP component of the Section 125 cafeteria plan, eligibility should be tied to each particular component within the health and welfare plan for which employees contribute on a pre-tax basis. That way if dental/vision has different eligibility standards than medical (e.g., they don't rely on the look-back measurement method's measurement/stability periods), employees' eligibility to pay for such benefits pre-tax through the cafeteria plan remains unaffected by a change in medical plan eligibility (or vice versa). It does make sense to tie eligibility to the health FSA component with medical plan eligibility, though. That is a requirement to preserve excepted benefit status for the health FSA (the so-called "footprint rule" that anyone eligible for the health FSA must also be eligible for the major medical). So there are situations where that eligibility tie specifically to the medical plan could make sense.

Agreed. If the plan had last day requirements, I would argue the other way.

Well, the position of the IRS is that the existing formula gives the participants a "protected allocable share" (i.e. IF an allocation is made for 2024, it must be pro-rata) and that such an amendment couldn't be implemented until 2025. I've seen arguments that the IRS' position is inaccurate, but I wouldn't want to fight that battle