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You can’t defer more than you earn. You can have catchup contributions go above compensation only if there is an employer contribution to push the number up. But with zero compensation, that’s not an option either. Maybe he doesn’t deduct something this year so he has income to defer on?

Partners K1 is their income net of partnership expenses but their retirement plan contributions are deducted on their 1040. Without knowing details, I assume a reasonable 415 limit had already been established such that having a very low 2023 plan compensation after all adjustments to and deductions from income does not cause issues there.

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.)

Before one suggests asking the Labor department to clarify what “with a balance” means, consider the proverbial saying: “Be careful what you wish for, . . . .” Or another practical caution: “Don’t unnecessarily ask a question if you’re not sure you’ll get the answer you’d like.”

Ahh, I see this now (I didn;t see yours at first). The key thing is "or for whom a contribution has been made to the Plan for this plan year or any prior plan year." It does not say when that contribution has been funded. So I do think counting receivable only people is a clear and direct interpretation of what they said...

He has no income, he has no deferral. Seems like one course of correction could be a 415 refund along with earnings.

are you asking about potential audit for 2024? "For example, for a Code section 401(k) plan, the number entered on line 6g(2) should be the number of participants counted on line 6f who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Defined benefit plans do not complete line 6g." So if completing the 2024 Form 5500, I interpret that to mean the 2024 BOY part w/ balances count should include those 20. So the BOY would be 130, and yes and audit would be required for the 2024 plan year.

Are you describing 120k as the minimum required contribution (MRC) or the pay credit, there is a big difference between the 2. You MRC might be 10k and that is all you have to contribute. This is all I can say without knowing anything else.

An acutary is a person who believes that if you put your left foot in icewater and your right foot in boiling water, on the average you're comfortable. An actuary is a person who, when faced with a choice of buying a watch that doesn't run at all and one that loses one second a day, will choose the watch that doesn'r run at all because it is absolutely correct twice a day while the watch that loses one second a day is right only once every 17 years. An actuary is a person who, when in a burning airplane, must choose between riding the airplane to the ground or parachuting out, will choose to stay with the plane because statistically flying is safer than parachuting. An actually will not understand that you don't need a parachute to skydive, but you do need a parachute to skydive twice.

Potentially. Again, I am going to recommend legal counsel. There are a number of issues here. But speaking generally, if the PA made an incorrect distribution, giving a beneficiary's money to the wrong party, then there is likely a fiduciary breach. Assuming there is a realistic belief that the PA could be liable for a breach, the PA can make the plan whole with a restorative contribution which can be used to pay the correct beneficiary. Separately, recovering the excess distribution from the other beneficiary can be pursued. This is not legal advice. The fact pattern here is interesting, but there is a lot of missing information that could reflect responsibility and/or liability by a number of parties for a number of reasons - or even that no one is due anything. To steal the line of a frequent poster here: free advice is worth what you pay for it. Unless this issue is over a trivial amount, I strongly recommend the plan consult with an ERISA attorney.

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.