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An actuary is a person who, after reading this quip, checked to make sure the "once every 17 years" calculation is correct.

I have been away from this sort of admin for years but my recollection is (1) you can refund excess by 3/15 (avoid excise tax), (2) refund after 3/15 but before 12/31 (incur excise tax), (3) provide QNEC to pass test if current year testing, deposit by 12/31, or (4) if you do not correct by the end of the following year then a permissible EPCRS self-correction method is what you describe in (2). https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-the-plan-failed-the-401k-adp-and-acp-nondiscrimination-tests

I think there's a 10-employee minimum for the EACA rules.

And after asking more questions, there is no ownership overlap, so no ASG. Thank you for all replies

@Gilmore the proposed rule was met with a less than enthusiastic response as noted in the attached review, and in the comments from ASPPA found here: https://www.asppa.org/news/ebsa-proposes-adding-self-correction-component-vfcp and here https://www.asppa-net.org/news/ara-pushes-additional-changes-vfcp-self-correction-option To answer your question, I don't see that the option is available at this time, and it seems as if there are several decisions that a plan would need/want to consider if the option, unmodified, was available now. ferenczylaw.com-FLASHPOINT DOL Embraces Self-Correction Somewhat Kind of Unenthusiastically The New Proposed VFCP.pdf

Unfortunately different situations might have different "right" documents. For the vast majority of us (?) using pre-approved documents, "it is what it is." What prompted someone to say "IRS regulations state that grandchildren are not eligible to receive distributions" is beyond me. And then I guess that "misunderstanding" (being polite; it's just stupid) led them to not pay the granddaughter even though the plan says she is entitled (although I remain skeptical of that detailed language, sorry). Plus you have the son bringing in an attorney, which is going to cost him half of what he received, if this plays out. It's a cluster f*ck. The lesson here is, IF YOU DON'T KNOW WHAT YOU'RE DOING, DON'T DO IT.

I think I heard that the the proposed rule has left OMB and is back at EBSA, but I'm not 100% sure. ASPPA/ARA submitted a pretty lengthy comment letter during the first comment period.

Here’s the reopening of the comment period: https://www.govinfo.gov/content/pkg/FR-2023-02-14/pdf/2023-02545.pdf. That comment period closed April 17, 2023. https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=1210-AB64 One year would be quick in rulemaking time, especially when other topics consumed attention.

And you've got the "service for vesting" filled with that smaller number of years, rather than the plain "service" number of years? And it didn't already have the 100% vesting error in the prior plan year's file, so that it would have just rolled that forward? I don't recall if I've seen that kind of thing screwed up before, so I'm at least pondering a "verify absolutely everything in the employee record" approach and hope Relius would do it right if it is just a case of missing a datum spot in the software. Heck, I've messed up stuff myself by entering 2003 for termination dates instead of 2023 already this year.

All super valid points. Well I couldn't have made my point any better than you have for me. Whether a plan needs an audit or not should not be based on how a TPA happens to interpret the 5500 instructions. Thanks for making my point! By the way the alternative of hirng a $500 an hour ERISA attorney to answer this question for my clients is likely not going to impress than much either.

Whatever the instruction might mean, imagine a big recordkeeper might not apply it with an allocation receivable in generating draft Form 5500 reports. Imagine a recordkeeper counts participants with an account balance by looking to what “the system” says was the balance actually credited on December 31. If the participants-with-balances count in a draft Form 5500 report suggests the plan’s administrator need not engage an independent qualified public accountant, often the administrator will accept that assumption. An administrator that assumes its plan was, for a to-be-reported year, a small plan often has not engaged a CPA firm to audit the plan’s financial statements; so no auditor probes any count of participants. Administrators of these plans might not think to ask a lawyer for advice. Not every plan’s administrator has engaged a TPA other than the recordkeeper. So for many plans, an administrator might have no one questioning the recordkeeper’s counts. After considering those possibilities (some might say likelihoods), how many 2023 Form 5500 reports will be filed using a with-a-balance count that omitted participants with only an allocation receivable? Then, imagine the Labor department, lobbied by big businesses, publishes revised instructions to clarify that with-a-balance means a balance actually credited on the applicable date, and need not consider an allocation receivable. If austin3515 suggested a plan’s administrator count as with-a-balance a participant with only an allocation receivable, might your small-business client be displeased with what some might perceive as your overly cautious advice? Even when a client prefers not to be bothered with questions it expects a professional to resolve, is it safer at least to ask one’s client its choice about something that involves spending, as you put it, an extra $20,000?

While I'd observe that I think you are oversimplifying the definition of Statutory Employee (see IRC 3121(d)(3)) I'd agree that if the employee is truly a Statutory Employee, (and not a full-time life insurance salesperson - see IRC 7701(a)(20)) they are independent contractors, and thus ineligible to participate in the plan - shouldn't need an additional special exclusion.

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 agree with prior posts. I think it is highly unlikely the granddaughter is entitled to anything. In the absence of a named beneficiary, the plan has a beneficiary under default provisions. It's not like this is a gray area; it is simply a matter of reading the plan provisions to see who the beneficiary is. That is typically going to be spouse, otherwise children, otherwise the estate. (as fmsinc notes, there may be a longer list; it might even be shorter, as in - spouse, otherwise estate). The only way the granddaughter gets anything is if she is the daughter of a deceased child (i.e. not the son's daughter) and the plan says that the benes are "issue per stirpes" (i.e. per branch of the family tree) but I've never ever seen that in a default. (All right, I suppose the plan designation could be "estate" and it is possible the granddaughter is is entitled to something under the will or intestate laws.) I repeat, this is not mysterious/subject to discretion/gray area.

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.

I can't offer any quantitative insights, and I'll refrain from anecdotal observations or conjecture. However, I'll note that there are at least 3 distinct definitions of "actuary" when it comes to retirement, and which of these you mean might affect your analysis: Enrolled actuaries Individuals with a credential from any of the five U.S.-based actuarial organizations Individuals working in an actuarial capacity, regardless of whether they have obtained any credentials For example, federal law only recognizes definition 1 with respect to ERISA and the tax code, and only those actuaries may certify a plan's actuarial report, its funded status, its PBGC variable-rate premium, or its sufficiency for a standard termination. However state law might expand that to include actuaries under definition 2 for some purposes. And some people under definition 3 might have a job title of Actuary.