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Personally, I think others will feel differently, I would consider that 1/2/2024 R/O for December 2023 dividend as a payable at 12/31/2023 and file a final return for 2023 showing zero assets.

Ascensus is correct.

I can certainly get behind that option as well.

You're right. They are included for coverage testing for both 403(b) and 401(a) plans. Mostly, we don't worry about the effect of this on nonprofits too much though, because the number of people treated as independent contractors is small enough that counting them for coverage purposes (even if all of them were recharacterized) would not throw off coverage testing. There aren't a lot of nonprofits that have Microsoft's situation. The bigger issue is the universal availability rule. That's a damned if you do and damned if you don't situation. If you include someone who really is an independent contractor, you have violated the rule that a 403(b) plan can cover only employees. If you fail to include someone later recharacterized as an employee, you have violated the universal availability rule. So there is no "safe" option other than avoiding having independent contractors at all.

Assuming you are talking about a DC plan, it is a circular calc; it boils down roughly to 25% of (covered) W-2 comp plus (roughly*) 20% of Schedule C. *There is an adjustment for 1/2 of SS taxes; after that it is 20%. Also note the Schedule C should reflect the employer contributions for employees, so if you are a TPA and are given the raw Schedule C by the accountant, you have to adjust for that as well.

Usually one of three ways: 1. Maintain both plans separately 2. Merge the plans 3. Go back in time

No can do, although now "kissing cousins" 403b and 401k are still fundamentally different and cannot be "merged". You can certainly terminate the 401k and let each participant individually elect to rollover to the 403b but my personal opinion is that you're going in the wrong direction (don't get me started on why 401k is better thanan ERISA 403b).