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A brother-sister controlled group requires 80% or more common control. It doesn't sound like that exists here.

Yes

Truer words wuz never spoke! It'll be ok for many employers, and others will botch it badly. Retirement looks more attractive all the time...

Don't think so, but also remember that neither spouse can be involved in the other's business for a control group to no longer exist. Sometimes, sponsors and/or their practitioners want there to be a CG and so create some cross-involvement to get there.

Yes, there is no control group, but if each entity had the same type of plan then the 100%/51% owner would have an aggregated 415 limit.

Well, we all know that complete disqualification (the death penalty) is not likely, so I'd drop that fear down to second place. However, employees blaming their employer, at least initially, is very likely. Since taking personal responsibility is apparently considered anti-American in our society, the first course of action is to blame someone else. The fact that as an employee I didn't read the communication(s), or didn't question it if I didn't understand it, etc., is immaterial. (All right, I'm done with that rant.) And of course, there will also be many situations where the employer did not enroll people when they SHOULD have been enrolled.

I would also say that most of our employers have simply decided to allow all employees, regardless of hours, to make their own contributions (although part-timers may not be eligible for a match or nonelective contributions). The cost of allowing employees to contribute their own money is typically less than the cost of keeping two or three years' worth of records of hours.

You can’t merge a 401k into a 403b. But I think that’s the least of the issues. seems like the guy is wanting to use a not for profit entity to pay the wages of the people that actually work for his for-profit business. I would have to imagine there are legal issues with that and I would avoid it. If you can insulate yourself by having his CPA and an ERISA atty drive the decisions, then you should be good.

Re: ERISA 403(b) Plans: We are still using the 20 hour exclusion for deferrals etc. when the sponsor requests, but informing the sponsor that it will be "overridden" by the LTPT rules. It can be complex and messy. We do discourage the use of the 20 hour exclusion because of LTPT but this argument is not acceptable to all sponsors who want to use it. I know of no ruling that invalidates use of the 20 hour exclusion in the plan document.

I don’t know why you would do anything else. Also, was any of it severance pay that they only received because of the termination?

Thank you Peter! I want to offer some context here. I am really concerned about this going into 2025. The following example is not at all unusual. Clients for 20 years have said "I cannot add auto enrollment, this is not right for my demographic." And they were right, they knew their employees. Let's assume an entrepreneur owns 50 MacDoodles and has 100 people a year become eligible. They ALL make minimum wage (or within $2 or $3 an hour of minimum wage). Let's assume the Employer is not as "aggressive" as I am proposing they should be in giving every opportunity to opt out. Does anyone disagree that rather than being over the moon that their employer cares so much about their retirement years, the employees will instead be calling payroll to find out what moron messed up their paycheck which is now a full $15 less a week? providing these people with instructions on how log into some other website is just not going to cut it. We all need to find a solution for this. This will not go well, I promise you. This is a disaster waiting to happen for a client like this.

Consider that an answer might vary with whether the plan’s sponsor and administrator seek to meet only Internal Revenue Code § 403(b)(12)(A)(ii) or also seek to obey ERISA sections 202(c) and 203(b)(4). Applicable or relevant law is ambiguous. Forty comments on the Treasury’s proposed rule are available at https://www.regulations.gov/document/IRS-2023-0058-0001/comment. Some comments flag your question as an open issue the Treasury’s proposed rule does not resolve. Likewise, some comments flag a coordination between tax law conditions and ERISA’s minimum-participation and minimum-vesting provisions as an open issue the Treasury’s proposed rule does not resolve. Although some might guess the Treasury lacks power to interpret ERISA § 202(c) and 203(b)(4), the 1978 Reorganization Plan transfers that authority to the Treasury. https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/executive-orders/4. But even if the Treasury publishes a final rule and no court vacates the rule, a Federal court does not defer to an executive agency’s interpretation of the statute. An ERISA-governed plan’s administrator must administer the plan according to the plan’s governing documents or, to the extent a document is inconsistent with ERISA’s title I, ERISA’s title I. That might call for an administrator’s prudent interpretations of ERISA sections 202 and 203. Different law applies for a governmental plan or for a church plan that did not elect to be ERISA-governed.

Consider warning one’s client that a Form 5500-EZ classification does not change whether ERISA’s title I governs the plan. An ERISA rule treats a proprietor’s or partner’s spouse as not an employee, but does not provide that interpretation regarding a proprietor’s or partner’s child. 29 C.F.R. § 2510.3-3(c) https://www.ecfr.gov/current/title-29/part-2510/section-2510.3-3#p-2510.3-3(c).

5500EZ instructions state that for a family biz filing as an S-corp, a plan covering only family members, can file an EZ. Owner, spouse and their children.

Brian Gilmore’s reasoning makes even more sense if one sees that the typical facts of a sale of business assets (dabram09’s query says A sells “Division Z” to B) is that the workers who relate to the assets sold end employment with the seller, and might become employees of the buyer (or its subsidiary or affiliate). This is not advice to anyone.

I have encountered similar issues before. My position has been that the employer mandate obligations for the buyer (with respect to Z's full-time employees in this example) trigger only as of first of the month following the close. That's not clear in the rules, but nothing else seems viable/reasonable. B can't offer coverage for the full month when the employee onboards mid-month. I therefore treat the first partial month of employment with the buyer in the same manner as a new hire. In other words, you get a limited non-assessment period (2D in Line 16). As for the seller, I treat this in the same manner as where an employee terminates mid-month. So the seller (A in this example) gets to use Code 2B in Line 16 to avoid any potential ACA employer mandate penalty liability for the 1H in line 14. IRS Form 1094-C and 1095-C Instructions: https://www.irs.gov/instructions/i109495c 2B. Employee not a full-time employee. Enter code 2B if the employee is not a full-time employee for the month and did not enroll in minimum essential coverage, if offered for the month. Enter code 2B also if the employee is a full-time employee for the month and whose offer of coverage (or coverage if the employee was enrolled) ended before the last day of the month solely because the employee terminated employment during the month (so that the offer of coverage or coverage would have continued if the employee had not terminated employment during the month). ... Limited Non-Assessment Period. ... First calendar month of employment. If the employee’s first day of employment is a day other than the first day of the calendar month, then the employee’s first calendar month of employment is a Limited Non-Assessment Period.

I suggest starting with the DOL EBSA either via phone or their online message system. Their Benefit Advisors can often handle these situations easily/quickly. Usually it's just someone made a mistake. https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa

Did the EOBs deny due to lack of coverage? If so, appeal the denial and call the former employer. Either the employer or insurer screwed up. if you don't get a satisfactory answer, sue the employer and the insurer.

If it is an S-corp, yes. If DB/CB plan, PBGC may come into play, depending on the biz.

I would do them separately. Why would you include a timely filing with a late filing. Perhaps you extend 2023 and file it in October. But go ahead and submit the two late ones as soon as you can. https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers