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I always apply the coverture fraction first. I assume the participant can choose a different form of payment on the piece that isn't subject to the QDRO.

Without diminishing respect for Effen’s and other pension practitioners’ methods: What does the text of the court’s order tell its reader about which way to do the computations?

We had an incredibly difficult time with them last year. They were requiring medallion guarantees, etc. Client finally opened an account at a local bank and the trustee was able to go online and request a wire to an account "with the same name". Paid everyone out from that account.

Agree with this. I don’t think it’s a thing. You just don’t post the notice for the upcoming year.

Can you find the reg for that? Meaning, if a SH is NOT ending mid-year, but is ending exactly at year end, a reg says you have to issue a 30 day advance notice to stop the safe harbor from continuing into next year?

If your document does not allow an exclusion, like a standardized document? Then I would look around for a nonstandardized document to use instead.

There are several non-discrimination tests that must be satisfied. 410(b), 401(a)(4), and 401(a)(26) are the big ones. The 40% rule is in 401(a)(26), so yes, you can create a DB plan that only benefits 2 HCEs, but you still need a way to satisfy 410(b), 401(a)(4), and the Top Heavy rules of 416. IOW, you will need a generous DC plan for the NHCEs. I wouldn't recommend creating an HCE only DB plan with a group this small. If/when someone leaves, or they hire a few more people, you will need to add people to the DB. Typical design would be include everyone in DB, give small benefit to NHCEs in DB plan (enough to "benefit"), and use the DC plan to satisfy the other requirements. Also, make sure that no one is "otherwise excludable", which might lower your count.

I agree. The startup credit references NHCEs, but the contribution credit references "employees making less than $100,000". As far as I can recall, owner-employees making less than $100,000 are not treated any different. The ACA credit of $500 has no NHCE or income restriction, and is available for all plans including one participant owner only plans.

I think it is pretty widely accepted that even owners with less than $100K of comp get the credit. if you look at the text, the words "NHCE" do not appear anywhere in there (its not very long). It only says people with more than $100,000 of comp are not eligible. I'm really talking myself into this...

Agree with both comments above. In many cases, we recommend that ESOPs still make a timely distribution/diversification payment as elected by the participant, but provide true-up payments after the transaction closes for the difference between the per-share distribution/diversification value and the per-share transaction value. There are a few ways to do this, each with its own complications. You'd need to decide where to draw the line on who gets a true-up payment; often, we will start with those who received plan distributions/diversifications after a binding LOI has been entered. But this is a judgment call in each case.

It's an EZ. 2% S-Corp shareholders are treated as partners for filing purposes. It was part of PPA but didn't make it into the 5500 instructions until the 2021 5500.

This is a delicate situation. The fiduciary will want to have the benefit of advice of competent legal counsel as a matter of prudent administration and, separately and cynically, protection from liability. That makes any specific observations in this forum irrelevant. Gratuitous comment: ESOPs tend to provide the most difficult fiduciary problems because ESOPs have so many incompatibilities with ERISA principles.

If they are excluded from the plan no gateway. You could exclude them by name but you would not be able to use average benefits to pass coverage. note that you could also have 2 SPDs; one for those excluded employees and one for everyone else (so everyone else does not see the list of names). But that would be administratively challenging for a TPA to make sure you always manually edit any new SPDs. i assume they are already eligible. If not they could irrevocably elect to be excluded PERMANENTLY (perhaps redundant but I have definitely seen people ask if there is any way to revoke their irrevocable election 🤔) Pretty sure this is an exhaustive list of options unless there is some other differentiator between them and the other sub 1% owners (like job title)

1) they just don’t contribute their own money 2A) Plan NOT top-heavy; use the “each participant is a seperate classification” election for profit sharing and just don’t give them a contribution. 2B) Plan IS too heavy: exclude any direct owners who owns less than 1%. Anyone excluded from the plan is not required to receive the too heavy minimum. both assume you can pass coverage and non discrimination.

Unless the plan documents says otherwise, this paragraph from the preamble to the 415 regs is what I have relied on when this question comes up. You are not required to count compensation on a FIFO type accounting basis. https://www.federalregister.gov/d/E7-5750/p-111 "As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415(c)(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year."

I think the issue is the due date for C corp tax returns changed back in 2016 or so. It used to be they were due 3/15 so 6 months afterwards was 9/15. See this link https://www.cpa-wfy.com/get-ready-businesses-some-filing-due-dates-are-changing/ I quote (bold mine): For many years, C corporation federal income tax returns on Form 1120 were due two and a half months after the end of the corporation’s taxable year (March 15, adjusted for weekends and holidays, for a calendar-year corporation). Form 1120 could be automatically extended for six months (through September 15, adjusted for weekends and holidays, for a calendar-year corporation). However, a law passed last year established new due dates for Form 1120. For tax years beginning after December 31, 2015, the due date is generally moved back one month to three and a half months after the close of the corporation’s tax year (to April 15, adjusted for weekends and holidays, for a calendar-year corporation). So someone taught you a short hand version of the rule and never taught you why is was 3/15 and 9/15. So when the due date of the 1120 changed you didn't pick up on it changing the deduction deadline. Zeller's way of saying it is the better way to teach it and that hasn't ever changed.

Can they legally do that? In many cases until the sale is final both sides are bound by confidentiality agreements that don't let them speak about the negotiations and possible sale. Also, letter of intent doesn't sound final. So if the deal can be broken disclosing it could cause people to not sell their shares and could be harmed if the sale falls through. You are rightfully concerned to worry about fiduciary responsibility. There are court cases where such people have been forced to pay people who sold at the lower price to make them whole to the sale price. However, given things like above disclosing it might not be allowed or even right. This client needs to go to an ERISA attorney who is very familiar with this topic. You can find times where the answer will be to delay payments until more is known. I have seen cases where the recommendation is to not pay anyone, diversification nor terminated participants even if it goes past the next year end. Obviously that raises questions of what about the law that says they have to be paid. This is very tricky becasue there are some large possible liabilities for people. You need something better than free advice on this forum for this one unless it is the free advice to find good paid advice.

You were taught wrong. The due date of the contribution is the due date of the employer's tax return, including extensions. See IRC 404(a)(6).

That the plan is discontinued or even ended, or that the employer dissolves, is not an excuse from ERISA § 103’s command for an audit of the plan’s financial statements. Consider whether a plan-accounting year ends when the plan pays or delivers the plan’s final distributions. For each plan, consider whether the employer or the plan needs a reserve of amounts to pay the independent qualified public accountant’s fee.