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They would be participants unless the amendment also froze eligibility to new participants. But unless something odd happened like they got a reallocation of forfeitures they would have a $0.00 balance and as such would not count towards the 100 under the new 5500 audit guidelines.

Agree you cannot retroactively amend PS formula for 2024. Also, depending on the terms, it might be too late to amend 2025 as well, if anyone has already become entitled to a PS allocation. You could back into the total PS contribution that would get HCEs where you want them and which would provide a lower NHCE PS than is needed to pass testing. Then you can amend the PS under 11(g) to provide the added NHCE PS needed to pass, or under SECURE 2.0 any retroactive amendment to increase benefits is Ok now. Doing zero PS in existing plan and adopting new PSP retro with formula as you need/want is a good way to go if they don't mind the expense of the second extra plan for a couple of years. As John noted, if the CBP is PBGC-exempt be wary of the combined plan deduction limit and having to limit DC ER to 6% total, which will be very challenging with a SHM.

What does the to-be-ended agreement provide about how much notice, and what manner of notice, the service recipient must give the service provider to end the agreement? Further, what does the agreement provide for whether the service provider’s fee is earned on the beginning of a period, or is apportioned regarding a partial-performance period? Just as BenefitsLink neighbors often suggest to discern a retirement plan’s provisions Read The Fabulous Document, consider a similar step in dealing with a service provider. If there is a doubt about what the agreement provides or about whether the agreement's provision or condition is legally valid, a prudent fiduciary would get its lawyer's advice. This is not advice to anyone.

Can’t amend the allocation retroactively. What you can do is start a new PS only plan retroactively with the allocation method you want. Then merge that plan and the 401(k) in 2025, if you want. Or keep it as a stand alone PS. We’ve done it both ways.

I'm pretty sure, but don't have time to check right now, that the proposed regulations specified that if the participant is still alive, distributions from the Roth portion do not satisfy RMD requirements.

You can always present both options to your client and have them make the call. In the end if all participants are getting the correct benefit, that is no one who should have been been paid out on 3% was paid out on 2% and the actually contribution was within the Min/Max (as you have said it is) under both the 2% and 3% and doesn't effect the deduction taken on the tax return then I don't think the IRS will be overly concerned if you go back and fix 2022 or say the data error was corrected in the 2023 valuation. Personally I think the amended filing is the way to go and just give the amended filing to the IRS for the audit. Then if they ask for the original, give them that along with an short statement that actually contribution is within the Min/Max under both the original and amended returns. But I'm not the IRS and they could take a different position based on who is the auditor.

Do what you think it reasonable and in the best interest of your client.

Also note that if you allow a specific employee to enter the plan early by naming them (or anything to that effect), you must pass coverage testing using the ratio percentage test as the plan does not satisfy the reasonable classification component of the average benefit test.

Just a note: if you accidentally let an NHCE in the plan early, EPCRS permits you to amend the plan retroactively to lower the eligibility requirements for that one person. So, there is precedent to permit the kind of amendment you are doing. I would beware, however, of situations where you have plans that are combined for testing, because you need to do coverage testing taking into account people who could have been eligible if they were in a permitted class and consider them to be excluded. So, the question becomes, if you let in a guy with a 6 month wait, and the plan normally has a 1 year wait, and you are doing coverage testing, do all the other employees (including NHCEs and HCEs) who have 6 months to 1 year of eligibility service become "nonparticipating"?