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Very likely there is would be no issue doing the true-up through the termination date. If the original plan document language somehow was overly descriptive and explicitly prescribed the true-up calculation, for example, by referring December 31, then the easy fix is to use the plan termination amendment to specify a true-up as of the termination date. They may want to do this anyway since it is very simple to do. They will not want to wait until next year in any event since the plan will not be considered completely terminated until all of the benefits are distributed and the assets to to zero. If they paid out everyone shortly after the termination date and then made a contribution next year, the plan would need to file 5500 for next year (assuming a calendar year plan). Keep it simple.

You can use a non-consecutive year average to determine the plan benefit. You can really use whatever you want, even a 1 year "average", however, the maximum 415 limit is still based on a highest 3-consecutive year average. Since the 415 maximum limits the benefit, most tax-shelter plans just use that for plan definition. I see highest 3 In the non-tax shelter world. I have several bargained plans that use a non-consecutive average. I don't like it in that setting because it leads to "spiking", where a person works a lot of overtime in a year, then coasts a few years.

and of course, try to avoid having a smaller BOY count the following year compared to the prior year's EOY without something really obvious as to why.

Short answer - No. One way to look at it is there are two different levels of 410 coverage testing. One is done at the plan level (or aggregated plan level). The other is done at the controlled group level, and must pass before you get to the plan level test. For example, if you are using the ratio test at the pan level, the denominators are the nonexcludable HCEs and NHCEs in the plan, and an employee is excludable when applying the provisions of the plan. (The numerators are the HCEs and NHCEs that are benefiting from the plan.) If you using the ratio test at the controlled group level, the denominators are the nonexcludable HCEs and NHCEs across the entire controlled group, and an employee is excludable when applying the most lenient provisions of any plan in the controlled group. This is a greatly oversimplified comment meant primarily to illustrate how the 410 coverage test at the controlled group level and plan level may look the same, but they are not the same. FYI, there is a possibility of using QSLOBs where based on geographic locations (among a wide range of other things), but the QSLOBs must be elected by 9/15 following the close of the plan year and QSLOBs have a whole other set of arcane rules.

Rents definitely are not contributions. Be careful not to restrict the definition of investment income solely to rents. Rents are income and are used to cover operating expenses among other things. Look to the rental property's P&L for financial reporting, for example, on trust reports and the 5500.

Yes, if 7/31 is the termination date you would calculate your contributions for 1/1-7/31 and also test that period if needed. Technically, not a short plan year, at least for filing purposes, as the plan is still in existence until assets are distributed. The timing of deposit will depend on what the plan requires, if anything specific, and the employer's tax year/return due date. If the employer continues on and only the plan is terminating, then deposit could possibly not be due until next year.

The only consequence of having an IDP is the inability to request and secure periodic ongoing determination letters. Some view those cycles as a safety net while others see an unnecessary cost and inconvenience. If you modified a preapproved document, those changes would have to be substantial. I've yet to see any plan with modifications that IRS rejected from preapproved status.

@Bri is on the right track. You will need, for example, to track meticulously a lot of information about: tests to be performed by plan (Deferrals, Match, NEC), and across the controlled group or testing groups (410 coverage, ADP/ACP, 401(a)(4), 415, comp limits...) each plan's provisions (eligibility, entry dates, service accrual (hours/elapsed time), compensation, testing compensation, birth/hire/term dates, classifications...) plan years (hopefully all plans have the same year) any mandatory disaggregations (ESOPs?, current vs prior year ADP/ACP testing?, Safe Harbor vs Non-Safe Harbor?, unions??) any permissive aggregations that may be needed to pass testing census data for all employees of each employer census data for employees who worked for more than one employer within the controlled group testing strategy (ratio vs average benefits test, benefit accruals vs allocations...) any mergers, spinoff, or acquisitions within any permissible transition time period ownership at all levels. If there are Defined Benefit or Cash Balance plans in the mix, then there needs to be close cooperation between the actuaries and any others involved in testing. Look out for testing quicksand/tar pits: Keep in mind that the determination of HCEs is done across the controlled group and, generally, if one of the plans is not using top paid group rules, none of the plans can use the top paid group rules. 5% ownership rules applies at the employer level, ownership of a subsidiary can trigger unexpected HCEs, Plans with very liberal eligibility provisions. Union employees. Leased employees (who may need to be included in testing even if they are excluded as a classification). This is in many ways the tip of the iceberg and is not a comprehensive list. Testing this many plans within a controlled group is very labor intensive, and the complexity increases almost exponentially with the number of plans and employers involved. Be sure to price the effort properly and make sure you consider the fees that may be charged by other professional like outside legal counsel or independent actuaries. If this is your first time performing testing at this level of complexity, you will have lifetime memories from this project. You may want seek out someone who has done it before to provide some guidance and be a resource as your engagement progresses. Good Luck!

When Congress provides a remedial-amendment period regarding a statute’s changes, a variation regarding collective bargaining protects an agreement made before the statute’s enactment. The idea is that an employer and the labor union ought not be required to open negotiations until the next time negotiations would regularly open nearing the end of the collective-bargaining agreement’s term. A premise of labor-management relations is that neither side unilaterally changes provisions about retirement benefits; it’s a subject for their bargaining. If the term of a CBA made before the statute’s enactment expired (or would have expired but for an extension or renewal), the employer and the union had an opportunity to discuss what retirement plan provisions they would make (or not) in response to the statute’s changes. This is not advice to anyone.

usually plan's formula for oner-only plan is 10% of AAC (415 limit formula). Thus, there is no need to complicate things.

I would suspect it's indeed the 415 issue, if the plan's aggressively maxing the owner out anyway.

Last time I looked, a long time ago, rent payments were not taxable UBI, so better rent than certain other types of income that could be generated by the property.

In my 40+ years, I've probably seen one or two plans that permit non-consecutive years in the FAC definition. Sorry, don't remember any of the details. Is it allowed? Of course. Is it wise? Probably yes for an owner-only plan. Caution don't forget about the 415 definition(s).

No, that is absolutely correct, why else invest in such property?

I agree, would only amend prior year filing if the correction was material. If it doesn't affect audit requirement or materially change active counts then I'd just correct going forward. So, 70 vs 69 - not material - 4 vs 3 I'd think about amending. My opinion FWIW

In a terrible accident at a railroad crossing, a train smashed into a car and pushed it nearly four hundred yards down the track. Though no one was killed, the driver of the car was injured and took the train company to court. At the trial, the engineer insisted that he had given the driver ample warning by waving his lantern back and forth for nearly a minute. He even stood and convincingly demonstrated how he'd done it. The jury believed his story, and the suit against the train company was decided in it's favor and against the driver of the car. "Congratulations," the lawyer for the train company said to the engineer when it was over. "You did superbly under cross-examination." "Thanks," he said, "but the other attorney sure had me worried." "How's that?" the lawyer asked. "I was afraid he was going to ask if the lantern was lit!"

Technically, the form should be amended. Did the change in the count have an impact on the filing (like triggering the audit requirement)? If yes, we would amend the filing. If no, we likely would carry the prior year count forward and use the correct year end numbers (assuming that the client doesn't repeat sending inaccurate information). Since the issue involved a termination date, don't overlook the individual when filing the Form 8955-SSA for the current. The SSA form is very lenient about who and when someone is reported.