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I agree with your assessment, not leased employees.

Slight alteration to what John said, the combined deduction limit for both plans is the greater of 1) 25% of eligible compensation, or 2) the greater of a) the minimum required contribution (determined under IRC Section 430) with respect to the DB plan or b) the excess of the funding target over the plan's assets. For both 1 & 2 you can ignore the first 6% of pay contributed to the defined contribution plan (count all employer contribution types but not salary deferrals). I just wanted to clarify that if the DB contribution exceeded 25% of pay it was still deductible and the sponsor could contribute and deduct an additional 6% into the DC plan. Also, the OP asked about "testing both a 401(k) and Cash Balance" together, which I don't think it actually impacted by the 6% rule. The 6% limit comes in for deductions, not testing.

I agree with the need for documentation regarding the termination of Employer B's participation in the Plan. However, I am not certain about the reporting... though I may be misunderstanding the comments regarding reporting. It seems to me that Employer A would file the following: For the year of the distribution, the Plan's Form 5500 indicating under Part IA that the Plan was a MEP, including a Schedule MEP that provides information for both Employer A and Employer B in Part II 2a. Note the 5500 is an annual disclosure form covering the PERIOD beginning ___ and ending ___. It is not based solely on the last day of the year. It seems to me no matter what day the distribution was made during that year, for at least one day in that year the Plan was a MEP. Also, the Schedule MEP Part II specifically asks for the % of contributions made "for the year" by the participating employers. So, it seems there would be information required to be disclosed for Employer B (though this may or may not be $0 depending on the facts). The other column in the Schedule MEP Part II requests account balance info relevant to each participating employer but it seems that would be filled in with $0 since this information would be the Employer B balance determined "at the end of the year". Then, for the year after the distribution, the Plan's Form 5500 indicating under Part IA that the Plan is a single employer plan (and no Schedule MEP would be submitted). The omission of the Schedule MEP in that following year would indicate to the IRS that the employer not listed in the Form 5500 single employer filing that was listed in the prior year Schedule MEP is no longer a participating employer. (This seems to correlate to how the filing would be done if the Plan were still a MEP, i.e., the 5500 would be marked as being a MEP but no information concerning Employer B would be included on the Schedule MEP)). I have not had to file a 5500 covering this type of situation before so I have not researched this and am just going off of what we have done when individual employers have withdrawn from MEPs we handle.

In my view, the “administrative transition period” the IRS stated in Notice 2023-62 was lawless. But no one challenged the IRS. And I doubt anyone could. For Article III standing, a plaintiff must show her concrete injury that results from the defendant’s act (and that the court could do something about it). A taxpayer is not injured by being allowed more choice than applicable law provides. Currently, the IRS’s management is unitary; the Secretary of the Treasury serves also as acting Commissioner of Internal Revenue. (Within the Executive branch, the only higher power is the President.) Whatever delegated authority the “Commissioner” for Tax Exempt and Government Entities otherwise might have does not now matter because the position is vacant. austin3515 is right that uncertainty about whether and when to apply law is expensive.

Note that these payroll companies have already rolled things out to their clients. If ADP programmed their system to do mandatory Roth 1/1/2026 and there is a delay, that means ADP has to spend REAL MONEY to: a) Reprogram their system to not implement Mandatory Roth b) Reprogram their system AGAIN to turn it back on. It's easy to assume that those things are not a big deal, but I've heard stories that these types of changes are monumental. Not to mention the time and energy required to train clients and explain all of this.

I'll raise you the 10x in penalties that "paid for" S1.0 Last I heard from the DC folks was that no one expects a delay at this point.

Exactly - discretion and flexibility are not always good to have!

Thanks. Unlike a plan’s administrator, a plan’s sponsor may make plan-design choices without an ERISA fiduciary’s responsibility. About forfeitures, the fiduciary-breach claims assert that a plan’s administrator had discretion and so ought to have loyally and prudently considered which way of applying forfeitures would be advantageous for the plan’s participants and their beneficiaries. If a fiduciary lacks discretion, its duty is to obey “the documents and instruments governing the plan[.]” ERISA § 404(a)(1)(D). In my experience, too often a plan’s governing documents grant the plan’s administrator some discretions an administrator might prefer not to be burdened by.

When I’m stuck with doing meatball surgery on IRS-preapproved documents, I tack on many risk-management provisions, including an exclusive-forum provision. Some clients like the Federal district and its division in which the plan’s administrator has its principal office. Some specify the place that’s most convenient or most effective for the law firm the plan’s administrator or another employer-associated fiduciary would turn to for ERISA litigation. Some specify a district in a circuit with the most favorable set of precedents on questions of law likely to matter (in the client’s particular circumstances) in defending against a fiduciary-breach claim, or in shifting or sharing a liability or expense.

If the cash balance plan is not subject to PBGC coverage and if there is at least one employee who is in both plans, then the deduction limit for both plans combined is 25% of eligible compensation, ignoring the first 6% of pay contributed to the defined contribution plan (count all employer contribution types but not salary deferrals). This combined plan deduction limit is avoided if the sum of all employer contributions to the DC plan (all employer contributions, but not salary deferrals) is not more than 6% of the sum of all eligible compensation.