L. S.

I'm hoping for help and clarification on this section of SECURE 2.0. With the automatic enrollment exceptions for small businesses with 10 employees or less, I am curious on how the employee count is defined. Is this looking at the total number of employees who received wages, tips, or other compensation from the employer (what would be reported on Form 941) regardless of whether all employees are still actively employed? Or is there another definition? As an example, - If Employer A has 8 employees at the start of the year. - 4 employees terminate mid-year. - Employer A then hires on 3 more employees before the end of the year. At the end of the year, they have 7 active employees. Would this employer be considered to have a total of 11 employees for that tax year and then be subject to the automatic enrollment requirements under SECURE 2.0?

Thank you for the input! Fortunately, none of the 401k Plan monies invested in the C Corporation are being utilized by the LLC so there is no concern there.

I'm trying to wrap my head around this and would love some input. We have a 401(k) plan with qualified employer securities. The plan sponsor is a C-Corporation and is privately-held. The owner formed a new business in 2022 under a separate LLC that they own 100% and hired employees in early-2022. Since the C-Corporation is in a controlled group with the newly-formed LLC, the LLC was added as a participating employer of the plan effective 1/1/2023, recognizing prior service with the LLC. We expect there to be employees that meet the plan's eligibility requirements in July 2023. My question is -- how does the qualified employer securities investment option work with the employees of the LLC? Would the LLC employees simply be treated the same as the employees of the C-Corporation and have the option to purchase stock in the C-Corporation? Or, is there some other piece that I'm missing. ....such as, since the C-Corporation is technically not their employer, would the option to purchase employer securities in the C-Corporation be unavailable? Although, if this is the case, I would presume this would run into benefits, rights and features issues.

Thank you all for the responses on this! After listening to the latest ERISApedia webinar last week on the extended amendment deadlines, Derrin Watson confirmed that if the plan did NOT utilize any of the CARES Act provisions (or offer it), that the CARES Act amendment is not required. In this particular situation, it appears this would apply and this plan would not be required to complete the CARES Act amendment. Conservatively, it would make sense to just complete the CARES Act amendment regardless -- to have a record showing the plan elected to not allow for any of the CARES Act provisions. @Bird Thanks for the suggestion -- I may look into that more.

We have come across an interesting situation and I'm hoping for some insight here. A client who had a plan formed (i.e. plan document executed) in 2019 has not actively used the plan (i.e. zero contributions made) yet and has been generally non-responsive to our notices regarding the Cycle 3 restatement, etc. They have now recently resurfaced and want to start actively using the plan. This is a new business (formed in 2019) with no new employees (yet). It is my understanding that the Cycle 3 restatement (under SCP) and SECURE Act amendment will need to be completed. However, my uncertainty is surrounding the CARES Act amendment. Since there were no funds in the plan, and no other eligible employees (other than the owner), there was no option to allow for coronavirus-related distributions or loans and there were no options for RMDs. Would the CARES Act amendment still be required?