PensionPro

This is for IRAs not qualified plans. He can rollover to an IRA and take his RMDs as charitable distributions in the future.

One of the conditions for permissive aggregation is that plans must have the same plan year so I am curious if that would apply in this situation.

Generally, decisions relating to plan investments must be made for the sole benefit of plan participants and beneficiaries. Prohibited transactions are just one of many pitfalls of investing plan money in real estate. The plan should work closely with an ERISA attorney if it decides to move forward with such investments. If the plan is unwilling or unable to retain an ERISA attorney the plan should refrain from investments that can give rise to complex issues. See this article for just some of the issues to consider: REAL ESTATE AS A PLAN INVESTMENT - nl2-1.pdf

These are two separate plans. Just curious ... is there a statutory basis to perform one test?

Obviously, EPCRS does not address the specific fact pattern described but provides that "the correction should be reasonable and appropriate for the failure. Depending on the nature of the failure, there may be more than one reasonable and appropriate correction for the failure." If the employees knew they were eligible for the match it would have affected their decision whether or not to participate. The match would have been an incentive. If you are going to make up the missed match there is an implicit admission that they would have or could have or may have made deferrals. So I would make a QNEC equal to the missed deferral opportunity and a match based on the missed deferral. The calculations depend on whether it is a safe harbor match or non-safe harbor match. This describes a missed deferral opportunity. I don't think there is a way of satisfactorily demonstrating to the IRS that those employees would certainly not have elected to make deferrals.

I see it as an operational failure when "the employees were told they needed to resatisfy the 1 year wait for the match" - improper exclusion from matching contributions contrary to the terms of the plan. I would probably treat it as an improper exclusion from both deferrals and match as described in the OP.

Unless a leasing organization was involved he was not a leased employee. He seems to be making an argument that he was improperly classified as an independent contractor and was actually an employee.

No.

See rules for B-Org groups.

This is a fact-specific question and requires knowledge of state family law but VERY GENERALLY SPEAKING a judge has the authority to modify or vacate a divorce decree after the decree is final. On what basis is the plan questioning the judge's decision to vacate the divorce decree? The plan probably needs the services of an attorney who is familiar with your state's family law.

My understanding is that it does not in itself create a prohibited transaction but creates the potential for prohibited transactions so would not recommend such a course of action to my clients but ymmv.

It can all go to the IRA. Those assets will be subject to the RMD rules under the IRA for subsequent years.

Math looks fine to me. I am assuming that C is not adopting any plan.

Great points! I am going to recommend he talk to an ERISA attorney and/or tax advisor. No point in making a client's problem my problem. That said, I am always curious about the statute of limitations on these types of transactions.

This letter from the IRS Office of Chief Counsel explains the issue very clearly especially in a 401(k) plan and reflects the IRS' serious view of the matter. https://www.irs.gov/pub/irs-wd/00-0245.pdf

he can terminate the plan.

I agree with your approach. It is a prospective client's plan so we are interested in giving them the correct viable options. However, I am curious about the application of the statute of limitations. Is the IRS in a position to audit this plan 1 for the 2010 year?

Plan 2 was adopted immediately after termination of plan 1, well within 12 months.

One person 401(k) plan wanted to move investment companies in 2010, was advised he had to terminate plan and adopt a new plan. Participant was less than 59 1/2 and no distributable event. Assets were rollover over to IRA and never withdrawn, it is still in the IRA, so apparently no tax consequence. The new plan is terminating now in 2018. The owner wants to fix the failure in the first plan. What is the fix at this point? Can he ride the statute of limitations and do nothing? Appreciate any insights! Prior discussion here: https://benefitslink.com/boards/index.php?/topic/56188-successor-401k-plans-correction-thoughts/

Amounts contributed (or treated as contributed) to a plan are deductible subject to the rules and limits in section 404. This is the case without regard to whether the amounts are used to pay brokers’ commissions, administrative or overhead expenses (such as trustee or actuary fees), or cash benefits. Revenue Ruling 86-142.

Let's say a pw contract requires $100 per hour. Everyone gets paid $100 in cash except for those who elect to defer who will as example receive $90 in cash, they defer $5, and receive $5 match. There may be a tax qualification issue but I am not quite sure. I would be wary if the eligibility requirements are not immediate for deferrals and match meaning some of the pw employees are eligible, and others are not. I would feel uncomfortable proceeding when the plan provisions are inconsistent.

How are prevailing wage plan contributions if any made to employees who work on prevailing wage jobs but elect not to defer?

OP is describing basic SH match formula. We have a lot of plans that offset the SH match with PW contributions. However, based on the language in the OP I am not certain of all the details of how it is being implemented.