Lou S.

I think that fails as well on the first condition. I believe you can have a single entry date of the first day of the plan year if the eligibility conditions are no more restrictive then Age 20.5 and 0.5 years of service. And you can also have a last day of the plan year entry such as Tom Poje describes, though I'm not sure that works well in a 401(k) plan, seems more applicable to profit sharing plans.

Yeah it is a clear controlled group, no reason to make it complicated when one plan should work just fine. He'll just have zero income from the sole proprietorship in future years it will all be from the s-corp presumably.

Why not have the sole prop also adopt the S-corp plan and make a profit sharing contribution on the combined income from both entities? I'm assuming he has a 100% ownership of the S-corp but maybe that's a bad assumption on my part.

I'm not 100% sure but I think the answer is no as it would change the information in the previously distributed safe harbor notices.

A plan with roughly 140 eligible participants on 1st day of the year but 401K only and approximately 50 participants with balances. Clearly by definition the plan requires an audit and has filed one historically. In the last year of the plan the sponsor goes bankrupt and pays out all participants. If the sponsor has no funds to pay an auditor and the plan has paid all benefits to participants, what do you do? File Final 5500 with no audit? Obviously if someone comes up with money for auditor this is not a problem but this can't be the first time this has come up.

Since no one is yet employed on the last day of the year, they are not yet entitled to a contribution, and you can amend the plan to exclude them from receiving an allocation, subject to passing testing of course. However, because the plan is top-heavy and they are a participant for some component of the Plan (namely the 401(k) component) they are entitled to a top-heavy minimum. Furthermore since they are receiving some er contribution in the form of THM they would then be required to receive additional gateway contribution if the THM did not cover he gateway.

https://www.irs.gov/Retirement-Plans/Reducing-or-Suspending-Safe-Harbor-401%28k%29-Matching-and-Nonelective-Contributions-Midyear On the first question if the termination is due to acquisition you should be fine with the Plan termination and operating as a safe harbor through date of termination. On the 2nd question that is a little more sticky but I believe you could likely unwind the termination is the acquision falls though and hand out the 2016 safe harbor notice with less than 30 days and document your reasonable cause for not giving 30 days notice. Perhaps someone who has gone through similar situation can chime in.

Members of a controlled group are treated as once big happy family for testing purposes, while I don't have a cite for this next piece, I would assume the IRS would treat them the same for cash out purposes. That is if they have more than $5,000 vested you could not cash them out without their consent prior to the later of age 62 or NRA, if t he plan allows.

The management regs were withdrawn. I hate ASG determinations but my guess is in this situation it is most likely an ASG, especially if 100% of the S-corp income is from partnership. And for what it is worth I agree with your "arbitrary splitting of income" comment.

I don't have experience with that in particular but why not use it to pay a portion of next year's audit fees?

I don't think that will qualify if ANY HCE is eligible for the enhanced match as you will have HCEs with a greater rate of match that NHCEs for some level of contribution rate.

Is this an Affiliated Service Group (ASG)? If yes have the individual LLCs adopted the parent plan allowing the partner to continue to participate in the safe harbor 401(k) Plan? If no, under what athority do the partners contribute to the safe harbor 401(k) Plan? If you are an ASG then the partners can not set up SEPs for the LLC and pass coverage as you'll be treated as one big happy family for IRS testing.

I'm not an expert on this topic but I think you would have problems offering or making available an investment that only HCEs have the ability to purchases even through an SDBA option.

No an existing 401(k) plan can not be amended to a safe harbor 401(k) plan as soon as the plan year begins so January 1, 2015 would have been too late to amend the plan to safe harbor. And existing 401(k) plan would have had to hand out the safe harbor notice for 2015 by December 1, 2014 and amended the plan to safe harbor effective 1/1/15 by December 31, 2014 to be safe harbor for 2015. If the Plan was a profit sharing ONLY plan that was adding a NEW 401(k) feature, October 1, 2015 would have been the deadline to give the 3 month deferral window for new plans. See the 401(k)(13) regs for additional info.

My understanding is that a self-employed person doesn't "know" their income until the tax return is completed and that the election only needs to be in place before the end of the year.

You can never amend a regular 401(k) plan to safe harbor 401(k) plan mid-year. The lone exception is a 401(k) plan that properly gave out the "maybe notice", is handing out the required supplemental notice, and is amending for the year that they elected to be a 3+% non-elective SH for the year. Any new calendar year plan or existing profit sharing plan must be be implemented/amended by October 1 to allow the minimum 3 month window for newly formed SH plans. Existing 401(k) plans are are amending to safe harbor plans must timely distribute the notice 30 - 90 days before the next plan year (unless you have reasonable cause for less than 30 days notice) and must be amended to include the SH before the year starts - unless availing yourself of the aforementioned "maybe" notice on the 3% non-elective.

Some of the free IRS webinars cover ethics credits 1 hour at a time. It varies when they are offered. The last example I see on a quick check of my CE files was 1/29/14 called - IRS EP Phome Forum - Ethical Standards of Employee Benefits Practice - What to Ask and Say to Clients and What to Tell the IRS. My other Ethics credits have been through paid ASPPA webinars.

In case ETA's answer isn't clear 1st match is safe harbor - not discretionary 2nd match is a fixed formula in the document - also not discretionary 3rd match is discretionary, can not be more than 4% of pay and can not match deferrals in excess of 6% of pay.

The problem you have is if one of them terminates employment between now and 12/31/15 as you would then have a RMD for 2015 based on the 12/31/14 balance due no later than 4/01/16 but may have a $0 balance in the plan with which to make the RMD.

Is this some kind of safe harbor 401(k) Plan? If the answer is no - then I see no problem with making the allocation requirements MORE generous than what is currently in the document. For example changing the conditions from "1000+ hours and employed on 12/31/15" to "0 hours and employed on 11/15/2015" would not cut back the allocation for anyone.

No plan NEEDS to provide a QDIA notice, but if you want fiduciary relief for defaulting participant's into an investment choice, especially those who refuse to make an investment selections themselves, then you MUST provide the notice.

I'm pretty sure that question and more is on the new 5500-SUP

Assuming it is not a partial termination (I am making no judgement on this issue) forfeitures can be used to pay reasonable administrative expenses if the plan so allows.

If you are asking can you exclude a portion of HCE income in the calculation? The answer is yes as you will clearly have a non-discriminatory definition of compensation, assuming you are not excluding some NHCE pay which would get you into a 414(s) test on compensation, The question then just becomes, how do you write the definition of compensation into the Plan Document to get what you want.

https://www.irs.gov/uac/Reporting-Miscellaneous-Income I have no idea what you are talking about. IRS guidance seems to clearly contradict your statement.