Lou S.

Wow, what a needless over complicated provision for such a small amount. Couldn't they just say - If you have an emergency you can take up to $1,000. If you do so you can not do so again from the same plan for 3 years. All the extra stuff is just screaming to mess something up somewhere.

It fits into the rules but can be problematic if you hire new employees who are not eligible in the "near" future like until after the next plan entry date under the Plan's regular eligibility rule.

Did the Plan's attorney draft the amendment to specifically exclude participants/employees not employed on the adoption date?

I would assume you count all service unless the LTPT rule are different than the regular eligibility rules. The minimum age just keeps out someone who otherwise would have met the service condition but does yet met the age condition.

Effective date.

I don't think the regs have been updated in quite some time to consider the prevalence of electronic payments. I have a hard time believing the IRS would challenge it or try to impose the penalty if there is evidence the wire/ach payment was initiated timely but credited after the date but can't say for sure. Also while regs address post mark, I would think you would get the same reliance using a private delivery service with evidence of pick up on or before 9/15 but again I couldn't say for sure. I think it would be nuts for the IRS to accept a post mark by "snail mail" and not accept a wire trail timely initiated, but then the IRS would be final arbiter.

Assuming this is calendar year and you are talking about 2022. Other than document everything and resign I'm not sure what there is to do. If 5500 filed on accrued basis you would presumably file with a receivable matching contribution. Is the Plan Top-Heavy if not safe harbor? They do have 12 months to deposit the safe harbor so technically they have until 12/31 to make the deposit. Though the deadline for deduction for 2022 could be 3/15, 4/15, 9/15, 10/15 depending on entity type and extension status. Though deadline to include in 415 limit for 2022 is 30 days after deduction deadline. Remind them about plan disqualification issues, excise taxes, and that what it takes to discontinue a SH which they probably still are for 2023, let them know about IRS correct programs and the name of an ERISA attorney they can call.

Until the IRS specifically blesses establishing a SHNEC for a new plan with less than 3 months of deferral with some official guidance saying that is OK, I wouldn't do one.

Follow 318 for constructive ownership rules for 401(a)(9). Anyone who is a more than 5% owner in the first required distribution year, remains a 5% owner afterwards for purposes of 401(a)(9) even if they sell the stock and remain an employee.

I don't think that works as you sill need the 3 month effective deferral to be SH, It's not like you can put in a new 401(k) on 11/30 with 3% NEC and say you are a SH. I guess some might argue there is 3 months if the first October payroll is after 10/5 but I'm not sure I'd want to argue that position.

Certified mailing to the the place where the owners and/or officer 1099-R was mailed or will be mailed? Assuming at least one officer was a participant in the plan you should probably be able to track down that address. Sounds like you've done what you can. Document it to the client as best you can and save the paper trail. Just thinking out loud, if the company went "belly up" who would the IRS go after for the penalty? And can the DOL go after a "responsible party" if the company has no assets should the DOL decide to impose penalties?

I think this falls under the timely mailing is timely filing rule and 9/14 would be the date. https://www.law.cornell.edu/uscode/text/26/7502 But be prepared to defend the timely mailing part upon audit.

If it was an asset sale and the seller retained the plan, why is the buyer involved at all? For purposes of the Plan it sure sounds like you have two unrelated employers which is probably part of the reason it was an asset sale in the first place. The employees were terminated by seller and rehired by buyer. Whether buyer grants service with seller to the employees or not is up to them and the terms of buyer plan, but what seller does with Seller Plan should not be a concern of the buyer. At least as far as I understand asset sales but maybe I'm missing something.

My understanding is the pro-rata rule is applied on 12/31 of the year of conversion. In this case only a small portion of the conversion is likely to be tax free. A way around would be to roll the qualified plan money back into a qualified plan before 12/31/2023 to zero out his pre-tax IRA balance. But I'm not a CPA so you might want to discuss this with one as my understanding is simply free advice which is often worth what you pay for it.

There are quite a few institutions that will establish cashout IRAs for missing/non responsive participants and will allow you to exceed the normal $5,000 limit if the Plan is terminating. Assuming you've done the DOL due diligence search per DOL regs. Alternatively you can use the PBGC program for terminating DC plans that was setup a few years ago. The PBGC program though is all or none. That is you need to turn over all missing/non-responsive participants or you can't use their program. There are specific requirements for using the program that are similar to the DOL rules. Most recently I've used Pencheck for a terminating 401(k) Plan that had a few missing/non-responsive. I think Millienium Trust is another who will do it. But those are by no means the only two.

BOY or EOY valuation? That should give you the answer.

Truphao's comments about timing are the potential issue. I think you clearly have a problem if the service credit or compensation used extends back to any point where he still had employees as that seems to be covered in the examples. I think it's more gray if you draft the Plan such that there is no overlap between the Plan's existence and period where he still had employees. I mean at some point he has to be eligible to establish a plan right? But is it 1 day after he has no employees? the next fiscal year? 12 months after? 5 years? I'm not sure it's fully address, just falls under the catch all "facts and circumstance" For further you can start at... § 1.401(a)(4)-5 Plan amendments and plan terminations. (a) Introduction — (1) Overview. This paragraph (a) provides rules for determining whether the timing of a plan amendment or series of amendments has the effect of discriminating significantly in favor of HCEs or former HCEs. For purposes of this section, a plan amendment includes, for example, the establishment or termination of the plan, and any change in the benefits, rights, or features, benefit formulas, or allocation formulas under the plan. Paragraph (b) of this section sets forth additional requirements that must be satisfied in the case of a plan termination.

Through the discontinuance, the SH match must be 100% vested and cannot be cut back under 411 even if the Sponsor had to test the matching contributions in the ACP test because of the mid-year stop. Any match made after the safe harbor halt would be subject to the Plan terms so RTD.

The document needs to be signed before employees can defer. The Plan has to allow for 3 months of effective deferral to be SH. If you can get the Plan signed, get participant's completed election forms, and start payroll deductions by 10/1, you're good. Then you just have a timeliness of deposits issue if there is no trust to deposit it to.

Agree with Zeller why does owner only need a SH? If there are future employees to worry about set it up a regular 401(k) for 2023 and make safe harbor effective for 2024. If they really need safe harbor for 2023 sounds like you have 2 options. Withhold the contributions starting October 1 and deposit as soon as the contract is setup with possible late 401(k) deposits or open a bank account in the name of the Plan to hold the deposits until the they can be transfer to American Funds and allocated to participant accounts.

No, you just need you own personal DOL signor credentials as Preparer and attach the client signed Return to the filing.

You don't need to be enrolled. You just need DOL Credentials yourself to submit the file. The software you have can probably walk you through the process.

#1 is no. The Plan must be timely adopted. Since there was no extension the deadline to adopt has already past. Either 3/15/23 or 4/15/23 depending on the type or tax payer and assuming calendar year filer. #2 I believe is yes as long as the Plan is adopted by the extended due date and the contribution is deposited by the extended deadline; you'd just file an amended return. If it were a plan subject to minimum funding it might have an earlier deadline to avoid the 10% excise tax for failure to timely meet minimum funding. I think both of these sets of facts have been discussed here on benefitslink with citations to support each in recent months but I'm too lazy to search.

If you want to dot all the "I"s and cross all the "T"s request a copy of the client's tax return extension for your files. We've had to do this a couple times over the years and have never had an issue.

I'm not an attorney so I don't usually see them called Joinder Agreements, we typically see Participating Employer Agreements (or similar) but maybe they are the same and we're just using them interchangeably. In this context it sounds like you have a controlled group with two participating employers of the same plan. Not really an issue at all, happens quite often. One plan, one account, one set of limits, doesn't matter which takes the deduction.