Lou S.

If the client is setup as the Administrator on the PBGC site, they can grant you access by inviting you. If the prior TPA did everything you might need their assistance. As for the premium, if it's a small plan using the lookback, the premium might be high since the interest rates lag what's been going on.

See instructions to Form 5500, you can if you meet the following conditions. An automatic extension of time to file the Form 5500 Annual Return/Report until the due date of the federal income tax return of the employer will be granted if all of the following conditions are met: (1) the plan year and the employer’s tax year are the same; (2) the employer has been granted an extension of time to file its federal income tax return to a date later than the normal due date for filing the Form 5500; and (3) a copy of the application for extension of time to file the federal income tax return is maintained with the filer’s records. An extension granted by using this automatic extension procedure CANNOT be extended further by filing a Form 5558, nor can it be extended beyond a total of 9½ months beyond the close of the plan year. Note. A tax-exempt organization is not required to file a federal income tax return. However, if the organization uses a Form 8868 to request an extension for its Form 990 series return, the filer is automatically granted an extension of time to file the Form 5500 until the extended due date of filing Form 990 series if all conditions listed above are met. An extension granted by using this automatic extension procedure cannot be extended beyond a total of 9½ months beyond the close of the plan year.

Assuming the plan doesn't currently allow for discretionary match I would assume they would need to adopt the amendment before they started depositing the matching contributions to the plan but not later than the end of the plan year for the discretionary amendment. That said, if they did start depositing the match early, I think the eventual amendment would most likely work as a self correction under the newly expanded IRS rules.

Company B can have it's own plan. They are a controlled group so you need test everything together and you have one 401(a)(17) limit and one 415 limit if you have any employees who wide up working for both company A & B. I think you may also have one 401(k) test, but I could be wrong on that. So yes but some extra testing.

Someone probably copied the prior payroll without checking the current one.

Wow that's a good question. I would assume absent specific guidance the 2022 audit would be required to be attached to the 2023 return since the 2022 audit is just being deferred under the rule. That is it is still required. And the audit relief for plans under 100 accounts is applicable to 2023 and does not go back to 2022 as far as I can tell.

Not this year, but I've seen similar in past years. But it is usually with non-calendar year getting an extension only to the calendar year extended date. For example I often had a problem with 1/31 year end getting a reply from IRS saying that the extended due date was 10/15 instead of 11/15. But I haven't seen your example where the IRS grans and extra 6 months.

Adoption of a "New Plan" is the creation of a Plan that didn't previously exist. Adoption of a "Plan Amendment" changes one or more terms of an existing Plan. Adoption of a "Restatement" is a type of amendment where the terms of existing document are replaced by a new Plan document. This is most common when IRS requires a restatement due to various law changes (right now that is about once every 5 years for pre-approved plans) or when you change plan providers who require you to restate to their pre-approved document for continued reliance on an IRS Opinion letter. The Restatement may or may not make substantial changes to the terms of the existing plan document. A restatement does not create a new plan.

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.