Lou S.

I'm pretty sure it applies to all participants, which would include terminated vested.

https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans.pdf From a handy DOL site.

Unless you have a time machine, not allowed. PY changes must be executed before the before the new PYE date passes.

I believe the rule is more you need to distributed in a timely manner and the IRS considers 1 year a timely manner. That said I would think liquidation issues would be something the IRS would likely consider a reasonable delay, assuming the delay is not "too long", which is something of a grey area I will admit. Did the Plan document say excess assets would be allocated to participants? And will they still be under the 415 limit if you could distribute the hedge funds? If the answer to both is yes, then I would have the client talk to the guy who sold them the gated hedge fund about re-registering the the asset from the Plan to IRAs for both of them in whatever proportion was decided and do a 1099-R for the in-kind rollover. That "should" satisfy the hedge fund as they are more concerned with liquidation issues but honestly I don't know if it "will" satisfy them. If that fails, suggest they talk to ERISA counsel about what is involved in getting out of the hedge fund so the Plan can close.

Is this participant directed and can participants move out without penalty? If yes you may have success in explaning that their funds will be hit with an MVA of X if they do not move to a different investment option, without actually giving investment advice. If it is small and all the participants can be located that may or may not be an attractive option to complete prior to submitting any termination paperwork to the custodian.

QNECs and QMACs are 100% vested contribution made to pass the ADP or ACP test and are subject to the same withdrawal restrictions as elective deferrals if I remember correctly. They sometimes have the same allocation rules are as PS/non-elective contribution but often the document has different allocation conditions to optimize the allocation so read the document. QNECs and QMACs used in the ADP/ACP test can't be used in your 401(a)(4) testing with other PS contributions but can be used to satisfy TH minimums if that's a concern.

I don't think it's a problem as long as all sources are repaid in the end. They probably want to repay any source that might be subject to vesting first to limit the chance for messing up the vesting if the loan goes into default or is off set.

Very likely. As ROTH will only be available to HCEs unless you have a lot of folks who are non owners who make more than $145K but less than $150K.

Put another way, if you want to continue catch-up contributions, you'll need to allow ROTH.

Since the contribution was made by the non extended due date the client could do one of 2 things - file an amended tax return for 2022 claiming the deduction or designate the $10,000 for minimum funding of 2022 but deduct as 2023 contribution. But I'm not a CPA so should confirm that with with a CPA. As for designating it I think it can be something as simple as "I sole prop. designate $10,000 contribution on 4/6/2023 for minimum funding standard for the 2022 Plan year and for 202x for tax deduction purposes. Signed and dated. Where x = 2 or 3.

For terminated plans you can only distribute to IRA if the Plan is not subject to the J&S rules if over $5K, otherwise you need to purchase an annuity, unless you qualify to turn it over to the PBGC.

Assuming you just froze the first plan pending a merger that the client has changed it's mind on then I think you could unfreeze the first plan and spin off the PEO assets to original 401(k) Plan. Assuming you don't have any safe harbor 401(k) issues and you don't have any prohibited cut backs. But agree with Bri's suggesting to at least get an ERISA attorney opinion.

Gateway must go to NHCEs who receive non-match employer contribution. TH Minimum must go to Non-Key who qualify (1000 Hrs in DB, last day in DC) Assuming the Plan Document allows the flexibility you can always discriminate against one HCE over another.

If you met the §410(b)(6)(C) transition rules (I think that's the correct cite), and your documents allow you can test them separately for 2022 and 2023 under the transition rules.

I don't think that is correct. My understanding is that the ROTH 401(k) will not be subject to RMDs before death putting them on par with ROTH-IRA rules starting with the 2024 year. Now it's possible this is another poor drafting in the Secure 2.0 that was being fixed in a technical correction but I'm pretty sure the intent was to get rid of the RMDs for ROTH money in qualified plans during the participant's lifetime.

And assuming all the Plans we are talking about are 401(k) Plans. I assume that is the case since we are in the 401(k) Plan sub-forum but OP doesn't make that 100% clear.

I don't recall anything that says they should not be counted as in-service distribution for top heavy.

Sure on termination the majority owners could waiver benefits, forego benefits, take a hair cut, whatever you want to call it. However IRS stated position, the Internal Revenue Code, and Treasury Regs concerning minimum funding rules are all consistent in the rules required in that owners are not allowed to forego benefits to reduce minimum funding requirements. Even if you have had the IRS agree to that in specific cases, it's not something you can rely upon under the law.

If the taxes were timely filed by 3/15 I think you are out of luck on 2022.

My understand for HCE/KEY ownership is you look at the largest percentage owned of any entity in the CG/ASG so Jane smith would be 100% due to her 100% ownership of Jane Smith PC. But if someone has a definitive cite I wouldn't mind be wrong on this one.

Yeah if you are filing a 2023 final; return, that is the one where you would answer yes. No on the 2022 return seems consistent with additional final payouts being made in 2023.

This may be true. It's certainly true if it's done as a corporate 401(k) contribution. But then you'd need the W-2 to reflect the phantom 401(k) contribution and be straying even further on to shaky ground.

If they want them in then I'd likely do 21/1 dual entry with eligibility waived for anyone employed on X date where X equals some date that brings in the 3 NHCEs.

It depends what the client wants to do. Are the 3 ees NHCEs or HCEs? Is the client putting the plan in primarily because the employees want it or the owners want the tax deduction? Is Top heavy a consideration? Will the Plan be safe harbor (match/non-elective)? Do they want future hires to come in quickly or keep them out as long as possible? Are they trying to get Secure 1.0 or 2.0 start up credits which require covering NHCEs? What I've seen done often (but not always) with the new small plans is they have the eligibility they want going forward (2 months, 6 months, 1 year whatever it is) but make everyone employed on the effective date of the plan (or signing date of the plan sometimes) immediately eligible. That's typically when they want to reward current employees or not have awkward conversations at least why they aren't eligible for the new plan and most of the folks coming in are NHCEs so you don't have testing issues with the early entry.

You can do what you want, but just remember you have to be comfortable defending your position on IRS Audit and I'm not sure the IRS would agree with your phantom contribution and phantom distribution approach even if from a tax perspective it comes out just the same.