Lou S.

From a tax code stand point I agree with you. From a Plan Document and Custodial Account agreement and what each provider allows - read the document(s).

And as a followup since they are a wholly owned subsidiary if the Plan is in fact terminated the employees would be subject to the successor Plan rules and prohibited from starting a new 401(k) for 12 months following the final distribution of assets from the Plan? And I would assume this would apply to them joining a PEO as well?

Peter thanks for your input. Let's assume for now fees will be paid and that I will be asking for payment in advance or at least a retainer for anticipated services and assume that all fees for the prior year have been fully paid. And if that is not the case I'll finish up 2022 and resign, they can find someone else to close the Plan out. The Buyer acquired the Seller in a stock purchase and Seller is now a wholly owned subsidiary of Buyer, at least that's what I've been told. So Buyer now has authority. The position they appear to be taking is that the selling agreement had a clause that the Plan is terminated the day before the acquisition which was executed by Docusign by the Seller when they still retained authority over the Plan. Assuming their position is correct, it brings me back to my original question if the Plan is in fact legally terminated as of 12/31/2022, what do do with the January deferral and match that are clearly run through payroll, deducted, and deposited post-termination? This could have been avoided had they involved me at the time of the acquisition but they chose not to. So I don't really want to make their problem my problem but if I can be paid to be part of the solution, I am not opposed. As long as I know what the correct solution to propose is in this case.

Maybe I'm being dense but I don't see how you can exclude her. She has 10 years of service and will be eligible. Even if you could keep her out under some reason like the the 1 year hold out (which I don't think you can because you said she doesn't even have a BIS) you'd have problems in 401(k) since the entry would be retro active and how do you go back and retro actively let her do 401(k)?

Well new one for me. Have a client that was bought. Recently told "Oh hey we were bought as of X" where X is a date in the past. Part of the selling agreement which they just sent me had resolutions terminating the Plan as of date before acquisition. Not prepared by us. Buyer is taking the position that that is formal plan termination. Seller decides on his own that since they aren't in the buyers plan he's going to continue deferral and safe harbor match and deposits first 2 January payrolls to the Plan. What is the fix? Can this be self corrected? or does this require VCP? Do the deferrals after term date get paid out as like a 415 excess? they ran through payroll so will presumably be on 2023 W-2. What happens to the match that was deposited? Forfeit? Allocate as prior year contribution? Return to client as mistake of fact?

The IRS position is you have a 401(k) plan and required Form 5500 filing until you terminate the Plan. That is you have eligible participants who have not elected to defer. So you have a plan just with $0 assets. I would say the Plan needs to be formally terminated and 5500 would be required for 2022 and 2023 though those 5500s should be quite easy. Hopefully it's a small plan with fewer than 100 participants so you don't need an audit. Anyway that's the correct way to do in my opinion. If they don't want to do it that way and just want to walk away to save expense, you should formally resign and let them know what their requirements are but that you will not be responsible. A CYA letter so to speak.

Has a DB plan and wants to contribute more than 6% to the DC. With 401(k) they can contribute 401(k) limit plus 6% employer contribution.

Just one of the many things in Secure 2.0 where we need guidance but speculating it seems likely that the guidance maybe - amend out catch-ups (at least for folks over the $145K indexed) or amend in ROTH.

I'm not sure I fully understand but from what you describe it does not look like there is any First Service Organization in this group nor does what you describe seem to fall into the Management Group catch all either. I find the linked IRS document helpful. But if there are any questions whether or no an ASG does or does not exists I'll refer them to an ERISA attorney to give them an opinion. https://www.irs.gov/pub/irs-tege/epchd704.pdf

Secure 1.0 updated the tables but there was no additional change to the tables in Secure 2.0 that I'm aware of and I haven't seen seen any mention of a table change in any write-up on Secure 2.0 or webcast I've sat in on.

Yes. The participant has an RMD for 2023 so the plan need to pay out the RMD to the beneficiary before the rollover since it's not eligible for rollover.

If you are trying to roll from ROTH-IRA to ROBS plan the IRS does not allow ROTH-IRA -> Qualified Plan. If you are trying to roll from ROTH-401(k) -> ROTH-401(k) the IRS does allow that as a direct trustee to trustee transfer but the accepting plan has to also allow it so that may be the limitation your are hitting. ROBS are not my thing. As to the rest of your situation I have no comment as it's not my area.

What vesting schedule do they want in the surviving plan? Why not use that one and follow the change of vesting schedule rules for anyone who the surviving vesting schedule isn't better in all years?

What's the reporting on it? Does the plan issue a 1099-R for ROTH contribution or is it added to the employee W-2? If added to the W-2 do they code it to be exempt from payroll taxes? If on the W-2 how is it reported to SE who don't get a W-2? Is it income for the employee taxable year when deposited or for the year declared? If it shows up on the w-2 how do you make sure it doesn't become circular if the definition of comp is W-2 wages? Maybe these questions have been answered and I missed that recap.

I don't think you can test plans with different PYE together for 401(a)(4) and each needs to pass on its own.

I believe the reduction form 50% excises tax to 25% is effective in 2023.

It depends what the plan document says. Is everyone in their own rate group? Will the testing pass if that participant gets an extra $300?

I could be wrong but I'm not sure it's an over payment. Rather it sounds like a 415 excess since there was no pay 415 pay to give it to the participant in question. My though was could it be "allocated" in a prior year when there was 415 comp and the custodian just "forgot" to move it from the unallocated account to the participant account? At any rate seems like a more than $300 of billable hours whatever solution is done to fix it.

That's a good point. My comments were all related to funding rates for the valuation. So if you're asking about something else, then my comments might not have relevance.

We're defaulting to 95% corridor of 4.75/5.18/5.92 rates unless there is some reason not to.

Those are the ones.

For my own curiosity if the DB plan is electing the DC method when the RBD is 4/1/2023 do they have to process the 2022 and 2023 RMD using that method prior to rollover like a DC plan would? With the "standard" DB method you would not.

Invoice him $300 for researching what to do with an unallocated forfeiture account.

Try here (we just switched to the ARP/IIJA Table for the applicable year of change) https://www.irs.gov/retirement-plans/pension-plan-funding-segment-rates

On #1 unless there are facts not disclosed I agree, no controlled group. On #2, interesting. As long as he isn't over the 30,000 limit and has at least $7,500 in deferrals to each plan I see no problem with what you are describing. It's an interesting loophole but it doesn't look problematic under the code.