Lou S.

If your plan document allows, yes. It's quite common.

SIMPLEs not my area but to terminate I think there is some notice you give employees before the year starts that you are no longer going to offer the SIMPLE and I think that date may be fast approaching. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-simple-ira-plans#terminating How do I terminate my SIMPLE IRA plan? Step 1: Notify your employees within a reasonable time before November 2 that you'll discontinue the SIMPLE IRA plan effective the following January 1. Step 2: Notify your SIMPLE IRA plan's financial institution and payroll provider that you won't be making SIMPLE IRA contributions for the next calendar year and that you want to terminate your contributions. Step 3: You should keep records of your actions, but you don't need to notify the IRS that you have terminated the SIMPLE IRA plan. Example: Acme Company decided on November 18, 2014, to terminate its SIMPLE IRA plan as soon as possible. The earliest effective date for the termination is January 1, 2016. Acme must notify its employees before November 2, 2015, that it won't sponsor a SIMPLE IRA plan for 2016.

Does your document automatically cover members of a controlled group? If no then employees are not cover by Plan A and are not entitled to any benefits. Of course for testing the employees of Company B are all not benefiting in your controlled group. If you pass all non-discrimimation tests with them excluded, sounds like you are fine. Does Company B sponsor their own plan? If so it may or may not be part of a required aggregation group for 416 which might kick in a required TH minimum.

Thanks. I knew it had to do with the Cycle 3 restatement but did not recall the details.

I think it was part of the LRMs for the Cycle 3 restatement.

Are you able to set up a "forfeiture participant" for each entity? If so that might fix your issues.

Does your document have a question that looks something where option 3 is selected? Safe harbor nonelective contributions (select one) 1. [ ] 3% contribution. The Employer will make a nonelective "ADP test safe harbor contribution" for the Plan Year to the Account of each "eligible Participant" in an amount equal to 3% of each Participant's Compensation. 2. [ ] Stated contribution. The Employer will make a nonelective "ADP test safe harbor contribution" to the Account of each "eligible Participant" in an amount equal to ___% (may not be less than 3%) of each Participant's Compensation. 3. [ ] "Maybe" election. The Employer may elect to make a nonelective "ADP test safe harbor contribution" after a Plan Year has commenced in accordance with the provisions of Plan Section 12.8(h). If this option d.3. is selected, the nonelective "ADP test safe harbor contribution" will be required only for a Plan Year for which the Plan is amended to provide for such contribution and the appropriate supplemental notice is provided to Participants.

They made a deposit in error to the participant that wasn't withheld from his paycheck? Sounds like removing it from his account (along with earnings) and using it to offset future deferrals is probably the correct fix.

If they are both calendar year plans and merging on 1/1/2023. Then for 2022 they are completely separate plans. The fact that the 2022 safe harbor contribution will be deposited to the post merger surviving plan in 2023 should have no impact on 2022.

Good question. I randomly ran into a potential client in nearly the same situation. My understanding is you can file DFVC up until the point you receive a penalty assessment. Can anyone else confirm or refute that?

Pooled non-calendar year profit sharing plans are often valued annually on the last day of the plan year. The 401(a)(9) regs address this. You take the balance on the valuation date, add in in contributions from the valuation date to 12/31, subtract distributions from the valuation date to 12/31 and that is your adjusted 12/31 balance for figuring out next year's RMD.

Getting younger is needed. But the Yankee had the 3rd best pitching staff in MLB this year. I'm not sure how that's "not great". The problem was they found was to lose 3 winnable games against the Astros while the Astros found a way to win all 3 of those games. Back to the topic, if the contributions are required like a money purchase plan I think you have to accrue them in, if they are optional like a profit sharing contribution I think you can treat is as cash basis.

Consistent administrative procedure should be set up. Any method seems like it would be acceptable as long as it is consistent. The pay roll probably has a hierarchy established. I had that happen to someone this year and their payroll which did ROTH first which capped him out and he had no traditional on his final deposit.

Yes the penalties are steep, some have said draconian even. But they are what they are. Don't be late and if you have to be, file under DFVCP. And don't forget I'm pretty sure the penalties accrue from the original filing due date and not the extended filing due date. So if you think you are one day late on October 18 this year, I think you are closer to 79 days late as far the IRS is concerned.

That depends on the plan document. If you have per payroll match you are violating the terms of the Plan document. If your plan matches on annual compensation or you have a true up you have no problem with what you are doing; I assume you are doing it for all similarly situated employees and not just a specific HCE who maxed out.

I thought they were working on that for 2023 or 2024. I could be wrong but thought I read that somewhere recently. I think they are removing the extension of the 5330 from the 5558 and moving it to a different form which will allow the 5558 to filed through EFAST. At least that is my understanding.

That is my understanding as well.

I could be wrong but my understanding is Pension Plans are supposed to start with 001 and Welfare Plans supposed to start with 501 and add 1 each time the employer adds a new plan. But I don't know if that's a hard fast rule or if there is any written guidance. That is can you assign any 3 digit number that hasn't been used by the employer before? I don't know. I do know if you go off convention the chance of the IRS asking you why and where the plans with a lower number are seem to increase. But I honestly don't think I've ever seen IRS written guidance on the where there convention comes from and if it's required that you follow it. Maybe someone else has something more on point.

What type of safe harbor? Matching or Non-elective? I think you have some problems either way but your path to correction might be easier if you have Non-elective safe harbor. I'm not sure if this flies or if you need an EPCRS VCP submission but if they elected the 3% non-elective safe harbor you might be able to merge the existing 401(k) plan into the new 401(k) Plan and treat it as one 401(k) plan for testing, assuming both plans have the same eligibility and cover the same group of employees and you don't have any prohibited cutbacks in the the new document that conflict with the old. While not technically correct it would seem to have the same effect of amending the existing 401(k) Plan. If you put in Matching safe harbor and they had an existing 401(k) I think you have bigger problems as the old 401(k) would have had to be amended to be amended last year with notices given out timely for them to be a safe harbor matching for the current year. It's an odd set of facts I haven't seen before.

The difference here being the lender (the Plan) generally has no risk since as the loan is fully secured by the participant balance in most cases which can be distributed/defaulted/offset as taxable income to the Participant with no loss real financial loss to the Plan.

If you have a short limitation year because of the termination you will need to prorate the 415 limit. This might also effect the the participant if there were "large" employer contributions.

An election to apply the top paid group would not effect top heavy as it does not change who a key employee is but HCEs are 5% owners and employees who made more than the IRS limit in the prior year. With the TPG election (which would be in the document or an amendment to existing document) you limit HCEs to top 20% of employees who made more than the IRS limit in the prior year so you could potentially change your group of HCEs from 11 employees to as few a 3. Vesting does have any impact in testing but if the plan is new or on going and is top heavy you need a schedule that statisfies top heavy. If a plan consists of only deferral, safe harbor contributions and matching contributions that meets the condition listed in the code then the plan is deemed not top heavy. Once you have and employee contributions that are in addition to those, even $1 then you lose the top heavy exemption. But it's rare that the 3% non elective doesn't fulfill the top heavy minimum. Typically it would be if there are non-key HCEs who are excluded from the 3% non elective but the employer decides to make an additional employer contribution.

I'm assuming this is a calendar year plan. Did you meet one of the exceptions to continue to be treated as a safe harbor plan in the year of termination since it is less than 12 months?

I could be wrong but I'm guessing the 2% PS is to make gateway because of the required 3% non-elective. In which case just make the contribution, credit earnings from when the original deposit was made to when this one is made, and deduct the contribution in the current year.

Is the plan top heavy, failing ADP testing, or both? Does making an election to use the top-paid group improve your testing results? You can change a vesting schedule but there are some complex rules to follow and you can't cut anyone's vested percentage below what they have already accrued. Amending in a 3% safe harbor non elective (on or before November 30 for calendar year plan) will let you pass the ADP testing and most likely top heavy too though there are some exceptions. You'll still need to pass ACP testing on the match this year but for next year if your match meets the requirements listed in the code and you timely distribute a safe harbor notice to employees (30 days before the start of the year) you are deemed to pass ACP well. Are you the admin, the sponsor, or a participant?