Lou S.

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?

If a PBGC plan is terminating with a majority owner waiver with spousal consent (assume the waiver and consent meet PBGC conditions) how is Schedule EA-S completed with respect to assets and liabilities? Assume without the a waiver the liabilities are $500K and assets are $400K. COVID killed this business model and it has not recovered and prospects for recovery are grim. Very small Cash Balance Plan.

The Plan that merges disappears on 10/1 and has a short plan year, yes? If so 2.5 after months is the refund deadline. If the Plan terminates you may have had created a short testing year but unless you distribute all assets you haven't created a short plan year so 2.5 months after the plan year ends.

What does the Plan say about rollover in eligibility? If not addressed directly by the plan, what do the Administrative procedures say?

Those are some big jumps.

I would make sure the document is written to define compensation this way and you do need to run a 414(s) test on compensation as Bri points out.

It seems like yet another gray area. This link might get you in the right direction or it might get you deeper in the weeds. That is IRS guidance seems to be less than crystal clear. https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=106

If you are asking if they can be excluded from your testing and pretend like they don't exist the answer is no. If you are asking how to cover them, Peter has better guidance above.

My thoughts are adopt the conforming interim amendments now and be done with it, assuming you are talking about interim amendment deadlines that haven't already passed like SECURE and CARES here not say Hardship Interim amendments.