Lou S.

Your question intrigued me and I went down a rabbit hole. I'm not sure if this is still accurate but an article on Benefits Link from 2002 (man this place has been a great resource for a long time) came up https://benefitslink.com/articles/tarpley020313.html It seems to hinge on §402(h) and §404(h). I don't know if those sections have been updated since 2002, I honestly can't tell from the current code sections and I haven't dug into the regulations. But that appears to be where the 25% cap is coming from. Both the 5305A-SEP (Rev June 2006) the latest version I've been able to find and the FAQs on the IRS website both reference the overall 25% limit. https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-sarseps Honestly I thought they mirrored the qualified plan rules in many ways and "assumed" the 100% 415 limit and 25% employer limit were applicable but it appears at least at one point, and possibly still that the limit is 25% of pay limited for each employee and included both employer and employee contributions. It seems a kind of nutty result but not much nuttier than ending SARSEPs in 1996 but grandfathering existing ones. Personally I haven't come across one in quite some time but maybe this will get you where you need to be and can figure out if it's been updated since that article.

I'm confused. The seller is selling their assets but continuing it's business? Who will the employees of the seller be after the sale? Whether selling corp and acquiring corp are a controlled group after the sale will be determined by both companies ownership structure. If they are a controlled group after the sale and selling corp adopts acquiring corp plan you have a single employer controlled group plan. If they are not a controlled group and selling corp adopts acquiring corp plan you have a multiple employer plan. What are the goals in terminating the plan? Typically the terminations are done effective the day of or day before the asset sale, often contingent on the sale happening. Does the seller still have a plan? Is the compensation for services to the seller? But like Bill I'm confused as to what the goals are in both the original and and clarifying post. If, how, and when seller plan is terminated would likely determined what distribution options participants in seller's plan may or may not have. Also if seller is terminating plan and it's a 401(k) plan that might affects it's ability to adopt acquires plan for 12 months after final distribution under the successor plan rules. A lot to unpack here.

My thoughts (and not a lawyer) is leave the SFs that have been filed as is. File EZ going forward. And Bri brings up a good point, until recently you could file SF-1partcipant plan. Though my memory is bad on just how recently.

I've had a few plans that used to have common law employee and became owner only and switched to EZ without issue. I don't know if it was always supposed to be EZ but was filed as SF if you'd have an issue which is your case and different set of facts. I'm pretty sure if you switched to the correct form the current filing year you won't have a problem with that particular filing. The question is what about the prior filings? I don't know what the correct answer is on the prior filings and I think I've seen some conflicting guidance in posts on this site related to similar issue. A few options - -File the old EZ under the IRS late flier program under the theory that a valid return hasn't been previously filed. -File amended EZs for the years that SFs were originally filed under the theory that the returns were timely filed but on the wrong form. -leave the SFs alone under the theory that information returns contained all the correct information and were timely filed but are open to public inspection as an SF and would not have been had an EZ been filed. Again I don't know what the correct answer is but those are the most reasonable choices as I see them. Good luck with whatever decision you chose.

Neither. It's a failure to follow the terms of the document (unless the excess is catch-up eligible in which case you are fine).

Yeah 200% of the first 6% SH match satisfies the enhanced safe harbor match formula for ADP/ACP 100% of the first 7% SH match satisfies and enhanced safe harbor match with respect to ADP, but not ACP. Though there are a couple ways you can run the ACP test as I understand it. I've never actually had to worry about in the practice though.

Not 100% sure but I think we were required to use whole percentages for the contingent beneficiary on my wife's plan that is record kept by fidelity so they were set up 34/33/33 for the kids. I'm pretty sure fidelity is still the record keeper but if not my apologies to fidelity.

You have deferrals with no plan. Amend the W-2 to show no 401(k). File an amended tax return for 2021. If they filed by April 15, too late to set up PS plan for 2021. If they were on valid extension but filed after 4/15 you could put in PS plan under secure with up to 25% employer contribution. Assuming their W-2 pay was at least $82,000 you could cover the $20,500 as employer contribution and the tax implications would be a wash (I think but I'm not CPA). Make sure he adopts a 2022 401(k) Plan (or amendment to SECURE adopted doc if you can do it) before he makes 2022 401(k) contributions.

You can file an SS4 on line and get EIN almost immediately.

That would depend on whether or not there are any key employees covered by the second plan.

The Prevailing Wage contribution will removed your "deemed not Top-Heavy" exemption.

I think you can do it if your document allows for it, but you have to have a fail safe language to bring in folks who meet the 1000 hours in the 1st year but not the first six months. I could be wrong but it sounds like they are trying to bring in "full time employees" after 6 months while excluding "part time employees". Which can be problematic under IRS rules if not structured properly.

9/30/ 2022 is too late to convert to a SH Match, that would have had to have been done prior to the start of the Plan year. They could have added a 3% safe harbor non elective by August 31 (yesterday) or can add a 4% non-elective prior to 9/30/22. They can go to a safe harbor match for PYB 10/1/2022 but you are outside the safe harbor 30 days before the plan year for distributing the notice. You can probably argue on fact and circumstance that the notice was delivered in a reasonable time before the start of the plan year. The sooner that is done, the more likley it will be deemed reasonable. OPPs just realized PYE in 9/30 and not 12/31 so editing response.

The missing 5500s could be subject to substantial non-filing penalties which were recent increased quite a bit. The filing of the final return might trigger failure to file penalty letters from the IRS. A 2009 document is probably an EGTTRA restatement I'm guessing and if that's the last document then you have a non-amender for PPA and Cycle 3 restatements as well as some interim amendments along the way likely missing. That's a plan qualification issue if not corrected. For open tax years, loss of tax deduction, taxation of trust income, distributions not eligible for rollover, etc.

Did the Plan offer CARES features to participants or implement any of the changes like no 2020 RMDs? If not my understanding is the CARES provisions were optional and not required so if you didn't offer it you don't have any required CARES Amendment. If you offered it but nobody took advantage, you then need a conforming amendment. Is my understanding incorrect on this?

Bill is 100% correct. He became eligible on his date of hire and immediately 100% vested. Any reduction from 100% would be a prohibited cutback under 411.

I would agree that looks correct with what you've laid out with respect to 1563.

Beyond my initial response it's not something I'm aware of, sorry can't help you further.

Final assets $0 PYB = 1/1/2022 PYE = Date of final distribution Yes, Short plan year. Use 2021 form. If filing on paper cross out 2021 and write 2022. If filing electronically, should be no problem if PYB/PYE date are correct.

72(p) gives maximums, there is nothing that prohibits the plan form allowing smaller loans. I don't see a problem for future loans and loans are not protected benefits.

What about excluding vesting prior the effective date of the plan? Give the guy an allocation (assuming you have fail safe in document to bring him in) , forfeit his balance, reallocate next year. You do have to worry about the Partial Plan Termination rules but pretty sure you can make a pretty good facts and circumstance argument for not unjustly enriching an embezzling employee if you have that all documented.

Yeah it is typically written as a fail safe for plans that have entry of less than 1 year of service for "substantially full time employees" but brings in the employees who actually meet the 1000 hour requirement and have a year of service. But then those employees are in for good even if they return to "part time" status. I wonder if some of the exclusions will be less used as SECURE will be bringing in long term part time employees next year even if they extended the actual amendment deadline to 2025.

I could be wrong but I think the IRS views the terms "part-time", "on call", "seasonal", or similar all pretty much the same and they aren't considered reasonable classifications for exclusion.

You can exclude reasonable classifications of employees provided you pass IRS nondiscrimination testing. Typically 410(b) coverage in this situation. I believe an exclusion of "less than 30 hours per week" is not considered a reasonable classification by the IRS and is not allowed.

Other than it being a quirk of how the plans were adopted, I don't see a problem if that's what you are asking.