Lou S.

Convert the 401(k) to a Profit sharing going forward? Then stop deferrals.

I've not seen the 11% issue so can't comment. I and other practitioners agree we should be able to rely on the regs, that said I don't want be the test case to push that in tax court.

The big difference being one is employer initiated where the employee does not have control over the transfer of assets from one plan of the employer to another such as in a Plan Merger, as opposed to the employee making an affirmative election to roll their funds from one plan of the employer to another such as upon Plan termination of the first plan.

The times I have seen separate source tracking required has typically been on In-Plan Roth conversions of some sort.

Depending on the age of participants, the testing age and the interest credit a $500 CB allocation may or may not produce enough with 0.5% accruals to pass 401(a)(26) testing. I use Relius and I've never seen it add the DC accruals to the 401(a)(26) report so you might want to check with Relius on what it is going on. Relius will give a report showing both "benefiting under the regs" and "meaningful benefit under IRS guidelines" if you aren't passing 401(a)(26) with enough at 0.5%, I wouldn't want to have that arguement with an IRS auditor though if you rely on the benefiting under the regs and not the IRS audit guidelines.

Why? They are rollovers not plan to plan transfers. I thought it was just Top Heavy that was an issue with respect to Related/Unrelated rollovers whether or not you include the balances.

Check Revenue Procedure 2021-30. I don't think your case falls into on that is specifically addressed but I do think you fall into an Operational Failure than the can be corrected under Self Correction under the Rev Proc if you follow the timing in 9.02 which it seems you have (assuming you've credited lost earnings for the late deposit). Though I'm not an attorney so you should probably run it by ERISA counsel before making a final recommendation to the client.

What is the nature of the required employer contribution? Money Purchase, Safe Harbor NEC, Safe Harbor Match, Fixed employer match by document, top-heavy minimum or other? Since you are correcting withing 2 years of the failure it may be insignificant and available for self-correction (I'm not sure on this so check the most recent EPCRS procedure), similar to a late 401(k) deposit if it is considered "insignificant". If not I think you are looking at a VCP submission where the IRS is going to want to see you've corrected the missing contribution (with earnings). I think if you do that the IRS is likely to be very reasonable, especially in light of the pandemic.

A gate-way of 7.5% of 415(c)(3) compensation to all NHCEs is not a "safe-harbor" but I think I'd have a hard time coming up with an example where a 7.5% allocation didn't pass the gate-way part of the general test.

If the Plan has $0 deferral limit for HCEs written into the plan document but allows for catch-up contributions your can probably get away with it. But no you can't just call the first $6,500 catch-up because you want to as it helps you out.

Check the current EPCRS procedures. I believe on the ineligible class you need to refund the deferrals with earnings and transfer any related match an earnings to a suspense account to offset future employer contributions. On the early entry of otherwise eligible employees that can be corrected by amendment to bring them in early (if it meets the requirements in EPCRS) or by correcting like above for ineligible class. I can't recall if this qualifies for Self Correction or VCP, if it is just the early entry and you bring them in by amendment as that is "almost" always available for Self correction with t hat method but the not sure if the excluded class requires VCP.

Is he considered part of the union for the medical plan coverage but his wages and benefits are not subject to collective bargaining?

https://www.federalregister.gov/documents/2021/09/15/2021-19714/proposed-revision-of-annual-information-returnreports I don't think it has been finalized but I believe these are the proposed changes you are referring to which would apply to the 2022 Plan year if finalized..

Without admitting any mistake was made, the TPA might want to contact their E&O insurance.

Maybe he has little or no taxable income this year would rather pay the expense out of an account that will one day be subject to taxation.

As I understand the Plan in scenario has a document, it's just treated as individually designed and you can't rely on the opinion letter. So they are simply a non-amender.

Scenario 1 - you can correct the document restatement failures through EPCRS with a VCP filing and the late 5500s through the IRS late filer program for 5500-EZs. The Brokerage issue is probably tougher to correct but could likely be done as part of the VCP filing correcting the document failures and working with Pershing to re-register the accounts properly. Scenario 2 - I'm not sure as you have no Plan adopted. Perhaps someone else can chime in on that one. I feel like this has been addressed before in other threads so maybe a search of this website?

If they are members of controlled group they would simply be employees for coverage testing. Whether or not they are eligible would be determined by the Plan Document. Has that Controlled Employer adopted the Plan?

Pay him the difference with interest and move on? Not sure if that's the right answer but it seems reasonable given the small size of the data error than is now being corrected.

Dad died pre-SECURE Act so kids can take out as stretch payments under the pre-Secure RMD rules on death after RBD, assuming Plan allows. I have to go back a re-read the 401(a)(9) regs whenever this comes up but pretty sure the answer is in there and your Plan document. Now if your Plan only has the 5 year rule you might be stuck with that. OTOH if you got "begin within 1 year of death for a "designated Beneficiary" and payable over the life of such Beneficiary" or similar language you should be fine with the annual stretch payments provided they satisfy the 401(a) rules and aren't for longer than the life expectancy of the beneficiary.

From your post I take it the company that sold the assets also terminated the 401(k)? Assuming that is the case I see no issue with splitting the distribution, in fact you probably have to allow that option.

I agree, it's too late now to do a 7/1/21 - 12/31/21 Short PYE.

As long as you don't have any 411 cutback issues with the MP plan and you preserve the MP characteristics of the MP source money in the surviving PS plan I don't see why not.

FWIW ours is in the the master text under the definition of Forfeiture. Says something to the effect of "if Terminated and 0% vested is deemed to have received a distribution in year of termination"

Yes if he died after his RBD and an RMD was required for the year it should have been taken either by the owner before their death or by the beneficiaries after his death.