Lou S.

SF is open to inspection EZ is not. I don't think the IRS will care that you filed a form with more disclosure rather than less disclosure.

Doesn't look like a controlled group to me. Do you have an Affiliated Service Group here? As for setting up a Plan for X assuming the Partner who owns company B (and then company B owns 75% of X) is the only employee of Company B then excluding company B won't be a problem as company B only employees HCEs and you can discriminate against HCEs. Now if A or B wants to set up it's own plan that's when you need to look and see if you have an affiliated service group or not.

I think you are simply confusing the fact that most of your plans use the SFNEC to satisfy safe harbor which also covers your TH minimum in most case. But since that is SFNEC it has to be 100% vested. Which you then typically use as the floor for your cross testing. Since you are using SHM in this plan the match is 100% vested but the other employer PS contributions are subject to the Plan vesting schedule. The fact that you are thinking about PS contrib "covering" different buckets like TH and Gateway for testing is irrelevant to the bigger picture that is still a single PS source.

RMD failures are correctable under EPCRS. https://www.irs.gov/retirement-plans/correcting-required-minimum-distribution-failures

If the new plan is a 401(k) Plan don't you have a problem with the successor plan 12 month rule? Do the Plan Years overlap? What is the effective date of the new plan?

Not allowed. It would violate the exclusive benefit rule if nothing else.

Non-elective or matching? If matching then yes you are supposed to give notice 30-90 days prior to the start of the Plan year. If notice is given less than 30 days before the start of the Plan year then you need to document why the shorter notice period is reasonable. I personally would argue that a plan that was just put in and notice delivered immediately is reasonable, others might argue differently.

As Bill correctly states you need 3 months of deferral. So October 1 is/was the deadline for a calendar year 401(k). You could set up a Non Calendar year safe harbor 401(k) today on December 1 with a plan year from December 1, 2021 - November 30, 2022. In that case someone could defer the 2021 calendar year limit of $19,500 (or $26,000 if catchup eligible) in December assuming they have the salary and election to support that.

I could be wrong but I though when an IRA was split in Divorce the funds got transferred from the existing IRA owner to the alternate payee IRA owner and then if they came out of the alternate payee IRA the were treated like any IRA distribution. That is under 59.5 would be subject to 10% penalty. I think the exception to the 10% penalty is only in the case of Qualified Plan that pays directly to alternate payee per QDRO. But my understanding could be off, IRAs are not my specialty.

I'll bite, what's a 16B indicator?

I took it to mean that if the Plan is allowed to pay expenses, a pro-rata share could be charged to the suspense account, but the suspense account could not annually pay 100% of the plan expenses like a forfeiture account might. That is each year it would pay a declining share as it is allocated to participant accounts.

PS only could convert to non-elective or matching SH mid year, but you still have to have at least 3 months of deferrals so could do it January 1 - October 1 for calendar year plans. 401(k) can convert to SH mid year but only on non-elective 3% or 4% rule.

A newly established SH401(k) Plan or PS only converting to SH401(k) would have to do so by October 1 to satisfy the 3 months of elective deferral rule for a calendar year Plan. You can adopt a new 401(k) or convert existing PS plan to a regular 401(k) right up until the end of the plan year, December 31st for calendar year but you can run into questions about effective availability of deferrals if owners can defer but rank and file effectively cannot. You'd be subject to testing so often prior year with the 3% default is often done for plans that get established say in December. That would allow HCEs to put 5% of pay + catchup. Concurrently the plan is either amended to SH or current year testing for the following year. If you have an existing regular 401(k) in place than you want to make SH for calendar year plans you can do it up to November 30th by amending in at least 3% non-elective safe harbor contribution or between December 1 and December 31 by amending in at least 4% non-elective safe harbor contribution. I forget if SECURE extended the 4% non-elective option retroactively after the plan year up until due date of tax return with extensions, perhaps someone can chime in on that.

Well the Subs are part of a controlled group with the Main Office since the main office owns 100%. Your plan can cover just the Parent Main Office and exclude the subs, it then becomes a question of whether or not that passes testing with all the employees of the subs excluded. I have no idea what the demographics look like but I'd guess that testing would likely be problematic.

If there are excess assets or other amendments that increase the owner's benefit you could have a discriminatory increase in the owners benefit with respect to timing if they all go to the owner. Annually for 401(a)(4) and 401(a)(26) you are fine with the owner as the only employee.

I think it depends on the individual situation. If they have a good relationship and aren't planning a divorce it can be handy to have both as Trustee in case one dies to be able to act on behalf of the Plan.

I'm confused? Did the client have separate ESOP and a 401(k) Plans and are trying to merge one into the other?

Correct.

Well once you make any employer contribution to the DC plan that is out side safe harbor rules you blow your "get out of top-heavy free card" so he needs to get a top-heavy minimum since you are clearly going to have to make an employer contribution to make the CB plan work. Though you can probably limit the HCE to a 3% Th minimum in the DC plan if you exclude him from the CB plan and your TH coordinating language is right. If they are trying to go with lowest cost they might consider switching from SH match to SH non-elective next for next year.

I don't know the facts. Maybe they contemplate hiring employees sometime in the future, maybe not. But assuming the have dual entry plan and plan on hiring employees before 7/1/2022 I would say the plan design is problematic.

Is this an individually directed Plan or Pooled? Assuming it's an individually directed plan and the life insurance policy is part of his account, then if he purchaces the policy from the Plan, the funds would go to his individual account just like if the policy was surrendered for Cash Value.

It only becomes discriminatory if they hire an NHCE during the new 1 year waiting period where you've effectively allowed immediate eligibility HCEs and a 1 year wait for NHCEs.

Yes, but if they want to roll over the balance now that would accelerate their 2021 RMD to time of the rollover. And if they do defer their distribution to first quarter of 2022, they will need to take the 2021 and 2022 RMDs in 2022 (prior to any rollover)

Yes they have a service level that includes payroll.

We use a Corbel (I guess now FIS) document and it specifically uses the terms "with wear-away", "without wear-away" and "with extended wear-away". It parenthetically explains each term.