Lou S.

401(k) Plans, existing, new or converted have to comply with the LTPT rules.

If the Plan allows for expenses to be paid from trust, then I don't see where this sort of fee would be prohibited. I believe under PPA funding rules you would add the expenses into the TNC for the year but if you're over funded it shouldn't have too much impact on the MRC for the year.

It is Age AND Service, so September 15, 2025 is when they first meet both the Age AND Service conditions. The they will enter the first entry date after September 15, 2025. If it is calendar year plan with first day of plan year and first day of 7th month that would be January 1, 2026. edited to take into account David Rigby comment.

There are a couple of options - 1 The Plan pays the expenses, assuming the Plan allows for this and participant disclosures about fees are properly distributed. Have the Plan Trustee authorize this option in writing. 2 You request payment in advance from the Plan Sponsor (or directly by the business owners if a small business) before completing any work. 3. You hope you get paid by the bankruptcy trustee. 4. You resign as a service provider. I generally try 1 and 2 first and if that doesn't work, skip to 4. There may be more options but these seem like the 4 most likely and what decision you come to as a service provider is up to you depending on your level of comfort.

They would be participants unless the amendment also froze eligibility to new participants. But unless something odd happened like they got a reallocation of forfeitures they would have a $0.00 balance and as such would not count towards the 100 under the new 5500 audit guidelines.

1. Employer contributions don't increase or reduce W-2 wages but may be reported on the W-2 in the "other" box but are not required to be reported. 2 If their gross wages for the plan year were over the compensation limit last year, they are HCEs this year - similar logic for next year. Doesn't matter whether or not those wages are regular, overtime, bonus, prevailing wage, etc. and it doesn't matter if those wages are used for allocation purposes. You could see if the TPG election improves your testing results and makes some of them NHCEs even if they are over the comp limit.

RMDs from ROTH are no longer required so they do not satisfy the RMD requirements.

I think making a 401(k) Plan that over laps the 12 month successor plan rule is problematic. I think having 2 plans the 401(k) for the short plan year and PSP for the full year are fine, then merge the 401(k) Plan into the PSP would work. I have no legal support for this, just a conservative approach that I think might work so asking ERISA counsel might be prudent.

You can always present both options to your client and have them make the call. In the end if all participants are getting the correct benefit, that is no one who should have been been paid out on 3% was paid out on 2% and the actually contribution was within the Min/Max (as you have said it is) under both the 2% and 3% and doesn't effect the deduction taken on the tax return then I don't think the IRS will be overly concerned if you go back and fix 2022 or say the data error was corrected in the 2023 valuation. Personally I think the amended filing is the way to go and just give the amended filing to the IRS for the audit. Then if they ask for the original, give them that along with an short statement that actually contribution is within the Min/Max under both the original and amended returns. But I'm not the IRS and they could take a different position based on who is the auditor.

The filing needs amending, the audit doesn't change that. Filing an amended return should not be an issue.

The maybe notice can only be issued for a Safe Harbor Non-elective. There is no "maybe we'll match safe harbor" A Safe Harbor matching contribution can be discontinued mid-year by amending the plan to remove the match, providing 30 days advance notice of the discontinuation to the effected participants and making all matching contribution from BOY through the discontinuation in the notice. In either case a "maybe" SHNEC that is "no" or a discontinued mid year safe harbor match is not treated as a safe harbor plan for that year and is subject to ADP/ACP testing and does not get the "deemed not top-heavy" exemption if that is a concern. If the advisor is insisting they are correct, have them provide a citation but you'll be waiting a longtime to receive one.

I think having it paid to the trust negates the ability of the spouse "to stretch" it for her life time and you are stuck with the 10 year rule but as Bruce1 points out, probably a better question for an estate planning attorney who is versed in interplay of both trusts as beneficiary and ROTH IRA rules.

Did the maximum lump sum drop do to interest rate changes or did the accrued monthly benefit payable drop?

I think I mixed up allocation rules for underfunded plans. I don't believe the PBGC has rules on allocating excess assets. Though the PBGC does ask for a lot of data in Plan terminations so whatever method they do chose be ready to defend it on audit.

I take it the Plan is not covered by the PBGC then? If you follow the document and pass IRS non-discrimination you should be fine. If you are offsetting, I think you would want to allocate the excess assets based on the benefit prior to offset and then apply any offset. As for reversion and QRP, does the current plan say allocate to participants or revert to employer and if revert to employer has that always been in place or in place for at least 5 years? As for favoring one HCE over the other, if the plan document allows or you can amend to something like that without a 411(d) cutback I don't see an issue.

What does the Plan document say? Does the proposed reallocation comply with the PBGC rules? Does the proposed reallocation pass IRS nondiscrimination testing? Is the Plan being submitted for IRS letter of determination with a request to rule on the reallocation method?

Oh yeah, if it's under examination correct the error as soon as possible.

As long as your contribution was in the min/max range under both and it doesn't cause any AFTAP limitation problems, I'd save the correct val to the file and provide a copy to the client but unless the IRS comes asking I'd just correct the next year 1/1 valuation and treat it as a data correction with possibly an attachment to the Sch SB to explain any issues. But I also don't see any issue that would be caused by filing an amended return. Lastly, you didn't say whether this plan covered employees or just owner and wife. If it is owner and wife only, you don't even file the SB with the 5500-EZ so you could just do an amended SB to the file in that case since the EZ itself would not change or need to be refiled as an amended return.

If you fail the 100x rule because the projected benefit dropped, I believe there are one or two other acceptable methods of satisfying the incidental death benefit rules but I'm that familiar with them so you'd need to look at the regs.

Do they not tell any NHCEs or just this one? and if just this one he must be the only NHCE. I'm not sure how forgiving the IRS would be with corrections of plans where no NHCE is benefiting. I'm honestly not sure what the correction is in this case should be. But I would think a 2% QNEC (50% of what the deferral would have been to get full match) for missed deferral opportunity plus 4% QNEC for missed match and get either an affirmative election or opt out signed fast to stop the bleeding.

I'm not sure you will find direct authority on that specific question. I think it is reasonable that the 415 limit for A is X/12 months prorated for the short year. And agree that the 415 limit for B is simply the 415 limit since there is no short year. So - If this is a stock sale then for the employees who were employed by A before the sale and now B after the sale then their 415 limit in B is the annual 415 limit - minus their 415 allocation in A. If on the other hand it is a asset sale then I don't think you need to reduce B limit by the allocation in A at all.

The client got bad advice on this course of action, at least with respect to 2024 because they are not considered a safe harbor for 2024, they just have a safe harbor matching formula for 2024 with the required matching contribution without any of the real safer harbor benefits for 2024. That is they are not deemed not-TH, they are subject to ADP testing and they are subject to ACP testing.

It's highest percentage ownership at anytime during the year so she became an owner in December. If it's calendar year she's an HCE for 2024.

That is an acceptable correction under EPCRS as far as I know. If a participant receives an allocation they were not entitled to under the plan due to an error, one way to correct it is to removed the funds from the participant's account, adjusted for gains/(losses) so the participant is in the same position they would have been had the error not occurred.

I agree that this could be covered by getting an IRS DL and specifically asking on a ruling about the excess asses above and beyond the IRS 415 limit for participants. But if benefits are increases to the 415 limit for all employees and there still excess assets, there must be some mechanism to deal with the excess where that is reversion to Employer or transfer to QRP but if it is against the terms of the document and less than 5 years from the change, I think the DL would be required to get the IRS blessing. It seems like one of those odd set of circumstances that should have a reasonably simple explanation but is at odds with the either the Code or the Plan document.