Bill Presson

Well you can have in-service distributions with some restrictions (age, service, etc) as well as different requirements based on the source of money (deferrals, match, ps, etc). But the OP question was related to money the participant rolled into the plan from an IRA or another plan. We generally design the plans to allow those funds to be distributed whenever the participant desires.

I think the 1/29 date is the date the payroll is being run. If accurate, that date doesn't matter. The ones that matter are 1/30 (termination date) and 1/31 (check date). If the plan terminates on 1/30 and no further contributions are allowed, then the 1/31 check date is outside that parameter and no deductions should be processed. Time to fix the dates. Might mean they need to move the payroll check date to 1/30.

Read the document. It will say if they can or can't. We (almost) always code plans to allow that.

@Brian Gilmore He can use the technical terms. i deleted my stupid answer because i was thinking FSA. thanks Brian.

Unless it's an obvious ASG, we refer all those situations to ERISA counsel.

Why would you do that?

Just be wary of the top heavy provisions, if applicable

Agreed. Are they considering waiving that requirement for anyone employed on 1/1? I see that sometimes to catch the December people you describe and have it only apply to those hired after 1/1/2024.

If I grasp the meaning here, then it depends on what your termination amendment/resolution says. Ours typically eliminates last day requirement.

Then I don't see the issue here. You're not even having to do an -11g amendment.

Thanks Jak! Happy Holidays! It was so nice seeing you at ASPPA this year.

Correct. Yuck.

If they WANT to be a CG, have their atty use a method to make it happen. That can mean being involved in each other's business or using options, etc. You can force a CG.

https://www.irs.gov/retirement-plans/consequences-to-a-participant-who-makes-excess-annual-salary-deferrals

Going forward, they need to fix the payroll because that's where 402g excess issues are fixed (excluding issues with the participant in two plans) before they happen.

My experience of almost 40 years is that the check date is most often used. Otherwise, the administrative work is a mess.

Agree with @Lou S.. When you have 2 people, the greater of (40% or 2) is 2.

I'm wondering if by "back dating" the op means crediting the deferrals "as of" the correct deposit date so that future earnings are correct.

https://www.asppa-net.org/news/browse-topics/another-erroneous-8955-ssa-notice-issue-and-what-do-about-it Covered in an ASPPA daily email.

Not if they enter under the LTPTE regs.

Well done.

Election form has to be signed by 12/31/2023 and after-tax contributions deposited by 30 days after the end of the plan year to be counted for 415. Obviously can be done within the plan year as well, but deposit deadline is not the tax filing deadline. Not sure what you mean in (2), but the 1099 should be created for the plan year in which the conversion occurs.

For plans that aren't at recordkeepers, the trust for that plan quite often DOES get an EIN to use to identify assets and to use when paying people out for tax deposits and 1099 reporting. With independent paying entities providing distribution services, it's becoming less common but we still use it pretty frequently.

For this to work, the OP would have to completely understand what they're saying and I doubt that would be the case. OP, you need to bite the bullet and hire an ERISA attorney or an experienced TPA to fix the error. This isn't a minor error. It's a big error that potentially involved a lot of tax deductions and you screwed it up by trying to DIY.

And if they don't track hours, there is typically a provision in the plan to allocate hours to those people via an equivalency.