Bill Presson

Correct.

Albany, assuming there is a refund, remind the HCE, that getting a refund isn't the worst thing to happen. The worst thing to happen is choosing to defer less and passing the test. Because that means he/she COULD have deferred more. Getting a refund means they deferred the maximum allowed by law.

John is correct if you're really talking about 2021. If you're talking about 2022, I would only choose option 1. The other two don't make any sense.

I recommend this: https://www.lfg.com/wcs-static/pdf/Attribution of Ownership in Retirement Plans - PDF.pdf

Couple of thoughts. 1. If you agreed to bill by the hour, then bill by the hour. 2. There is a value in the services that isn't tied to time. It's tied to knowledge and efficiency. One shouldn't be punished for being smart and working quickly. 3. If you bill less than estimated, be sure the client is aware. And remind them that things sometimes go the other way and you would still expect to be paid.

First, make sure you eliminate it for 2023 AND let them know if the plan is top heavy and what they need to do to avoid any TH minimum. At this late date, you aren't going to avoid the SH because you have to give 30 days notice and that puts you to the end of the year. Agree with Bri to see if you have leeway. We draft our documents so that the HCE SH is optional. Then start discussing a plan to make the 2022 contribution.

I'm just going to say that they need to either do a SIMPLE IRA or a 401(k). No one has listed anything.

We don't see clients do that.

Tell them how much you'll charge to allocate and distribute a handful of pennies.

The merger documents can provide that the two trusts are effectively merged as of XX date without having to physically combine them. What if you were just changing the name of the trust? No way that happens on the effective date. It happens later, but the document says when it's effective.

The plan has to have entry dates and they are written into the plan. Typically they are the first day of the plan year and six months following (ie 1/1 & 7/1) but can be more frequent. So assume your person was hired 10/10/21. They complete their 6 months eligibility 4/10/22. They would then enter the plan on 7/1/22 and be eligible to defer on 11/1/22. The 11/1/22 effective date for deferrals means that's when deferrals are first allowed in the plan. Not uncommon for a new plan to specify a date on or after the plan is signed in existence. As to vesting, I'm going to give you the most common example and one exception. Your plan defines exactly how it is determined. You just look at the plan year and ask "did the person work 1000 hours"? If the answer is yes, they get credit for 1 year of vesting service. Hire dates and termination dates don't matter for this measurement. The one exception is if the plan excludes service before the start date of the plan. But, in my example, the plan year, the hours, etc could all be different. Read the document.

This doesn't make any sense.

I know they're trying to save some money. But don't let their problem become your problem. Unless you're an attorney, don't try to create a DRO.

"satisfying coverage" would still be an issue because "former HCE" isn't an HCE.

call your attorney.

PS - yes to last day requirement (subject to discrimination testing) SHNEC - no to last day requirement

Yes. In fact, you could set up a plan to just cover a single NHCE and have no testing. We have done things like this quite often for fast food operations, etc. The owners aren't worried about participating, so we exclude them (and all other HCEs if they have any) and cover only the managers and assistant managers at each location. Generally those people are paid pretty well, but don't qualify as HCEs.

What advantage would a SIMPLE 401(k) have over a regular 401(k)?

A SIMPLE 401(k) is a combination of all the bad parts of a SIMPLE IRA and a 401(k) plan. I've never run across an employer for which a SIMPLE 401(k) was a good solution.

I've never seen a non elective contribution calculated on a per pay period basis.

Then it's only owners. Non owners aren't HCEs the first year of their employment.

If the plan requires it, you have to do it. The plan document will outline what refunds to do for a 415 excess.

I wasn't worried about the charges. Just that you CAN'T have a plan with just Roth. So if you have set it up as 002, it's wrong.

Agreed. This is the issue.

Same