Bri

I agree with Lou, but will also pile on with, if the gateway rate is 5 but you're running separate 401a4 tests for otherwise excludable employees, that gateway rate might not apply to him, so you'd want in the original scenario to have only one set of 401a4 testing rather than two.

Yup.

(And SEPs require a pro rata allocation with extremely limited exceptions)

If it's a safe harbor 3% nonelective plan, I believe EPCRS says to use 3% as the makeup QNEC. (Looking at page 85 of 140 in RevProc 2021-30 while typing this)

This is a weird one, indeed. It's not that the plan sponsor "knew" it was holding onto assets that should have been in the plan - they didn't know they'd computed the amount incorrectly. They did "timely" contribute the revised amount's differences, right? That "feels" like they wouldn't have done anything else wrong from a prohibited-transaction standpoint. Certainly we'd talk about it more otherwise here on the boards, no, if anyone else had considered this angle?

That's basically the idea, although the intricacies of the guidance are going to have some of the what-ifs..... And the new guidance also reflects what happens to FLTPT (former LTPT) when they meet the plan's normal eligibility. They'd be "normal" enough but still get to stay on the 500 hour vesting schedule. That's the part that kinda....sucks?

Was the guy a 5% owner back when he turned 70½?

The after-tax contribution wouldn't reduce his Earned Income. Do the PS calculation first to see how much is left to be a potential after-tax amount.

Is there a separate document section for plan termination, compared to the regular rules for distribution of benefits?

Kind of a smart spouse there to know the ERISA protection available!

Don't SH contributions typically get 12 months to be made? If so, then your real issues might be 2023 deductibility and annual additions tracking, since they certainly are late to be 2022 additions, but not late to meet the safe harbor.

1. Run? 2. VCP? 3. Do it right going forward and pray they don't get caught? Some accounting tricks might mitigate the problems (count the late deposit as being for "next year" such that maybe only 1-2 years are totally unfixable based on timing) good luck!

Don't forget that if 5.5% and the AMT provides a lesser lump sum than the plan's AE factors, then that will override your prior number. And the one-year participation limit before age 62 gets reduced down below the 14,779 as well, to something more like 7,243 at age 41.

Agree with Cuse - The deadlines are about the sponsor's tax deadline, so if the partnership itself is the sponsor, it'd make sense to tie it to that.

Different answer if HCEs are instead put in a class allocated a contribution credit of $0, rather than excluded by class?

This sounds like you're hoping to apply the flexibility allowed for top paid group determinations, but I don't believe that's provided for in the coverage rules. The only leeway I've seen on that one is when you fall back on the plan's entry dates under liberalized eligibility, as opposed to the straight reading of the rule (where you go six months out from the one year anniversary, even if the plan had dual eligibility and someone snuck in July 1 even if it that were earlier than statutorily required).

Oh, as a sole prop, then this could potentially be the company's final contribution in the year of termination. Subject to 404 and 415, of course. I was interpreting the OP as some rando wanted to apply personal funds towards his deferral ceiling before his distribution.

It depends on if the plan allows after-tax contributions outside of payroll deduction, and that the termination date hasn't already passed.

Oh I don't argue it hasn't still been a net positive....just thinking of how we could further avoid these issues where as soon as the Required List comes out, a sweeping piece of legislation gets passed which won't end up in a basic plan document for another nine years! Alas, that might require some foreknowledge of when the next big one is coming.

Do we have any knowledge of whether the IRS would even consider abandoning the Cycles/Required Lists and going back, instead, to specific legislation-based restatement periods? (Restating for SECURE 2.0 is the new Restating for TRA '86.)

Can a distributed loan (offset of benefit, if his termination of employment triggers immediate distributability and the loan being due) be "rolled back in" indirectly within 60 days? Thus making the loan "live" again? (I know this doesn't seem typical, but what finer point do I miss when suggesting this?)

I agree, sounds only like persnickety software rather than a plan design issue. Any leeway on just giving the Keys the match and calling it a day?

No (restriction on other plans at the same time as the SIMPLE). But why not roll the SIMPLE funds to "anywhere" else besides that IRA if he wants better choices?

If you already filed, the IRS "should" figure it out and would send the same basic letter again. I had a client with the same issue - we had just finished processing his 2022 returns for signature when he got the notification that they'd assigned his new EIN, since his 2021 returns had his SSN listed as the EIN improperly. For this guy, we prepped amended returns for 2022 to show the new EIN on line 4. (Figuring, that won't cause the same IRS letter to pop up a year from now. I don't know if them getting 2 straight years with the wrong EIN would escalate their correspondence to "cut it out, stop filing with the wrong one.")

The second of those - all the owners AND all the top 8. (Or 7, you can round either way on the 20% calculation as long as you're consistent in the way you do it.)