RatherBeGolfing

I would also quickly file under DFVCP. I agree that the goal is for people to comply, not to punish as many people as possible., Personally, I think it is allowed unless they have contacted you for that plan year since each return is limited to a specific plan year.

I agree it should be blank. If the plan is not a 401k plan, it doesn't apply.

I think I heard that the the proposed rule has left OMB and is back at EBSA, but I'm not 100% sure. ASPPA/ARA submitted a pretty lengthy comment letter during the first comment period.

Yea the auditor community reacted as expected to the change in participant count for audit purposes. It tough to find someone wiling to accept a new audit client unless it's an ongoing relationship, and even then it can be difficult. Filing without a bond could be red flag, but I have seen so many filed with no bond that don't get an agency love letter that I'm convinced you need really bad luck to get picked for follow up due to no bond. Even then, they will most likely just tell you to get a bond. YMMV

Yes, if you purchase a retroactive bond that covers the period you are filing for, you check yes.

You make them a participant by accepting the rollover, so I would argue that "not a participant as of EOY" is incorrect. They are a participant who has not met eligibility for contributions other than rollover.

Is this person a US citizen or permanent resident (green card)?

That begs the question, what does "completed" mean? When it was prepared? When it was sent to the client for review? When it was reviewed by the client? When the client communicates to CPA/preparer that they agree with the K-1? When the full return is accepted/signed by the client? When the return is filed with the IRS? The list goes on, which is probably why you have never had an auditor ask the question

It also allowed Starter 401(k) as a replacement, which is deferral only... not surprising that this was removed in the technical corrections bill. Although, since that bill hasn't passed yet, I guess you could technically replace the Simple with a Starter 401(k), but that is really pushing it.

Not a mad rush, but I have more than a handful so far.

I could probably argue both ways in good faith, but I agree that we need guidance ASAP so we can put a pin in it. We have gotten plenty of requests already.

You did have a plan in place "as of the day after termination date". My issue with your hypo is that you also had a plan in place before the transition year (the period beginning after the termination date and ending on the last day of the calendar year during which the termination occurs". Sec 332 adds adds 408(p)(11), which lets you terminate the simple mid year, and allows you to accrue benefits in the qualified plan during the "transition year". By making the plan effective 1/1 for profit sharing, you are maintaining the qualified plan while also maintaining the Simple. The reason you are allowed to terminate the Simple mid year is because you replace it with a qualified plan. It seems clear to me that the intent is for one arrangement to be maintained at any point in the year, rather than allowing both to be maintained at the same time. So, while I agree that 408(p)(11) does not specifically preclude the SH plan from being effective 1/1, I argue that 408(p)(2)(D)(i) already precludes you from doing this.

What is you definition of a "complete system"?

There is not. Sec 332 states: (11) is Simple (12)(B) is SH Match (12)(C) is SHNEC (13) is QACA (16) is Starter 401k (removed as an option in the proposed technical corrections bill since its a deferral only plan)

Dang MoJo, this really has you fired up!

You could have an amount less than $5,000 (or even less than $1,000) and have a default rollover and IRA provider. It depends on what the cash-out limit is. If cash-out is $0 or any amount that is less than the force-out, you would need the rollover provision. I do agree that that an amendment is likely needed if you haver to add the IRA provider particulars (or really anything other than the just the force-out limit)

Agreed. Our letter also has an "a" after the six digits. The IRS list of approved documents does not include the "a" on the letter serial number.

That is a good side issue since we haven't seen the amendments yet. That said, I think we may run into that issue either way unless you make the call as the document provider to default all your documents to $7,000. Most amendments that are adopted by the provider on behalf of the sponsor also include the same effective date, so unless you default all your docs with the same effective date, you will probably need the sponsor's signature. I have a feeling we will need sponsor signature for a lot of the S2.0 amendments as there are so many optional features. There are other optional features that I don't think would work as a default amendment, like Roth match/nonelective. Some clients love the idea, others don't want the hassle.

Personally, I don't think you need to amend to $5,000 in order to take advantage of $7,000. The caveat would be if there are any other elections that need to be made in order for the limit to be $7,000. If all you need to change is the limit, I have no issues jumping from $X to $7,000, as $7,000 takes the place of $X (its irrelevant that point). We are also amending the cash-out to $0 when increasing the force-out to $7,000. If we had a client say no to removing the cash-out, I wouldn't lose sleep on going from less than $5,000 to $7,000. BTW, there was a webcast a few weeks ago on LTPT that said a plan amendment to eliminate the LTPT issue (like amending to reduce hours of service or going with elapsed time) could be done operationally now as long as the amendment is done by the S2.0 amendment deadline. That feels a bit aggressive to me.

One could argue that without a date certain for the plan term, there is no actual decision for the plan to be non-permanent. In that case its more along the lines of "it will be permanent until we decide to retire" which is an unknown future date. And if you sell the business at retirement, why assume that the plan would term? It could continue with a new owner.

I refer all to ERISA counsel when its ASG or complicated CGs. We don't always require a formal opinion if its fairly simple and a memo is enough.

Yea Derrin said something along the lines of "I'm not sure that this was intended, but I don't think its prohibited based on the language". The way it was discussed was more like this is an interesting question and here is my take, rather than this is what you can and cannot do. At least that was my impression. I still think that based on 408(p) and Section 332, the plan cant be effective prior to the SIMPLE plan term.

To me its 100% clear that the SH plan itself cannot be effective prior to the termination date of the SIMPLE. - 408(p) already says that the SIMPLE will not be considered a qualified salary reduction arrangement if the employer also maintained a qualified plan in the same year. - The exception created by S2.0 is when a SH plan replaces a SIMPLE mid year, because the after the termination date, the SIMPLE is no longer maintained. What 332 does is break the year into two periods, one with the SIMPLE and one with the SH. The two plans cannot be maintained during the same period. Sec 332(a)(11) Sec 332 also defines the transition year as the period beginning after the termination date and ending on the last day of the calendar year during which termination occurs.

The 401k plan cant be effective 1/1/24. The transition year (the 401k portion of the year) has to begin on the day following the termination date of the SIMPLE, and end on the last day of the calendar year during which termination starts.

The question is whether the plan satisfies coverage and nondiscrimination by permissive aggregation. If there was no aggregation, the answer is no. From the instructions: