CuseFan

Just make sure that the plan document would not inadvertently make this person eligible for the SH (i.e., the plan says whoever is eligible to defer gets the SH). You may need to specifically provide 21 & 1 dual entry for the SH.

Exactly, since not using a design-based safe harbor in the PSP, uniformity doesn't matter. Having to do gateway likely means doing at least 5% in PSP, if not more, as gateway could be 7.5%, so with TH satisfied in PSP why even bother with SHM offset? The only reason would be if there were non-key HCEs that needed TH but not gateway. Your PS document could probably specify that. For example, "Top-heavy minimum allocations shall be satisfied in this Plan except that the minimum allocation for any Non-Key Employee who is a Highly Compensated Employee shall be offset by any safe harbor matching contribution allocated to such Employee in the XYZ Company 401(k) Plan."

But the point / question was there are two DC plans - a 401k SHM and a separate PSP. If you are satisfying TH with contributions to both DC plans then CB document should note that and probably both DC plans in some fashion. Statutorily you satisfy TH with 4% SHM and 1% PS but unless you provide TH minimum according to the provisions of EACH document you're going to have an operational defect under one or more plans for not following the terms. AA agreements for these plans easily provide the means to spell this out. I suspect your inquiry is with respect to HCEs because NHCEs would be needing more PS for gateway as Bri mentions.

If the funded status of that plan is sufficient, it might make sense to terminate and save the administrative costs, PBGC premiums, etc. but there may be lots of other issues to consider, like settlement accounting if subject to ASC 715. This is where a good actuary provides value, meaningful consulting versus mechanical valuations.

According to Google AI, the spouse can work but there are steps to take in addition to simply securing the H-4. The H-4 visa is a U.S. dependent non-immigrant visa issued to the legally married spouses and unmarried children under 21 of primary work visa holders, primarily H-1B workers. It allows family members to live, study, and travel in the United States alongside the primary worker. Key Benefits and Rules Living and Studying: Holders can reside in the U.S. for the duration of the primary worker's valid status and study full-time or part-time without an extra student visa. Social Security and Driving: Eligible holders can obtain a driver's license, and those with work authorization can receive a Social Security Number. Social Media Vetting: The U.S. Department of State requires H-4 applicants to set social media profiles to public for online presence screening. Employment Authorization (EAD)Spouse Restriction: H-4 children cannot work, but H-4 spouses can apply for an Employment Authorization Document (EAD) using USCIS Form I-765. Eligibility Rule: The primary H-1B spouse must have an approved Form I-140 immigrant petition or an extended H-1B status beyond six years. Processing Times: Initial EAD requests take about 6 to 10 months, and renewals take 5 to 9 months, with no grace period if the card expires before approval.

Probably, but may want to check your plan document to see if it mandates an order of correction. Also, I assume the after-tax contribution will satisfy ACP testing for the plan or such testing is not necessary because everyone is an HCE.

Agreed. That won't fly and will be considered a detriment to a valid election for the distribution. Similarly, if there was investment direction you could not remove that and force them into a low-yielding money market, for example.

My understanding is that plans adopted after the end of the year for which they are retroactively effective are not required to file a 5500 for that initial plan year regardless of whether the plan was adopted before or after 7/31 (the 5500 does not ask for the adoption date of a new plan). Could you file an extension and a 5500 for the initial 2025 plan year? Yes, but it is not required. If these are DBPs, remember that a Schedule SB must be prepared for that first year and attached with the second year SB on the that first 5500 filing (or just prepared and provided to plan sponsor if an EZ).

If the PTEE never worked 1000 hours, can amend the plan to apply 1000-hour YOS eligibility and apply to everyone as of an allowable date which could serve to kick out this employee. However, such amendment would likely be a modification to the pre-approved document language (most provide continued participation) and could also trigger a partial termination. Since PS-only there are no LTPT EE issues. Seems like a lot of trouble to avoid PS for a single PT EE.

No worries and thanks for the confirm - hope you are enjoying the summer.

Very good "not advice" @Peter Gulia

Maybe, you have a 33 1/3% reduction in active participants via action by the employer. I would lean yes. However, it's not just flip a switch and this person magically goes from employee to contractor. Unless something changes in the relationship this person could still be deemed an employee.

That may be a possibility if the buyer's new sub adopted the seller's plan as a participating employer, creating a multiple employer plan for that "stump" period, otherwise having them remain in that plan w/o being employees of a participating employer would violate the exclusive benefit rule in my opinion. If the TSA (what does that stand for?) allows for this then maybe that is sufficient for a participating employer agreement, which should have been executed in some form prior to these employee deferrals from the "new" employer.

I assume the employee was not deferring at the time or those would have stopped as well. The employee could make pre-tax contributions in the amount of the loan repayments to restore his balance to what it would have been upon repayment and on a pre-tax basis. Maybe an EPCRS filing, but he's already been taxed, then that also involves amending 1099 (to zero?) and tax return. Whose error in "terminating" the employee? The employer or the TPA? Maybe TPA covers (a portion of) the EPCRS? As I've opined over the years on these types of situations, the employee needs to accept some responsibility here as well - he didn't notice that his net paycheck increased or think to explore why? Agree that 1099 coding was incorrect.

Those who had 415 excess must be informed of such and that those amounts were not eligible for rollover and need to be withdrawn from the IRAs and the 1099Rs they get from the plans will (should) reflect that. At least that is my understanding. Note, the overpayment forgiveness allowed by SECURE?2.0? does not extend to amounts that exceeded legal limits.