CuseFan

As part of the control group you say the wife's company was a participating employer in the plans. Terminating her employment in husband's business may end the control group but then you have multiple employer plans unless you also end her company's participation in the plans. I think she has an aggregated 415 limit in any new CBP but on that I'm unsure, you'll need to check which and how attribution rules apply to 415 control group. I agree with your thought process, just need to close the loop entirely on her business's participation in the plans and verify the new CBP 415 concerns.

Asked Google AI and got this and it seems logical to me in the scheme of things. If early entry is indeed a BRF then I do not think you can do this. If they started the plan prior to 9/1/2026 before they had employees then no issue, but after the fact this clearly discriminates. Benefits, Rights, and Features (BRF) Test (IRC § 401(a)(4)): Permitting early entry is treated as an optional feature or a modification of plan terms. Under 26 CFR § 1.401(a)(4)-4, any benefit, right, or feature must be available to employees on a nondiscriminatory basis. [1, 2]

Agreed, @Effen is spot on - (1) yes on 204(h) w/o a doubt; (2) no, since there was no amendment that resulted in the reduction of future rate of accruals.

Consider your brain unfrozen. 2026 is first distribution calendar year so yes, if plan termination distribution happens in 2026 there is a RMD due for that year. If 2027, then yes, there are two years of RMDs which could be made in 2026 and 2027 or both in 2027 provided the 2026 RMD is made by 4/1/2027.

Thanks for the "echo" Lois. The IFEBP also does much in the area of large corporate employers, especially with H&W (health & welfare - not husband & wife, the common vernacular here), but yes, very limited useful content for the small and middle market. We have a corporate membership as we're also in all those practice areas. An individual membership is not too expensive, IMHO as you noted, and worth the investment for someone practicing in the multiemployer space - or at least a one-year trial for someone trying to break into that space.

The International Foundation of Employee Benefit Plan (IFEBP), a co-sponsor of the Certified Employee Benefit Specialist (CEBS) designation, is big into "Taft-Hartley Plans" - i.e. multiemployer plans. You can visit their website but I don't know how much meaningful content is available to non members.

I'm not up on what all the issues are with moving out of a MEP, but I assume the withdrawal ultimately results in a spinoff into a new plan, in which case there isn't a distributable event anyway, correct? Unless the employer is not replacing and is terminating their "plan" - then never mind. If the employer establishes a successor plan and there is ultimately a plan to plan transfer, would not that have to include any loans? If that is indeed the case, and if the successor plan was established timely for deferrals et al to start (w/o regard to when assets actually transfer) why couldn't the loan repayments be taken via payroll withholding per the amortization schedule and deposited into the successor plan before any default occurred? Maybe the timing is just too problematic to navigate, or the employee is requesting the loan knowing it will default and they'll get what amounts to an in-service distribution without any tax withholding. Both reasonable reasons for a fiduciary to not approve the loan.

Also, I thought for HPI it is only W2 income that is considered, so sole props and partners aren't subject to that - so you only look at Jane's W2 income for those 2 months. Or am I thinking about something else?

True

There is no double taxation on excess contributions (ADP test failure) only excess deferrals (402(g) failure). Treas. Reg. § 1.401(k)-2(b)(2)(vi)(A) (vi)Tax treatment of corrective distributions (A)Corrective distributions for plan years beginning on or after January 1, 2008.—Except as provided in this paragraph (b)(2)(vi), for plan years beginning on or after January 1, 2008, a corrective distribution of excess contributions (and allocable income) is includible in the employee's gross income for the employee's taxable year in which distributed. In addition, the corrective distribution is not subject to the early distribution tax of section 72(t). See paragraph (b)(5) of this section for additional rules relating to the employer excise tax on amounts distributed more than 2 1/2 months (6 months in the case of certain plans that include an eligible automatic contribution arrangement within the meaning of section 414(w)) after the end of the plan year. See also § 1.402(c)-2(c)(3) for restrictions on rolling over distributions that are excess contributions.

Correct on all counts.

If the plan provision says later of applicable age or retirement then those people are not at their RBD and have no RMD.

yes, good point

Understood, and that makes sense that it is EARNED as services are performed. But that could be problematic in each question/situation @justanotheradmin posed. A plan to which the partner contributes (or wants to contribute) terminates before the end of the partner's tax year, on what basis do such contributions, whether salary deferrals or employer contributions get determined? Do you wait until YE and prorate their income for the partial year, make the contribution(s) and then the final termination distributions?

Or trying to explain when the HCEs do get bonuses that are otherwise excluded from plan compensation that it's still discriminatory because they're already over the compensation limit. Fun times!

Yes, the 436 restriction is based on the annuity starting date. Looking at IRC 417(f)(2)(A), for a LS the ASD is not the date of the payment, it is the date when all events entitling the participant to the payment have occurred. (A)The term “annuity starting date” means— (i)the first day of the first period for which an amount is payable as an annuity, or (ii)in the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit. (B)For purposes of subparagraph (A), the first day of the first period for which a benefit is to be received by reason of disability shall be treated as the annuity starting date only if such benefit is not an auxiliary benefit. If all election forms were completed and properly executed with spousal consent if applicable, and all were received by the Plan Administrator prior to the date the AFTAP was received, AND the date at which the lump sum was valued (typically shown as the ASD on election forms) was also prior to receipt of that AFTAP, then I think the ASD precedes the AFTAP and the bifurcated LS portion could be paid. For example, forms for 9/1 ASD on bifurcated benefit went out in July, received back by the PA on 9/11, fully and properly executed, and then on 9/14 the PA receives the AFTAP, I think the distribution can and should go forward.

Retroactively amend to include those bonuses? Don't know what else can be done, unless this means not SH and you run ADP and ACP tests using gross pay rather than plan comp in your denominators. Wouldn't / shouldn't this have been known ahead of time and been addressed before it became a problem? Was it an amendment, always in the plan, these were never paid before. Obviously the horse is already out of the barn and we have to get him back in - but the barn still needs to get fixed.

First, make sure the plan's language supports (or doesn't prohibit) payment of these expenses, or reimbursing the employer for such. If supported (or not prohibited), I would have employer pay first, electronically as required, and then submit its receipt to the plan's trustee for reimbursement.

Safe harbor non-elective counts toward gateway and rate group accrual rates for 401a4 testing, safe harbor match does not. If your 6% SH is the match it doesn't help you and could hurt the situation. If this is a small professional services employer where you may need to limit DC ER to 6%, the SHM is often a roadblock and can delay CB implementation until the following year, switching SH to non-elective.

I would buy that, but remember your deferral limit is prorated for number of days under each type of plan and applied to each plan. I don't know the answer to your other question.

I was thinking same thing. If a SHM then adding the true-up changes the terms of the SHM and that may not fly - but I defer to others with more expertise in this area. One might think this doesn't hurt anyone and only helps, but if I'm smoothing out my deferrals to make sure I get the full match and then you change the terms such that I could have frontloaded my deferrals for the year (like from a bonus) and still got the full match of 4% of my pay, then I have certainly been disadvantaged. If this is done to accommodate HCEs who actually did frontload deferrals to get them invested sooner, then I also think you have a potential discrimination issue whether plan is SHM or not, IMHO.

Exactly - the plan can exclude hourly employees as a class but if they satisfy 21 & 1 (1000 hours) they cannot be statutorily excluded from coverage and nondiscrimination which creates a demographic compliance failure in this situation.

Unless also an ERISA or labor attorney I'd tell him to stay in his/her own lane.

SECURE 2.0 allows otherwise excludable employees to be excluded from top-heavy.