CuseFan

If just an "ordinary" match you can amend to stop for any match that has not yet been earned under the terms of the plan. Therefore, if changing for 2026, just need to amend prior to 1/1. There is no advance notice as far as I know.

Agree with ESOP Guy. Also becomes problematic if distribution requested and ultimately paid after the employee is rehired/recalled.

The statutory exclusion from coverage testing is for a participant who (1) terminated and worked 500 or fewer hours AND (2) did not benefit for such year by reason of such. If benefited - must include regardless. If no allocation conditions - must include regardless. 1.410(b)(6)(f) - these are "and" conditions meaning all must apply to exclude an employee from coverage testing. (f) Certain terminating employees—(1) In general. An employee may be treated as an excludable employee for a plan year with respect to a particular plan if— (i) The employee does not benefit under the plan for the plan year, (ii) The employee is eligible to participate in the plan, (iii) The plan has a minimum period of service requirement or a requirement that an employee be employed on the last day of the plan year (last-day requirement) in order for an employee to accrue a benefit or receive an allocation for the plan year, (iv) The employee fails to accrue a benefit or receive an allocation under the plan solely because of the failure to satisfy the minimum period of service or last-day requirement, (v) The employee terminates employment during the plan year with no more than 500 hours of service, and the employee is not an employee as of the last day of the plan year (for purposes of this paragraph (f)(1)(v), a plan that uses the elapsed time method of determining years of service may use either 91 consecutive calendar days or 3 consecutive calendar months instead of 500 hours of service, provided it uses the same convention for all employees during a plan year), and (vi) If this paragraph (f) is applied with respect to any employee with respect to a plan for a plan year, it is applied with respect to all employees with respect to the plan for the plan year.

Yes, just restate as PSP, but if no 401(k) deferrals why ask about auto enrollment?

Thanks for the clarification and I agree those listed items are red flags for audits.

Unless the plan document does not allow or such request for reimbursement is not timely (asking in 2025 to be repaid for expense paid in 2024), I see no problem. Could be the RK just doesn't want the assets leaving the plan.

I don't have any input because I haven't done 5500s in years, but found this interesting given something I read earlier in the week. https://www.napa-net.org/news/2025/10/talking-points-things-that-make-me-mad-as-hell--part-2/?utm_source=MagnetMail&utm_medium=email&utm_term=kprell%40bpas.com&utm_content=COM_NAPA_eNews_10.21.2025_Daily_Tues&utm_campaign=Hopes%2C Fears for Middle Class Retirement Prospects Scroll down to this header. One of Nevin's pet peeves is people using 5500 data to manufacture compliance scares. Data “analysis” that takes real stuff, combines it with fake stuff, makes up a new scary-sounding name for it, and then claiming that vast majorities of all the retirement plans in existence are in “violation.” Certainly there are compliance issues and some clear red flags that can pop up on a 5500 filing, but someone could take many questions and say a certain answer might mean there is some obscure issue, not to mention those questions that require a yes or no answer when NA should be the logical answer and for which any answer could be deemed suspect, i.e., "have you stopped beating your wife?" Statistics/data analysis can be skewed to serve the presenters agenda. Peter, I'm not questioning your intent, just saying our forum should exercise caution and not create a lot of smoke where there is no fire.

In terms of a protected benefit, consider that such cannot be cut back or eliminated with respect to benefits already accrued. That context really does not translate to automatic enrollment (which is a statutory design requirement) except that someone who is automatically enrolled must remain so unless they make an election. If the small plan of the buyer was merged into the larger plan of the acquired with that plan being the survivor, then that plan goes away for prospective benefits. I do not see anything as needing to be protected except possibly one's default enrollment. I would also consider a campaign to get affirmative elections (including zeros) from all employees previously in the buyer's plan so there are no residual default enrollments to worry about protecting if required. Another consideration, institute auto enrollment for the merged plan as an enhancement.

Google AI overview provides this: Calculation for a short limitation year The formula for the prorated dollar limit is: Annual dollar limit times fraction of months in short limitation year/12. Number of months: Any fractional part of a month is counted as a full month for this calculation. But the IRS website provides this specific example, so not sure where AI got its purported intelligence on this. Maybe the AI machines interpreted "... and any fractional months" as meaning they count as a whole month, and maybe (hopefully) these machines aren't quite ready to take over the world. Example 2 - Termination Plan B is a profit-sharing plan with a calendar limitation year. The plan is terminated effective September 15, 2018. The plan termination is treated as if an amendment has been adopted to change the limitation year to a year beginning September 16, 2018. A short limitation year is created from January 1 to September 15, 2018 (8.5 months). Because the plan terminated in 2018, the prorated short year limitation is calculated based on the 2018 limit of $55,000 under IRC Section 415(c). The prorated short year IRC Section 415(c) limit is: $55,000 x (8.5/12) = $38,958.

Unfortunately, with all the deportations (whether legitimate or not) this is likely to be not such a rare occurrence in our world.

Also, consider terminating the MP and allowing (not forcing) R/O into the new plan. That way you deal with the QJSA notices and elections now at one time rather than having to deal with them on pieces of accounts at varying times in the future. Also, the larger those MP balances get in the future, the more apt someone is to see an annuity as attractive and elect - at least IMHO. Given a very easy direct R/O option to new plan, I would expect a majority to do so.

The decision as to whether someone gets a PS contribution should be made by the EMPLOYER not the specific HCE unless it is an owner-only plan. If the EMPLOYER was smart, they would give a particular HCE a nominal amount so such HCE's compensation may be used in the deduction determination.

100% agree - the deduction limits apply to the eligible compensation of employees who benefit under the plan.

Agreed, but if the first plan was in place less than 10 years then IRS could challenge its "permanency" - so they may want to get their ducks in a row regarding business reason for the termination.

Buyer is still sponsor. Buyer's plan issues, if any, do not automatically and instantaneously go away either, so perhaps the buyer should do the proper thing and address/correct compliance issues and then merge the plans. If issues were due to buyer's deficiencies, controls and procedures should be put in place so same doesn't happen with merged plan. If issues were due to buyer's plan provider/recordkeeper, then maybe target's plan provider should service the merged plan or at least until an RFP can be run for new provider.

Pooled funds I assume? Surrender in and of itself is not a violation, but could a disgruntled participant sue the fiduciary and claim a breach or even multiple breaches - the decision to get in and then the decision to get out? Possible, yes - probable? I think this has come up here before where it was asked whether employer or service provider (new funds or advisor) could make up the surrender charges to the plan to make participants whole, which may have its own ERISA concerns. Employer probably OK, service provider not so sure. I expect others on this forum have dealt with this in the past. Owner likely has largest balance so employer making whole might be palatable.

Buyer sponsors plan, terminates plan, then becomes sponsor of acquired plan. Yes, I think you have successor plan situation. Can they terminate, sure, but that won't be a distributable event. Why not merge plans - what is the aversion? I understand not wanting potential compliance liability for acquiring someone else's prior mistakes, but isn't that part of due diligence and indemnifications? In your situation, if the buyer is willing to sponsor the plan of its acquisition, why would it not want to merge? Unless buyer knows its plan has issues and wants it to go away?

For non-PBGC DBPs, if the plan is not already frozen then you need to provide 15-day advance notice (ERISA 204(h) notice) of an amendment that results in a reduction in the rate of future accruals.

Regarding account balances, I personally believe in accrual based accounting but I know lots of others use cash-based and I think the instructions say you can use either but likely need to be consistent with your method from year to year. I'm long removed from 5500 world so hopefully other and more knowledgeable 5500 practitioners should be able to confirm or correct my response.

Lou answered that on a prior response. Only those NHCEs that benefit must receive gateway, so you can have zeroes in there but you must benefit enough NHCEs to pass testing on ratio percentage.

It would not be subject to gateway if you are not cross-testing and are testing on contributions. You still need to satisfy coverage. If the document is set up with those 3 groups then that could be a reasonable classification and you can continue with average benefits. Then if you need to move someone from group 3 to group 2 to pass you could do via an 11g amendment. If the document just says individual groups then I think it's covering 7 and passing the ratio percentage test or nothing.

Agreed, any NHCE who benefits under 401(a) portion of the plan must get gateway which, for an HCE rate of 5.6%, is 1.866667% or 1.87%, not 1.86%. Also, to pass coverage using average benefits the first requirement is a reasonable classification. What was the reasonable classification used to determine the 4 (or 5) NHCEs out of 10 to give profit sharing? Picking the youngest and/or lowest paid doesn't fly the reasonable plane. You don't need reasonable classification once you get to nondiscrimination testing, but you can't fly there until your coverage flight gets off the ground.

Yes, but any investment earnings must be distributed as well and would need to go to a traditional IRA to further defer taxation.

This is the language from FTW SPD and still shows $110. Enforcing Your Rights If your claim for a pension benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the Plan's decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

The tax treatment of the distribution cannot control/deny someone of future participation. However, it can affect tax treatment of future distributions. If the person takes a permissible LS (total distribution) under the terms of the plan and applies NUA, then any future distribution attributable to future participation would be precluded from using such. I would not think such would retroactively negate the prior NUA treatment but would seek qualified tax counsel for that. I would also be EXTREMELY careful on distribution timing, what constitutes a lump sum and future participation. I think you would need to avoid any contribution after the distribution but in the same tax year as such that creates a balance at year end. Get qualified tax counsel and/or financial planning assistance AND understand your plan's rules and it's administrative environment as any misstep could prove expensive.