CuseFan

Great question and I agree with your opinion, unless IRS tells us otherwise. Thankfully the form has those counts in addition to the account balance counts.

I think under the SECURE 2.0 benefit increase amendment, if that even applies in this instance, that you'd have to amend by tax return due date, including extensions - or, if you need to take that out to be able to allocate gateway and pass testing then you could do an 11(g) amendment by 10/15. Either way, I don't think you can go out to 12/31/2024. If the plan was properly designed and drafted, you should have overriding gateway allocation requirements (if that's your issue, and I think most pre-approved documents now have that) or those allocation conditions should have been removed as incompatible.

Agreed - unresponsive participants under the plan's cash out threshold must be paid out through the PBGC's missing participant program.

Not necessarily. Did plan have provision to allow in-service at 59.5? Even so, the plan still was terminated and that is the event triggering the successor plan rules. Starting a new plan would not be w/o risk, so I would proceed forewarned.

Spouse must be beneficiary of the pre-retirement death benefit unless the participant names another beneficiary and the spouse consents in writing to such and such consent must be notarized or witnessed by a Plan Representative. Spouse, if participant has died, can and should make a claim to the Plan Administrator and go through that formal process which may or may not lead to discovery of fraud, and then proceed from there including any claims appeal. If that fails then the spouse can bring suit. If participant has not died and spouse has discovered fraud through some other avenue, maybe contacting the Plan Administrator can address the situation. We have some good legal minds on this forum who have better or more comprehensive advice.

If those 401(k) successor plan rules did not apply to owner-only plans then they could circumvent the pre-59.5 in-service distribution prohibition rules at will. Unless there was some specific investment he could in IRA rather than 401(k), what was purpose for terminating in the first place? If no other distributable event per RBG, I think he must wait 12 months from the distribution.

I knew Brian would come to the rescue!

If you've contributed $X YTD then I think the cash refund you'll get is $X less whatever claims have been paid to you. If your paid claims were more than $X, I don't think the excess can be clawed back (like if you terminated and your YTD claims exceeded your YTD contributions). But that is just the cash flow issue. Whatever you had contributed YTD will all be taxable to you regardless of cash refund amount and also subject to FICA and Medicare taxes. There is a very smart health and welfare plan practitioner in this forum who hopefully will see this and either confirm my understanding or set me straight and give you the correct answers.

Control group issue is simple - the stock ownership attribution rules consider both you and your wife to each own 100% of the laundry, and 100% of your original S-corp, so yes, these businesses are a control group. I'm not an expert on the PEO situation, but here is my understanding: those leased employees are considered your laundry business employees unless they have a 10% money purchase pension from the PEO (I have never seen one). However, any employer contributions they receive from the PEO in a PEO-sponsored plan can be considered provided by you because you ultimately pay for those indirectly. I thought this model changed over the years, though, and PEO's could only sponsor a multiple employer plan and the individual employers had their own participating employer "plan" that covered their leased employees. I'm sure there are more knowledgeable practitioners on this forum who deal with these arrangements and can confirm or correct my understanding or lack thereof. Finally, provided some conditions are met, there are transition rules that allow you to treat each entity as before, not in a control group, for the remainder of the transaction year (2023) and the entire following year (2024) - so you have time to sort this out and hopefully have a competent TPA to assist you.

So sad - and a huge loss to the profession. Rest in peace brother.

Funny. I'll worry about that when the sales people start designing and modeling plans!

Average compensation is used to determine an individual's 100% of comp 415 limit. If you have a high enough limit when the plan starts, from historical earnings, then having future net after-pension earnings go to zero isn't usually an issue. You just need to manage the timing of funding so that current non-deductible contributions can be deducted in the subsequent year. Depending on SE earnings in future years, you might be playing that time lag game consistently. You've got apples and oranges you're juggling. You need to make sure that (1) minimum required contributions are funded by 9/15 of the following year (or off-calendar equivalent) and (2) the deduction does not exceed the SECA adjusted net SE income and nothing that is not deductible is contributed during the year.

Absolutely. Given the 9/15 drop dead date, we work backwards from there given the situation (solo plan, few employees, larger plan) for the time needed to complete the valuation, establish the trust/custodial account, execute plan documents, draft and review plan documents and come up with our approximate due date for the client to engage us for a prior year effective date. Don't want a sales rep selling a 2023 plan on 9/13/2024!

Be very careful because a pro rata allocation based on account balances might NOT be nondiscriminatory if those balances ON THEIR OWN are not nondiscriminatory. If balances accumulated under an aggregated cross-tested CB/DC arrangement that leveraged NHCE contributions to pass then you may need to allocate excess differently (such as flat dollar or percentage of pay) or include in a final year combined testing and pass in that fashion, which requires aligned the plan years so your CB may need to run to 12/31.

Also, you don't fully describe the error, in particular the errant contribution. If the error was not made, would that have resulted in more of a contribution allocated to other participants (we contributed $X to be allocated to those eligible based on pay) or simply would that contribution amount not been made at all (we wanted to contribute X% of pay for those eligible)? If the former, then the defect likely warrants correction where someone (employer, TPA, shared) makes the plan whole by funding, and then such is allocated. If the latter, participants have not been harmed, this is simply an inadvertent error the plan sponsor can choose not to recover.

I think they claimed a deduction for 2022, which needs to be amended on that tax return, which certainly evidences intent. But yeah, that would certainly be a Hail Mary pass and you wouldn't know if it was completed until the game, maybe even the season, was over.

Also, be aware that a pre-approved document being used may or may not accommodate the exclusion without grandfathering, and if what the plan sponsor wants is not supported and requires modified language, that could negate reliance and require a determination letter submission.

Yes, only benefiting NHCEs need to get gateway. Have these non-key HCEs accumulated balances such that it's not top-heavy (yet)?

Same situation you posed Tuesday but now asking if EPCRS might be a fix? Maybe, but that's now without its issues. This is likely not the typical self-correction fix and move on scenario, which means a VCP filing to request the proposed solution. Given that there is clear documentation (deduction) that they intended to contribute, IRS may be sympathetic to allowing a 2022 allocation, especially since the main reason for doing so is providing profit sharing to people who have left the company (very noble - don't see that much). However, if the allocation formula is cross-tested and would allow HCE(s) to max 2022 by this "fix" I think that is a MUCH tougher sell. Regardless, VCP filing response times work against you, especially for a non-routine/special issue, so you may not know until late this year (best case) or sometime next year for approval. I don't think IRS would waive any deduction timing or limits, so you might be doing a 2022 PS allocation in 2025. I don't know the ramifications for doing what you want now and then filing to get IRS to bless after the fact. Depending on the formula, you may be able to get all the actives in 2023 what they would have received for 2022 and 2023, just not the 2022 terminations. If the problem is owner(s)/HCE(s) not maxing out 2022, I think they just need to "grin and bear it" and they'll never forget another profit sharing contribution.

If top-heavy, the non-key HCEs need to get a 3% top-heavy minimum.

If I'm not mistaken I believe court cases have sided with participants, if they have proof they were in the plan, where the plan sponsor has not retained records to document the entitlement to and payment of benefits. I also think what DOL may view as a reasonable record retention and destruction policy would be much more stringent than what a plan sponsor or practitioner may consider. This is my non-legal practitioner memory from reading stuff over the years, and maybe my contextual memory is incorrect.

Basically, I think you are correct - EZ and then SF. rbr, I think it's the nature of participants (not employees) for EZ, having non-participating employees doesn't take you out of that. There is even a plan characteristic code for the situation where the "one-participant" plan relies on aggregation with another plan of the employer to satisfy coverage.

I believe the answers are (1) after-tax (unless it came from a an IRA or another plan, which should have been communicated at the time) and not a rollover; and (2) if after-tax, that $4,000 should have been treated as basis and the taxable portion limited to $16,000.

I think it has to be a 2023 contribution as it will also count as a 2023 annual addition.

If each location A and B satisfies coverage with respect to the total employer then if the allocation at each satisfies 401(l) you do not need to test further.