CuseFan

If the legal documentation said they were merged 12/31, then for that brief time in 2023 you had two trusts but one merged plan, I think you're good.

John, that was my first thought - are they truly interns or is that classification being used to exclude part-time employees who may ultimately work 1000 hours? I guess someone might intern at the same company for their entire college career, or maybe the employer's industry is one where long term internships are normal (but isn't that more apprenticeship?) - and do these "interns" usually get hired into benefit-eligible positions or are they longer term term temporary labor? Probably not the TPA's concern here but certainly a situation I'd call a head-scratcher.

Probably OK but if the terminating plan has excess assets that are being allocated remember to include those in the benefits when coordinating 415 limits with new plan. Also, if you were and/or will be aggregating with a DCP to satisfy coverage and nondiscrimination, they need to have the same plan years so it might be cleaner to terminate 12/31 and start new plan 1/1. I assume this is likely an owner-centric plan and the owner(s) want to roll lump sums and self invest, settle the liabilities and risk thereon, otherwise simply freezing traditional formula and converting to CB would save a lot of time and expense.

As J noted - not only CAN they do this, they MUST do this.

Like most open ended questions the answer is it all depends. What is the objective - rewarding/sharing in profits, retention/competitive comp & benefits package? What is the industry, how much does the person make, what can the employer afford to provide? If the employer provides other substantial benefits on the health and welfare side, maybe a SEP or SIMPLE IRA or 401(k) plan with a match is appropriate. If the employee is invaluable, say hired to run someone's business for them, then maybe a 401(k) with a substantial profit sharing is appropriate, or even a defined benefit plan if $60k-$70k in annual retirement isn't enough, although if the owner is also an "employee" then this may or may not be possible depending on circumstances. Answers to those two questions at a minimum are necessary and you ask for "best options" - for the employer or employee or blending the needs for each?

Forgetting about the short plan year and termination for the moment, what if the PYE and valuation date was 12/1 instead of 12/31. Would your MRC due date still be 9/15 or 8/15 (8/16)? I think it's the August date. So in your situation I think it's due 7/7ish. Also, why risk a late contribution for 8 days over an interpretation question/gray area?

Yes. I believe a submitter who is not the plan sponsor must be authorized to practice before IRS (but do not know this for certain). If not, they could prepare the submission for the plan sponsor to file. Good questions, never thought about it. My thoughts are about this in general, not your specific inquiries. If the practitioner was at fault and is proposing an aggressive remedy that is not a standard correction and which would limit the correction cost for which it is presumably responsible then I'd say that is a conflict and must be disclosed to the client. If the at fault practitioner is doing the correction work w/o fees to avoid incurring another professional's costs, maybe that could be a conflict. However, any instance where the correction is routine and mandated, whether completed by an at fault practitioner or not, I don't see where there would be any conflict. My general thought, if a practitioner made a mistake they need to make it right. These are my personal opinions. I have no answers or opinions on your other specific questions.

Yes, I don't see why not if BRF satisfied.

Maybe the IRS's AI is too much A and not enough I.

Thanks Bill, I never knew that - I learned something new today so you can teach an old dog new tricks! Of course no guarantees I'll remember that months from now when it happens again.

Sorry, without the need to aggregate.

Provided each plan can satisfy coverage without the need to aggregate then you can test separately for nondiscrimination.

that is my understanding

I bet you all can't wait until the government shutdown!

I don't think so, but if the reason for doing so is to keep those assets invested, note that gains and losses in that escrow account will increase/decrease the portion that gets allocated each year - so volatility and lack of liquidity could be issues.

It is a taxable fringe benefit and included in the 3401(a) compensation definition regardless of the employer's discretionary decision on whether to withhold unless the plan definition also has the permitted fringe benefit exclusions. The 401k Answer Book has a nice table that shows the various 414s safe harbor compensation definitions, inclusions, exclusions and optional exclusions. Other publications likely have similar,

SoBs are a pain to administer, which is likely the reason the insurance company wants it out, to make its life easier. Employer shouldn't care anymore, as noted, and there is no prohibition on removing - it's one of those easier to take out than to put it provisions.

Yes, that is the best approach for sure, the potential challenge getting two medical professionals used to doing their own thing to agree on a unified plan/approach. Good luck!

Statutorily it is permitted but as CBZ notes you need to see what the plan document says.

I think IRS/DOL position would be yes, because the benefit was due and not paid and the plan had the use of the assets. If the plan had actual contact with the beneficiary, had a valid address, SS#, etc. (which should have been collected and verified up front) then why wasn't the survivor benefit just started? IRS/DOL might raise that question as well.

The other problem I see is how this distribution was transacted. Was the employee able to directly request and receive payment after being reported as terminated, without the employer having to authorize payment? Something like this, and maybe the issue with the titling and ownership of the account creates constructive receipt blows up the tax deferral? Also, if indeed a rabbi trust, there should be a trustee who should ensure proper reporting. If the trustee doesn't facilitate W2 reporting then the best practice, in my opinion, is for the trustee to transfer funds to the employer's payroll function for proper reporting. Silly rabbi trusts are not for kids!

Yes, appears this will be ASG. If separate plans, there will be aggregation needed to satisfy nondiscrimination and either the new company #3 will need a plan for this employee or they will need to be covered under the plan of #1 or #2. Maybe have #1 and #2 participate prospectively in plan #3, essentially freezing their respective plans, unless they are similar enough to merge into a single plan #3. Any separate benefit structures, rights or features will need to satisfy coverage/nondiscrimination, which makes keeping an active owner only plan within the ASG difficult.

For LTPT it looks to me like entry date is always 1/1.

Certainly ERISA counsel input would be warranted. As others noted, any prior service component would create discrimination issues, in my opinion, and I think a 2023 short plan year may also be pushing the envelope. A totally prospective plan beginning 2024 would appear safer to me. This wasn't a "I fired everyone so I could start a plan" situation, there was a business transaction and such events regularly give rise to changes in retirement programs.

That is the key difference - in these instances you have unrelated employers, so each is viewed separately. With a CG, it's deemed a single employer.