CuseFan

I don't deal with these plans, but it could mean simply that the contribution to the SIMPLE does not count as an IRA contribution and so a full IRA contribution can also be made. The plan/no plan issue (as well as income) affects deductibility, not amount.

Nope, and Google doesn't have a definitive answer either.

I don't think the filing per se precludes adopting a plan retroactively. For example, say the 2022 return is due 9/15/2023 but was filed on 7/1 - I think the taxpayer could decide to adopt a plan retroactively and amend their return before 9/15. I think the issue for you is whether the automatic weather related extension counts the same as a filed extension for this purpose - I would say probably but don't know that - and when the original return was actually filed. If filed before the un-extended due date, I think might render the automatic extension moot, that's my understanding how filed extensions are treated. If they filed after the un-extended due date under the automatic extension then you might have a case for adopting retroactive plan now and filing amended return. That is my non-legal, non-accountant opinion for what it's worth.

Exactly, someone would have been required to secure the appraiser's EIN.

Good communication/consulting with the client is the key. This really doesn't matter now unless the plan is terminating or one of the two owners is exiting and plan is sufficiently funded to pay out. Otherwise, I would continue as is until some event triggers needed action to realize desired outcome.

Drop to 99 - can file as small plan, drop to 79 - must file as small plan. Agree with other comments above. Also, plan audit scheduling and timing can often be a challenge, we see 5500 filing audit not completed issues in this space all the time, and I think moving in and out of audit years (doing/not doing) increases the risk of late audit completion in the years required.

One more thought - make sure amortization and payroll withholdings are done properly, as this person might now be on a weekly payroll whereas non-union/active participants (and typical loan) may be bi-weekly or semi-monthly.

Agreed. There is no statutory prohibition, and there appears to be no plan prohibition. Assuming the person is getting a paycheck from which loan payments can be withheld and assuming that is another loan condition/requirement, then it looks like all the boxes are checked for allowing the loan.

The 9/30/2022 PYE & FYE is due by tax return due date for that 9/30 FYE, including extensions. Going to a 12/31 FYE and having a short tax year 10/1-12/31/2023 doesn't change that I wouldn't think.

You are not prohibited from having a SEP and another qualified plan or plans in the same year, unlike a SIMPLE, unless the SEP is on the IRS model document FORM 5305-SEP, which prohibits having another plan. SEP contributions, if any, are treated like profit sharing so you have to be cognizant of combined plan deduction limits. If the SEP is on the 5305, I would restate onto a provider's preapproved volume submitter SEP document (which you might need to search to find one) before adopting any other plan regardless of any 2023 SEP contributions or lack thereof.

There is no requirement to restate but you need to make sure the plan language is up to date and any interim amendments after the last restatement have been timely adopted. If so, and they can adopt a CARES/SECURE amendment and a SECURE 2.0 amendment (which you may need to craft or tack language onto SECURE) and you should be OK. If a CBP with market return ICR, may want to double check document language is up to date/compliant as well.

Also, for DC plans, is there any utility or advantage in retaining earlier commencement requirement and disconnect from the statutory RBD? For DBPs that are still required to provide actuarial increases from 70.5 to commencement at statutory RBD, I can see where the plan sponsor could want to retain a pre-SECURE required commencement date (and we did ask).

It sounded like most of the population was hourly but also full time (2080 hours) and the desire was to exclude a fair number of part time hourly employees. The "scheduled to..." classification would be even more blatantly abusive as some part timers could reach or exceed that through overtime. When it comes to exclusions, IRS is adamant that any hours-based (or disguised) criteria exceeding 1000 hours is a no-no.

Agree with Peter. I think this is the PA's problem, not necessarily the RK's obligation.

But not statutorily exclude any who work >1000 hours for a computation period. So if you are wanting to cover hourly employees who are credited with 2080 hours (aka full-time) while excluding employees credited with fewer hours (aka part-time), you would have to find some other legitimate non hours related business classification for which to exclude, assuming you can pass coverage as you say without those >1000<2080 employees. If all such employees worked in the same location, department, etc. exclusive of hourly employees you want/need to cover, that might work, but I would tread lightly as the exclusion of part-time employees who work more than 1000 hours is a specific NO-NO in the eyes of the IRS.

https://www.irs.gov/taxtopics/tc431#:~:text=In general%2C if you have,the year the cancellation occurs. IRS says 1099-C

Check the plan document(s) - I think hours of service for eligibility, vesting and allocation entitlement must include all hours worked for the employer (or all employers in a control group). For example, someone who worked a number of years over 1000 hours goes from excluded union to non-union status, they do not have to complete a year of eligibility as a non-union employee before being eligible and all their service counts for vesting. So anyone who otherwise satisfied eligibility requirements should be eligible upon having any compensation or being credited with any hours in an eligible class (i.e., non-union). This does create a headache for you, but if I'm working 2000 union hours "in the shop" but work an extra 200 non-union hours in the office, I'm entitled to non-union plan benefits on the basis of compensation paid for those 200 hours and allocation entitlement and vesting crediting of 2200 hours. These situations could be excluded by plan design, but would count in coverage and nondiscrimination testing as they are not statutory exclusions. I think it's no different than someone switching once from union to non-union, you just have the headache of that happening in multiple pay periods. I don't see how you can treat differently and continue to exclude that non-union piece, unless you argue they are still covered under CBA while doing non-union work? Maybe if the CBA provides accommodation and/or the non-union work is minimal, but I see potential abuse if that were allowed - using union labor for non-union work and avoiding both union and non-union benefits on those hours. Agree that having an attorney involved makes sense, I would want someone with both labor and ERISA knowledge, especially if the employer desires to exclude the non-union activity of union covered employees.

Maybe accelerated plan leakage - loss of assets on the RK platform = lower asset-based fee revenue? Responses might be masked differently, but honestly, how many RKs out there really want to make it as easy as possible to get assets off their platforms? The one legit reason might be cyber-fraud concerns, where potentially any account could be targeted for a withdrawal, not just those of separated or 59 1/2 in-service eligible participants. But if that is an RK's concern, then maybe they aren't doing enough cybersecurity now, so that may be a red flag. These are just my anecdotal thoughts from the recesses of my brain, for what they're worth, not any official position or expression of observed occurrences.

Effen is absolutely correct. If plan did not have immediate lump sum already, you need to add immediate annuity along with it. As noted, you need to state how that is valued - do you use ER factors to ER age and then actuarially reduce thereafter or just actuarially reduce if not ER eligible? We usually do the latter but some clients do chose the former. Also, be careful how you amend for the lump sum as you won't want a general lump sum feature (if you don't already have one) that needs to be included in a deferred annuity contract - makes placing/pricing contracts more challenging.

Plan termination would not work either because of the successor plan rules. Remember, distributions are different than plan to plan/trustee to trustee transfers.

Service providers to a company are either employees (W2) or contractors (1099) - how these people can be both is mind boggling to me. Sounds like kind of a shell game to be able count as employees for some reason(s) but not for others (include for H&W benefits but minimize payroll taxes - although not for recipients). Regardless, it is more the employer/service provider relationship (like who has control) that determines whether someone is considered an employee or independent contractor. You can ask the employer, it's accountant and/or attorney to answer that question for you and then choose to accept and act accordingly, or disagree and walk away.

I think there are various options, but the successor plan rules are designed to prevent premature in-service distribution of salary deferrals on plan termination. I don't think those should prevent a new plan or spin-off - however she wants to get her own plan - provided it does not result in a prohibited distribution. Two overlapping plans is a recipe for compliance mistakes in my opinion, and further complicates the situation if her husband's plan covers employees of his business.

Someone put on his consulting hat - nice response!

Not saying this is or is not legit, but minor children often have bona fide work in their parent's businesses (and not just sneaker factories in southeast Asia). I have seen one-year-olds on payroll as they appear in marketing materials and TV ads. They could be self-employed, think maybe the E-Trade baby/toddler - sure hope the little dude has a Roth IRA or 401(k)! - so why not an employee? Sure, there are child labor laws, and a red-flag warning that something "funny" is going on would be a plan design with 1000-hour YOS eligibility that somehow the 10-year-old satisfied but other employees did not. But agree you should want and get some assurance, whether from CPA and/or attorney.

I wasn't so much concerned with NHCE access to the same specific investment (LP), but having a similar investment environment, whether trustee directed or participant directed with or without a brokerage window. One plan or three plans, that is a BRF that must be nondiscriminatory. Owners get to individually invest in nearly anything they want (forget about the questionable investment) and employees all get to choose among Nationwide funds? And that isn't discriminatory? Are you saying because these owner plans only have rollovers that BRF is not an issue? If they have qualified ERISA counsel telling them this is all OK, then so be it - just doesn't pass the smell test for me that's all.