CuseFan

What do you mean "wants to cover"? Make them employees? If they are already employees he either has to cover them under the LTPT rules if they qualify or he can provide coverage for them on a different basis in which case they are otherwise excludable employees. Either way, I believe they are excluded from average benefits test. However, I think you need to careful how they get added because as otherwise excludable they are HCEs and you would have separate coverage and nondiscrimination testing. From a prior ASPPA presentation, link to which is provided below: An LTPTE is an employee who: completes two consecutive years with 500 hours of service (HOS), and for plan years beginning before 2025, three consecutive years of 500 HOS; attains age 21 by the second (or third, if applicable) year of 500 HOS; is not a union employee/nonresident alien (union HOS count); and does not otherwise satisfy normal requirements. An employee who satisfies normal requirements before (or at same time) as LTPT conditions is never an LTPTE. An employee who satisfies normal requirements after becoming LTPTE ceases to be LTPTE and becomes a former LTPTE (FLTPTE). If the employee becomes eligible for any other reason, he or she is not an LTPTE. If the plan has eligibility requirements that are more lenient than those of the LTPT rules (e.g., in which HOS are not an issue or where the otherwise LTPT will enter faster than required under the law), the employees are never LTPTs. The effect of not being an LTPTE is that the LTPT vesting rules will not apply. https://www.asppa-net.org/news/2024/5/close-look-ltpt-rules-asppa-spring-national/

Personal opinion is you use only the non-union prior year ADP and ACP. Those are numbers for the disaggregated component plans and you still have that for non-union, just a larger population for 2025. Look at it this way, what if union covered employees were excluded from the plan before, now enter 1/1/2025 when union is dissolved. Is there any question you'd use the 2024 ADP and ACP from those (non-union only) participants? You look at that union disaggregation as if it was a separate plan.

There has been some discussion on that before in this forum. The consensus seemed to be that this is definitely a gray area and that the amendment and document language matters - meaning either interpretation is possible. You could likely amend to unfreeze if needed to accomplish your objective, if not for the entire benefit formula at least for average compensation.

125 contributions are pre-tax and not subject to FICA/Medicare as you note. Typically, a W2 compensation definition will specifically say, somewhere and somehow, that 125 and all sorts of other pre-tax deferrals are included (or excluded). Are you looking at an IDP? If pre-approved, look at the BPD, and you may need to bounce around for definitions within definitions. There are also some plans that intentionally use W2 taxable wages, although not common.

If a Key EE has a CB benefit and a DC account, yes. The Q&A below are from a Wolters Kluwer (ftwilliam) webinar on top heavy in 2013. Also, it looks like they are of the opinion that a non-key in both the frozen DB and the DC needs 5% for TH. Looking at the regulations, they say "covered" by a defined benefit plan, not "benefiting" in a plan, so it does look like it's 5% for non-keys who are in both plans. If some were excluded from the CB (like maybe non-owner/non-key HCEs) they would only be entitled to 3%. Q. How are frozen plans treated for purposes of the top-heavy rules? A. For purposes of section 416, a frozen plan is one in which benefit accruals have ceased but all assets have not been distributed to participants or their beneficiaries. Such plans are treated, for purposes of the top-heavy rules, as any non-frozen plan. That is, such plans must provide minimum contributions or benefit accruals, limit the amount of compensation which can be taken into account in providing benefits, and provide top-heavy vesting. Note that a frozen defined contribution plan may not be required to provide additional contributions because of the rule in section 416(c)(2)(B). Q. An employer sponsors both a DB and DC Plan and the TH minimum is provided in the DC Plan. If the DB Plan accruals are frozen, what is the TH minimum % required in the DC Plan? A. Frozen plans continue to be subject to the top-heavy rules (typically, top heavy minimum of 5% of compensation is provided by the defined contribution plan - see slide 35).

I don't think that's a requirement that goes away once it applies, and I expect you had PS here too, so TH did apply. I don't see how you could have a TH combo plan and then freeze CB/stop PS and then avoid TH going forward, that does not make sense to me. Since no one is benefitting in the CB then I think your TH minimum does revert to 3% and which can be satisfied by the SHM. However, if TH, those not getting at least 3% in SHM need a TH allocation, IMHO.

Generally, no, that would not be allowable as it (deposit timing) would be a discriminatory BRF. Maybe 6% owner PS and 0% NHCE PS deposited throughout the year would be OK but as you say, there's no guarantee it would pass testing. If more NHCE PS is then required, would that create retroactive BRF discrimination? Maybe, probably would not know unless and until audited, if ever. Certainly going more than 6% is not a good idea. How important is getting that extra 6% in sooner compared to the possible risk? You can communicate the issues and, where there may be compliance ambiguity, the owner can decide how to proceed and accept any risk (but get it in writing). Another concern may be if PS provision has any conditions for entitlement in the document.

Peter and Connie have the proper accounting of the facts.

Bigger picture questions: Why in this day and age would a plan have a 10% deferral limit? Was this an HCE? If not, could plan be amended retroactively to allow for that extra 2% deferral?

If the custodian of the current brokerage account also handles IRAs, and as @Peter Gulia said if the document allows (if it doesn't you can amend), then you may be able to do in-kind distribution by simple transfer of the account from plan to IRA. Even so, a market value of the distribution and rollover will need to be determined and reported on a 1099R.

Yes, if someone gets employer contributions in a year that are equal to their 415(c) limit of the lesser of 100% of pay or $72,000, then any and all deferrals would be deemed catch-up contributions. In your example, the person could actually have had compensation of $72,000, an employer contribution of $72,000, and $8,000 in catch-up contributions.

Hoping that Mike Johnson doesn't see his shadow and give us 6 weeks of government shutdown!

Those rules are very particular, and "I thought I could deduct but my accountant told me no" (or some other facsimile) I don't think qualifies as a mistake of fact. CB contributions - minimum required and maximum deductible - should have been calculated by a knowledgeable actuary. Following bad advice, ignoring good advice, or not getting advice is not a mistake of fact. Mistake of fact is like having the actuarial calculations based on materially incorrect data such that the contribution range is materially incorrect. Maybe that is the case here, but you don't provide details. If so, and a refund was requested from the trustee within a year of the contribution then there could be actionable cause, in which case I'd recommend lawyering up and following through on the litigation threat as it seems the seller has been ghosted. Note the amount available for return is limited to the excess over what could have been contributed had the mistake leading to the error not occurred. Disallowance of deduction is specific to IRS action and you don't mention that as a relevant event here.

Absolutely perfect!

They are likely a control group so one plan with each LLC adopting should be fine. Even if not a CG they could do that as a multiple employer plan. However, if the desire is to use a vendor's solo-k product, need to make sure it accommodates whatever structure/LLC relationship you have.

Ordinarily, the 5-year rule is the 12/31 of the year containing the 5th anniversary of the participant's death. If death was x/x/2020 then 5th anniversary is x/x/2025 and entire benefit should have been distributed by 12/31/2025. However, and this comes from the IRS website where you can essentially treat 2020 as if it never existed. The excerpt below says inherited IRAs but earlier language also refers to retirement plans and I can't see them saying 2020 disappears only for IRAs. https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras Distributions from inherited IRAs are not required in 2020. If you were required to take a distribution within 5 years following the year of the account holder’s death, 2020 does not count toward the 5 years. So, you would essentially have six years, instead of five, to distribute the inherited IRA. Also, if the account holder died in 2019, you would normally be required to begin taking distributions by the end of 2020 to be able to take distributions over your lifetime. Since 2020 does not count, you have until the end of 2021 to begin taking distributions over your lifetime.

You've got it. Forget the CG and just think 2 HCEs and 2 NHCEs where you cover 1 of each. Yes, if the covered NHCE leaves then you would need to add the other ER and its NHCE.

That is my understanding.

I do not think you can formally state two groups, those employed 2/15/PY+1 and those not, because a person's grouping is not determinable by PYE. Draw a parallel to changing an HCE top-paid group election after PYE, where the result changes a person's status under the plan, which is impermissible. Using individual allocation groups in the document but in practice determining two allocation groups by your desired methodology is the best way to accomplish what they want IMHO and I think that of most others. If said 2/15 fell on a weekend or holiday and/or for whatever reason the plan sponsor wanted to accelerate or delay that date, individual groups compared to hardcoding, even if such was permissible, makes administration accommodating. Just because the document allows for flexibility doesn't mean it needs to be used. Finally, you mention a parent and a lot of subsidiaries all with their own plans with separate RKs and independent testing. Is no one concerned about testing in consideration of the control group?

Reasoning? If they want so they can invest in whatever they want versus being limited to the same fund lineup, then you have a BRF discrimination issue.

Also agree with @justanotheradmin and @Bill Presson. Assuming no coverage and nondiscrimination concerns, I would use the everyone in their own group document provision and then utilize that 2/15 methodology for allocation determinations. What you lose in that is the ability to statutorily exclude from testing those who terminate during the plan year with 500 or fewer hours. I do not think you could write the 2/15 of the following year into the document as your allocation entitlement would not be determinable by the plan year end. I think someone in this forum asked this same question (maybe with different date) within the last year or two, if memory serves.

Union covered employees (if retirement subject to GFB) and non-union employees are subject to mandatory disaggregation. Furthermore, if you have a plan covering employees in different unions, I believe that each union represented constitutes its own disaggregated "plan" for coverage and nondiscrimination. As @ESOP Guy states, be sure to check the plan documents for proper inclusion or exclusion of union covered employees.

Agree with @David D - including the 1099 situation not appearing correct unless something else going on. Are the owners each single member LLCs that own the company and company then pays the LLCs via 1099s. Even so, the LLCs would be either incorporated (C or S) or not (sole prop) and pay their owners via W2 or K1, respectively. Then (I think) the LLCs are disregarded entities and their earned income should count for 401k plan. If that's not the case then that whole 1099 situation is wrong IMHO - but I'm not an accountant.

The 80/120 rule only applies with respect to which 5500 form a plan may file, nothing else that I know of.

Paul I is spot on with everything. Remote or hybrid arrangement with zero industry experience, not going to happen. My guess is that an employer would want at least 2-3 years of direct on-site experience and supervision of a new hire w/o prior experience before entertaining a remote or hybrid arrangement. My experience is that you learn and retain more with the direct supervision, knowledge sharing, and professional discussions you get from being in an office, not to mention relationship building. From homicide detective to 401(k) administration? I'm sure she has her reasons and best of luck to her. Paul I provided great suggestions.