CuseFan

Then the interim valuation is a non-event for them. Whether there is a legal obligation to provide the statement - I don't know but I think not. However, if there are any other pre-2022 separations who have not requested distributions, I think they need to get statements too.

There may or may not have been a termination of employment but whether the person enters on 7/1 or 8/5 doesn't matter as TH based on full year pay unless considered terminated (again?) before PYE. Employer should make the determination - was person terminated in payroll system, did person's other employment-related benefits stop, was the person offered COBRA? Reductions in hours, working on an as-needed/on-call/per diem basis is generally not a termination, in my opinion. Otherwise, I think you put yourself in position of tracking a string of hire and term dates for each temporary stint, two weeks here, then another week a month later, and so on and dealing with the break-in-service rules - which I have seen done and it wasn't pretty.

You can spin off a plan - that is, split a plan into two or more pieces, regardless of any changes or lack thereof to the sponsoring employer. The new plan, for the division being sold can then be merged into the buyer's plan. However, if those employees are terminated from B, you can distribute according to elections or possibly do a trustee to trustee transfer w/o the administrative hassle of a spin-off merger. Also think about vesting for these employees, which might need coordinated effort/agreement between buyer and seller if full vesting is desired or non-vested balances are to be transferred as well, and then there's the possible partial termination. I'm sure others in this forum who deal with 401(k)s more than I may have further insights.

Assume currently an NHCE. I think you can do, but why amend twice? Why not amend once to say, "notwithstanding, employee X will enter the plan effective MM/DD/CCYY" or something similar, or employees hired on A or between B and C?

Agreed - no aggregation.

What are you trying to accomplish? Did you want one document instead of X or are you/they looking to pool assets that are set aside into a master rabbi trust for lack of a better term, and then put on one platform to administer as one (multiple employer) plan? Assets must remain owned by the sponsoring employer (or rabbi trust) subject to the claims of creditors. If you combine, how do you title assets separately by employer, maybe through participating employee of an employer? But would a custodian be able to handle? I have never seen a master rabbi trust, which might be the solution, but that doesn't mean those can't exist. If participating employers are to gain cost savings and/or other efficiencies, then they can share the cost of getting legal opinion and/or document preparation for such.

Yeah, we had all sorts of discussion on this a week or two ago. So whoever asked "is this going to be a thing now" - I think you have your answer.

Maybe. I guess being able to assign some or all of my QP assets to my spouse (essentially treating as a "household" retirement account rather than an individual account) makes sense conceptually. Looking at the language of 414(p), can this strategy also be used to transfer assets to a child - i.e., here's your inheritance now, before I die, so you can avoid the recent stretch IRA and other SECURE prohibitions/restrictions? As 99% of plan participants are likely needing to take and use their assets to provide for their retirement, this just smells like a loophole for the other 1% to transfer wealth to future generations on a continuing tax deferred basis. Yes, we design plans that skew large contributions to owners (many maybe 1%ers), but those are required to satisfy all sorts of requirements including gateway minimums for rank and file - probably the one area where "trickle down" theory actually works. But if this type of QDRO becomes commonplace, ...... I'd be disappointed, to put it mildly.

Agree this is best (only?) way to accomplish owner's objective. Otherwise, potential THM as Bri notes. Why make eligible for DC and then try a (highly) legally questionable side agreement precluding him from making deferrals? Employee can make an irrevocable election not to participate prior to entry if plan language allows but why? Just amend plans to exclude him. This also makes it easier to later bring him into one or both plans if circumstances change.

Personally, I think this is poor if not incorrect design/completion of AA. Defining a YOS for eligibility has no relevance when a YOS is not a requirement. And you have a further disconnect using hours for eligibility YOS and BIS when eligibility is based on elapsed time. The application of this - someone having to complete a YOS to eligible upon rehire after only having to complete 3 months after initial hire - should be evidence enough that the combination of those provisions is improper and incompatible.

That is always the case. AE/AE is good policy for general retirement preparedness. Mandatory Roth-ing of catch-ups? Revenue raiser for sure. But the logistics on that - especially if you have HCEs who after the fact have regular pre-tax deferrals reclassified as catch-up deferrals, could be a headache for sure. Not to mention the person could then be under withheld on income taxes.

correct

seconded

Asset sale, so the company/plan sponsor continues to exist, just doesn't have any assets (except cash). Unless buy/sell says otherwise, seller still maintains (and has responsibility for) the Plan and it can remain open indefinitely, until the sponsor terminates it.

Was this a case, or one of a number of cases, where airline pilots got divorced for the sole purpose of creating (Q)DROs that assigned 100% of their pension benefits to the AP "ex" which could be paid in an immediate lump sum? I thought that was Delta, but maybe multiple airlines. The case(s) I recall were that the divorces themselves were a sham ("paper" only, with no changes to living arrangements, personal finances, etc.) and hence the supposition for the (Q)DRO being a lie disqualified the DRO as invalid. Agree that plan sponsors (with assistance from qualified service providers) should examine any "scheme" that appears to circumvent qualified plan rules.

See what the plan document says - may need to refer to the basic plan document if it's an adoption agreement - but I doubt you need to SH match voluntaries. And the usual question - why do they want voluntaries? If for owners/HCEs to do VAT/Roth conversion, that rarely works for small plans covering employees.

True, it is not stated in legislation or regulation, but IRS has taken a fairly hard line approach on that position dating back to the 2002 Paul Shultz memo https://www.irs.gov/pub/irs-tege/memo_060602.pdf I would not try to dodge that without a very strong facts and circumstances case that a lower accrual rate should be deemed meaningful.

Sure, why not? It is a defined time frame.

This happens all the time (<0.5% accrual) in CBPs, especially those with a relatively low interest crediting rate. The "worth" is in the large contributions attainable for the business owner(s).

Or a legal separation pursuant to a court order, correct? Which could be quicker?

Agreed

Are they excludable from coverage and NDT or not? That's not clear. Are they excluded from an allocation under the terms of the plan? it seems they are, and that is why an 11g amendment could be needed, in which case you would have to provide some vesting - whether 20% in total, or 100% on just this PS. BUT - Look at the partial termination rules - it is facts and circumstances. Simple 5500 reporting could certainly lead to a letter of inquiry from DOL or IRS as a PT will be presumed. And it might be a tough case to argue that "yes, believe it or not, all of our NHCEs terminated voluntarily before they were vested, totally unrelated to any actions by the employer." That is why all employees terminating in a year of PT must be fully vested, not just those involuntary terminations (handwriting on the wall ideology). Just my opinion, but I would consider steps now to head off possible future issue, unless other circumstances point to a hard line approach, like bad blood because all employees bolted to a better paying competitor.

I think the person goes from active non-vested to terminated non-vested (assuming termination and re-hire) to non-eligible/non-participant (unless/until 1000 hours). So I don't think 5th anniversary of participation happens because not participating. You may also have a 0% vested deemed cash out, check plan language. However, I think this is all assumes an actual termination of employment and rehire. If the BIS was solely due to a reduction in hours, check plan language carefully as that situation may be treated differently.

Thanks everyone for the valuable information. It's stuff like this that makes this such a great forum.

One final thought, looking at the text, it doesn't say that you can't do it (period), it says you can't do for purposes of reducing the average for your correction percentage.