CuseFan

That is the case - and age 72 now. You cannot force the A/P to take a distribution.

You can only change your eligibility prospectively. This would be very messy mid-year because people would have already become eligible for match - whether they deferred or not is irrelevant - and would need to be included in ACP testing as your TPA noted. However, your plan can carve out the early entrants who are otherwise excludable and test them separately, for ADP or ACP or both. That is fairly standard for plans with less than the statutory eligibility limits (21 & 1, dual entry) and can help testing unless you happen to have an owner's spouse or child becoming eligible. Your TPA should be explaining all this and more.

seconded

So company email is sent to all employees and it is up to the employee to figure out if they are eligible to enter as of the next entry date and then take action? Is that considered notification? I could make the argument if I had to but would not be overly comfortable/confident that it would fly. You mention SH - does the plan provide the notice (or did they stop)? The SH notice - if sent and if this person rec'd - is likely a better argument for notification of deferral eligibility. Agree with BG on best practice.

I think you could argue that allocation of excess assets is not part of accrued benefit calculation/determination and so not subject to that plan imposed maximum benefit. If you still have ability to amend the plan, you could accommodate that way.

This is not an election, not eligible for rollover, and is required to be paid by the plan for continued qualification, so no forms should be needed.

As Forrest Gump and his mother say, "stupid is as stupid does", expensive lesson learned (hopefully) by the plan sponsor.

Also, plan document should specifically state how to determine FAE if a person has fewer than the number of years for the averaging period - and it's always use the compensation averaged over the service they actually have.

Exactly - we do these all the time: deferrals, catch-up if eligible, 6% PS (be careful to use correct "compensation") and max CB. And if they have the income to support it, do some voluntary after-tax up to the DC 415 limit and then in-plan conversion to Roth.

I think you shut off includible compensation and deferrals as of the plan termination date, provided there is a resolution (and amendment, if necessary) for the plan termination on that date and you're not just assuming the plan terminates because the sponsor is being acquired effective that date. There are various scenarios that could apply depending on the specific M&A transaction. If the sponsor is simply ceasing to exist and the plan needs to shut down and the employees are all terminated from that sponsor (and no formal plan termination resolution/amendment as of X date) then I think you need to look at the plan's post-severance compensation provision for your answer.

Agree with suggestion and yes, expired, but if they did not not allow after a certain date where legally they could, the plan amendment (or a resolution if generic pre-approved plan amendment) should reflect that or else they have an operational defect on the flip side. Especially if employee A tells employee B that she got a CRD so why didn't B and he says he asked an denied....bad, but then not having the documentation to support, worse.

Are these real estate agents? If so, they are self-employed and can have their own plans on their own income from self-employment.

I thought this came up earlier this year, or maybe last fall, it's all a COVID blend right now, but I referenced an ASPPA recorded webcast that Derrin Watson did on earned income and he covered this. If I remember, he stated there was no clear guidance either way but thought you it would be reasonable to combine the SE income to not less than zero and then add in W-2.

Correct, just need a valid tax ID# and that does not have to be a SSN.

So if they just ignored everything and pretended they never adopted a plan, you can't really stop them and force them to take salary deferrals from employees - but you can resign from the engagement and bill them for the contracted services you performed (document and whatever else) if you haven't done so already. They assume the risk for non compliance. Maybe they get away with it, or maybe they don't because some disgruntled employee says "Where's the 401(k) plan you said we had? I have this SPD that says I'm automatically enrolled but you're not taking those salary deferrals or giving me matching contributions." and then complains to DOL and/or IRS.

Precisely

That is the answer. You can deduct up to 31% of "compensation" in total but if DB contribution lowers compensation then you have more issues to deal with. You can deduct up to the 31% combined max and then deduct the rest of 2020 MRC in 2021 and will hopefully have enough room from the cushion to also deduct the total 2021 MRC, otherwise you end up carrying forward. Make sure the SEP is 6% or less - but may want to take SEP out of equation altogether (replace with 401k to get the salary deferrals). Other SEP issue - if with Schwab, is it their SEP VS document being used? Because you cannot use IRS Form SEP-5305 and have another plan.

Exactly - so no deduction, but could do VAT up to 415 limit, do an in-plan Roth conversion (plan document needs to have Roth provisions) and then voila, you have your back-door Roth that everyone seems to be clamoring for these days. This is one of the rare instances it works (owner/HCE only plans). And at age 42, I would say there is certainly value for the owner in Roth.

You never need to restate a terminating plan but you do have to make sure it is up to date at termination. The pre-approved plan providers have interim amendments for terminating plans, the issue is knowing whether these cover everything through your termination/distribution date if such extends beyond the cycle restatement date. I deal with DBPs, and those interim amendments are usually sufficient - I expect DCP amendments would be as well, assuming you don't blow well past the cycle date. All that said, restating gives you absolute safety in that regard.

Agreed!

No, I think you have it well thought out - the double deduction design will not work. Yes, adding a calendar year PS 401k will work provided the noted 6% PS limit to avoid combined plan deduction limit. Do they not want a 2020 deduction or do they think they missed their chance? If their extension goes to 9/15 they can adopt a DBP for calendar 2020 and file an amended return to claim the deduction, we had a new client specifically do that.

If the above is not available, I would suggest a resolution adopted by the person or entity with the current authority to appoint or replace the trustee, that authorizes and names a successor/contingent trustee in the event the current trustee dies or becomes otherwise incapacitated, and have such successor/contingent trustee sign an acceptance of this. Then make sure a copy of this is kept with permanent plan records and given to vendors as may be needed.

YES - all service within the control group must count for eligibility and vesting whether earned at a participating employer or not.

What does the plan document say? Always the first source, right? Many pre-approved documents I've seen that have the under $5k default rollover provision also give the PA discretion to adopt procedures to implement default rollovers for balances less than $1,000.

The instructions are clear - they want hi-3 average for a DBP (checking 415 limit) and if the benefit is based on something different then you need to attach a separate schedule that shows the compensation upon which the benefit is based (so they can spot-check that).