CuseFan

Yes, if 7/31 is the termination date you would calculate your contributions for 1/1-7/31 and also test that period if needed. Technically, not a short plan year, at least for filing purposes, as the plan is still in existence until assets are distributed. The timing of deposit will depend on what the plan requires, if anything specific, and the employer's tax year/return due date. If the employer continues on and only the plan is terminating, then deposit could possibly not be due until next year.

The only consequence of having an IDP is the inability to request and secure periodic ongoing determination letters. Some view those cycles as a safety net while others see an unnecessary cost and inconvenience. If you modified a preapproved document, those changes would have to be substantial. I've yet to see any plan with modifications that IRS rejected from preapproved status.

Hence now your previous employer - congrats on resolution.

We'll see - usually it's the services and oversight we want that gets cut and what we wouldn't mind seeing wither away remains!

No, that is absolutely correct, why else invest in such property?

Be prepared! I've had my ERPA since 2010, renewing in 2012, 2015, 2018, 2021 and 2024 based on CPE for the 3 years prior cycle. In every renewal except the last one in 2024 for the 2021-2023 cycle, I self reported w/o issue. Last time I get an email from IRS saying there isn't documentation for my credits and I need to provide ERPA-compliant certificates for all the sessions I attended those prior 3 years. Most of my credits were satisfied with ASPPA recorded sessions for which I got certificates but which were not ERPA compliant. I had to go to ASPPA and ask that they re-issue about 30 CPE certificates in ERPA-compliant form (needed IRS program number) - and now I've heard they aren't too keen on doing that. Then I package everything up and submit only to be told that I'm short credits because I had 3 Ethics credits each year and they only count 2. Nowhere in the renewal instructions or Circular 230 did it say at least 66 non-ethics credits and 6 ethics credits in a 3-year cycle - it said at least 72 credits of which at least 2 each year must be ethics. So I had to attend a couple sessions in 2024 to apply to the 2021-2023 cycle, which won't count for 2024-2026 but, to be honest, I'm done and letting it lapse. I work with enough enrolled actuaries and we have other ERPAs, I don't need the aggravation. I know another one of our forum contributors was going through similar scrutiny and dickering with ASPPA for compliant documentation. I feel sorry for those of you who really need to maintain that designation for your practice. Sorry - rant part deux.

Does that document automatically include all employees of employers in the CG or must affiliated employers adopt and, if so, did this one? IF the ONLY issue is missed deferral opportunity I would be inclined to make a 3% QNEC. That's the assumed NHCE ADP in the first year of a prior year ADP tested plan, right? It's also the SHNE rate, which also make 3% the reasonable correction in my mind.

You got that right! First they eliminate the requirement that an ERPA have a PTIN, which I and many others dropped because why go through the cost and trouble to keep renewing. Then well after that (years) they require program providers to report directly to IRS, using what, a PTIN of course. Now, a number of program providers do not give session attendees an ERPA-compliant CPE certificate that includes the IRS program number, and IRS will not accept such deficient documentation. I had to beg ERISApedia for an ERPA compliant certificate because I registered w/o a PTIN. At this stage of my career and ERPA cycle, it's not worth getting another PTIN. I think IRS is trying to accelerate ERPA extinction through forced attrition rather than natural retirement. Sorry, I haven't had a good rant in a while and was overdue!

That link you showed looks like a bargain, I'd say start the free trial and see if it lives up to expectations.

Do you have free access to ASPPA's recorded on-demand webcasts? Although documentation is an issue from what I and at least one other person have experienced.

I think you have more problems to consider. Was the other company a participating employer? If a solo 401(k) "product" was used then likely not and the document also would have precluded eligibility of any employees. I think you have a demographic coverage failure as well. It's not that they were eligible and not told that they could defer, but I'd bet that under the terms of the plan they weren't even eligible. So not only do you need to fix the missed deferral opportunity - I'd say you have to fix any demographic failure and document deficiencies. You say owner didn't contribute in 2024, but what about other years, when was this a CG, when were there employees? There might be some other solutions here but you need to dig into all the relevant details. If these employees should have been eligible then I do not think zero contribution is an acceptable fix.

You cannot permissively aggregate CBA and non-CBA populations - there is mandatory disaggregation. You may only permissively aggregate different CBA populations which are otherwise treated as their own separate "plan", see below, (v)(B) of that regulation. Therefore, I think you need plan language governing required testing. (B) Permissive aggregation of collective bargaining units. Notwithstanding the general rule under section 410(b) and § 1.410(b)-7(c) that a plan that benefits employees who are included in a unit of employees covered by a collective bargaining agreement and employees who are not included in the collective bargaining unit is treated as comprising separate plans, an employer can treat two or more separate collective bargaining units as a single collective bargaining unit for purposes of this section and §§ 1.401(k)-2 through 1.401(k)-6, provided that the combinations of units are determined on a basis that is reasonable and reasonably consistent from year to year. Thus, for example, if a plan benefits employees in three categories (e.g., employees included in collective bargaining unit A, employees included in collective bargaining unit B, and employees who are not included in any collective bargaining unit), the plan can be treated as comprising three separate plans, each of which benefits only one category of employees. However, if collective bargaining units A and B are treated as a single collective bargaining unit, the plan will be treated as comprising only two separate plans, one benefiting all employees who are included in a collective bargaining unit and another benefiting all other employees. Similarly, if a plan benefits only employees who are included in collective bargaining unit A and employees who are included in collective bargaining unit B, the plan can be treated as comprising two separate plans. However, if collective bargaining units A and B are treated as a single collective bargaining unit, the plan will be treated as a single plan. An employee is treated as included in a unit of employees covered by a collective bargaining agreement if and only if the employee is a collectively bargained employee within the meaning of § 1.410(b)-6(d)(2).

You complete required paperwork for an 8/1 annuity starting date (effective date of payment). Payments can be administratively delayed, which is essentially the time necessary to process the distribution and have the check cut and mailed. Saying it can't be paid until the annual audit is completed is not a reasonable administrative delay. What if you retired 3/1, would they delay payout until October? The audit is for the 2024 plan year and should have no bearing on your payout, unless you are a restricted employee (one of the highest 25 historically paid HCEs). In that case, plan must be 110% funded AFTER your pay out and maybe the audit is required for an accurate value of plan assets - that is the only potential logical reason I could think of.

Agree completely with Paul I. I also think these are typically larger plan sponsors and is also more prevalent with defined benefit plans that have been around for a long time, older cash balance conversions, and possibly ESOPs that pre-dated their inclusion in pre-approved plans. Most of this could be inertia, and then there is not wanting to continually restate and submit modified pre-approved plans.

Unless such employees would have to be included for coverage and nondiscrimination because they are not statutorily excluded you do not include for average benefits.

I agree, would only amend prior year filing if the correction was material. If it doesn't affect audit requirement or materially change active counts then I'd just correct going forward. So, 70 vs 69 - not material - 4 vs 3 I'd think about amending. My opinion FWIW

Correct - only works in HCE-only plans or very large plans that can also pass ACP testing because of generous match and excellent NHCE participation. Need to make sure that VAT contributions are tracked separately and get converted before any investment earnings accrue or pick up any such earnings as taxable upon conversion. This can be done via in-plan conversation or withdrawal of the VAT account, just make sure you have provider that can accommodate and all is properly tracked and reported.

The existing trust agreement should specifically state the procedures for replacing a trustee and appointing a new one. The new trustee could be seen as an additional trustee, not a replacement, so that distinction should be clear in some documentation, be it a resolution or amendment. There is usually a notice requirement for the exiting trustee, but since that is not possible given your circumstances then I think additional documentation is warranted. A clearly written resolution together with an amended trust agreement with the successor trustee should be sufficient documentation.

Agree, just be sure the basic document provides for eligibility failsafe at 1000 hours in 12-month computation period.

Interesting question. Similarly, what if one spouse worked elsewhere and there was a separate QDRO set up for the non-employee spouse within the plan, would you count that? I do not have a definitive answer but my inclination is that in either case you continue to count, and if distributed then count for 5 years. When a key or HC employee's account or benefit is partitioned or otherwise attributed to a spouse, beneficiary or ex-spouse, some restrictions/requirements remain attached. For example, in the DB world, if an HCE is restricted then his spouse/beneficiary/alternate payee is also restricted. In your case, I think it counts toward top-heavy determination, whether key or non-key, and the QDRO doesn't change that. IMHO.

Exactly, so w/o interest 1/7 of $105k is $15k in year one, 1/6 of $90k is again $15k in year two, so w/o any interest all years are $15k. With gain/loss, year two is 1/6 of whatever that balance is. If 10% gain, then 1/6 of $99k is $16,500 for year two. And so on.

Terminating the MP is probably the best option regardless, otherwise, a transfer of those accounts (versus an elected rollover) would require continued separate tracking and future annuity normal form requirement.

The SMM timing (legal requirement) severely lags the effective date of implementation, I suggest a best practice would be some sort of consolidated communication disclosing that and whatever else the employer is implementing/enhancing under SECURE 2.0. That is, take the current opportunity to "blow the trumpet" and get some positive PR - "as allowed by recent law changes we're making our plan better for you by ..."

HCE, you are correct. You may want to explore, with legal counsel and accounting input, the possibility of correcting now by applying FICA and Medicare taxes to the existing employer-attributed account (contributions and earnings) as if it just became vested, and then do properly going forward. Another potential fix is applying retroactively and paying the interest and late payment penalties, if these don't go back ages. Hope that is not your case as you don't mention related issues for any current or prior distributions. Again, consult legal and accounting counsel. The "penalty" for missing this, as you note, is that all payouts are then fully subject to FICA and Medicare, accumulated contributions and all investment earnings. Any investment earnings on contributions (and prior earnings, if applicable) already subjected to FICA and Medicare are not subjected thereto, which is why I would explore the prior years' fix and do properly going forward. At worst, you could probably split employer-based accounts into wrong portion (subject to F&M on payout) and right portion (apply F&M as contributed/credited). If your payroll is external, I'd review that contract/service agreement and look to seek some compensation or other recourse for the error. Good luck

Yes, if value of benefit exceeds $7,000 you cannot force out or force a lump sum. Some plans mandate commencement at normal retirement date, but most do not, so as stated above the person could defer benefits until RBD. Then, if still unresponsive, you can commence the benefit in the normal form - J&S if married, life annuity if not. You could try to purchase a deferred annuity that provides all the plan's options (including lump sum) but it would be very expensive if you could even find an insurer, as these are full of too many uncertainties that insurance companies dislike. It would be easier (but not necessarily easy and still expensive) to buy an immediate annuity for the specific option elected by the participant, but having an unresponsive participant does not facilitate that. Unless you're in the situation where this benefit must commence (upcoming RBD), I would just sit tight until you had to do something with this participant. You're not paying PBGC premiums, thankfully.