CuseFan

Oh, Lola

I would also caution against repeating this strategy any time within the next few years for the same employer, and make sure the employer is aware of that, as you do not want a pattern of amendments that creates a discretionary arrangement in practice.

Your thoughts are correct and the employer should either stop making contributions until final numbers are provided or live with giving some employees more than they needed to pass testing, it's as simple as that.

Think about union exclusions - employees who go back and forth between union and non-union status become eligible/ineligible employees and into/out of active participation all the time. The difference here as noted above, is that you cannot statutorily exclude from coverage and non-discrimination testing if they have completed age and service eligibility requirements.

Yes, if this was a taxable entity and that limit applied, all employer contributions and all employees eligible for such would be considered for the 25% deduction limit. No, 404 does not apply.

IRC Section 401(a) is the section of the tax code that applies generally to all tax-qualified retirement plans, whether defined benefit pension or defined contribution plans. The answers to your questions are all "it depends" on the type of plan and its particular provisions. Then there are many other code sections that apply to certain types of plans or plan provisions. What you're asking is basically for an introduction to tax-qualified retirement plans course, which is too voluminous for this forum.

Best of luck for the next chapter of your life.

Yes. Since you were >5% owner in 2023, the lookback year for 2024 HCE status, then through ownership attribution your daughter is an HCE for 2024. In 2025, you are still an HCE through attribution from your son but your daughter is no longer considered a >5% owner as there is no sibling attribution nor double attribution (e.g., from son to you and then you to daughter). Assuming your daughter is not an HCE by compensation then she is not an HCE come 2025.

If you amend (if permitted) to provide contributions to terminated participants you should also vest those contributions otherwise they don't count.

Agreed, it should have been spelled out in either the plan, an underlying employment agreement, or both - if well-designed. Otherwise, you're in the good-faith/fair-dealing gray area. If some sort of supplement to a qualified salary deferral/match arrangement then adhering to that practice or statutory timing could be deemed reasonable. And, as Peter notes, this is not advice to anyone.

It is not protected. It is a feature ("F") subject to BRF nondiscrimination. The question is whether that can be considered the same feature as the Schwab brokerage window. If not, that alone creates a BRF problem and that could be the issue upon which trustees force the transfer. Does the plan have in-service and in-kind distribution options which this person could utilize to roll out to an IRA and maintain his broker relationship?

No. We have a number of those clients and they all were required to amend for the Windsor decision.

Sounds like employer (PC) and both plans are continuing, so 1/1-12/31/2024 PY on both, but all employee other than the owner terminated 2/28, correct? If so, read on, but if not then you have bigger problems. If employees did not work 500 hours through 2/28 and do not benefit because of that then I think you exclude them from 401(a)(26) count in CB. However, you still have 2024 annual (combined I presume) coverage and nondiscrimination testing, and since everyone benefits by virtue of 3% SH then you have a gateway requirement. Employee compensation for such would be W2 from the PC, for the owner it would be the applicable metric for the year - either W2 or net earned income from self-employment. For the cash balance, compensation is used to calculate liabilities (pay credits) not the actual contributions. Required funding is a function of both assets and liabilities.

??? Was this a change in how the entity was taxed, switching from S-corp to partnership? Otherwise, what is the basis for this? Anyway, yes, you handle like you would any sole prop or partnership in that regard.

Agreed, and obviously the plan provisions must support

Yes, the 2% would be on $350K total and limited to $7,000. Absent any specific language in either or both plans on how to adjust, I would say prorate, so $175K comp in each plan and a$3,500 contribution.

Sounds like an hourly prevailing wage item where the "fringe" goes into health insurance or retirement - and if retirement, it's an employer contribution and not a salary deferral unless you also have the ability to take that $4.50 in cash in your pay. It may not be and your employer just gives you a choice between contributions to health insurance or retirement. Employer contributions have different contribution timing requirements and can often be made well after the plan year to which they relate. However, if it is a prevailing wage situation then there are state laws governing when employers are required to deposit contributions (usually at least quarterly is my recollection).

That is absolutely the correct method.

Details? Usually, unless it's a black and white situation. is the company's business investing in/owning stores, or is this an investment advisor/money manager firm that owns a store somewhere, your description is very vague. Maybe there is a control and maybe there are qualified separate lines of business - lots of maybes pending the details.

Your requirement is to ratably allocate the QRP escrow over 7 years or less. You are not precluded from making current deductible contributions up to allowable limits. If you do the above, allocate $50k of a $150k balance, then you've started the QRP allocation cycle at 1/3, so next year you need allocate 1/2 of the remaining balance and then finish it in year 3.

Or they could be carved out of general testing as otherwise excludable.

no

which will likely need the tax return be on extension

Yes vesting service continues and vested percentage will increase and by virtue of the plans merging there should be amendment to A for needed B provisions unless there is generic language in A that accommodates.

Was thinking the same thing - or as Forest Gump's mother told him, "stupid is as stupid does." That anyone, for YEARS, doesn't notice something like that is amazing, let alone someone who was involved in the payroll process. But we constantly see these situations pop up in this forum where someone's election, that directly affects their paycheck, gets discovered after a ridiculous amount of time - it flabbergasts me every time. So I'll hold more venting until the next example hits this forum, peace out.