CuseFan

Agree you cannot retroactively amend PS formula for 2024. Also, depending on the terms, it might be too late to amend 2025 as well, if anyone has already become entitled to a PS allocation. You could back into the total PS contribution that would get HCEs where you want them and which would provide a lower NHCE PS than is needed to pass testing. Then you can amend the PS under 11(g) to provide the added NHCE PS needed to pass, or under SECURE 2.0 any retroactive amendment to increase benefits is Ok now. Doing zero PS in existing plan and adopting new PSP retro with formula as you need/want is a good way to go if they don't mind the expense of the second extra plan for a couple of years. As John noted, if the CBP is PBGC-exempt be wary of the combined plan deduction limit and having to limit DC ER to 6% total, which will be very challenging with a SHM.

Agreed - PW compensation is compensation under any safe harbor definition, and although it could be excluded by specific provision I think it would be a rare instance that such would satisfy nondiscrimination testing. PW fringe benefit dollars may be "paid" in a variety of ways - as retirement, as a health and/or welfare benefit, or as direct compensation, in which case it is treated as such. As noted, if retirement contributions, they can be used to offset other required employer contributions but the plan document should specify. These are 401(a)contributions subject to all those rules for coverage and nondiscrimination and, as Lou noted, HCEs and NHCEs are determined by definition and lookback year gross compensation.

Correct - he only is required to get gateway if he benefits under 401(a) portion(s) of the plan(s) (non-elective - CB & PS). Since he gets no CB or PS under the terms of those plans then he does not benefit, so no gateway.

Yes, provided the discretionary matching contribution provisions in the plan document support doing that.

Ditto! Coincidently, 41 years ago today I started. DB pensions were prevalent, ERISA still fresh, TEFRA/DEFRA/REA started a new flurry of legislation, 401(k)'s were new, cash balance plans were on the verge of being invented (by Kwasha Lipton in 1985), participant investment direction and daily valuations were science fiction, no load/low fee investments were a wish, profit sharing allocations were done on "personal" computers with 8 or 9 inch floppy disks that took ages to boot up sounding louder than my car starting, and reports typed by a secretary on an IBM Selectric (oh, and the dirty looks you got if you found a mistake that had to be retyped/corrected). Like every other aspect of life, technology has transformed the retirement industry and it has been a wild ride. It will be interesting to see what the next 40+ years bring, watching most from the sidelines of course, for how many ever years I'm granted. And belated Happy Barry Bonilla Day and an early Happy Independence Day to everyone!

I don't know, I would expect not in any participant directed 401(k). Maybe still in the 403(b) insurance company and TIA-CREF world. I'm not involved enough in either to offer any hard evidence. I would think, if still prevalent to any significant degree, that the occurrence would be in DB plans, where assets can be placed in certain investments without the need or expectation that they will be liquidated for many years so that redemption fees/deferred sales charges et al either go away or are dwarfed by the extra return (I assume) that such long term investments generate. I remember seeing these investments in many a pension plan termination in the mid/late 80's when corporate raider plan terminations were the rage before excise taxes were implemented (yes, I'm old!).

Agree, but would hope in the modern world that those are non-existent or few and far between.

As with many answers in this forum, even if you CAN do something doesn't mean you SHOULD do it. Can they do this? Yes. Whether or not they should is an overall HR/employee relations issue that should be considered.

If you are passing ADP & ACP with a 415 comp (a safe harbor) as your denominator then I don't think you need to do the 414(s) test or take any remedial action. Same is you were general testing a profit sharing and used a safe harbor comp as your denominator instead of plan comp. I assume comp less bonuses was the plan definition. Passing using that as your denominator only works if you satisfy 414(s), which you don't.

Agreed - discretionary doesn't mean do as they want carte blanche, must follow the plan document.

You are correct.

Can be paid out concurrently but in two portions - RMD not RO-eligible and not subject to 20% w/h, and then a RO-eligible LS which is subject to 20% w/h to the extent not rolled over, either to another plan (401k as you mention) or IRA.

I don't know all the particulars but do know that participation of Canadian resident citizens in US retirement plans have a lot of complexities that can create both tax issues and Canadian retirement plan issues, including their version of social security, for those individuals. We had to grapple with that on pension plans. It is much easier not to include them.

Agree with Effen and truphao. I think says more that participants don't have to get excess unless plan says so, or its reversion provision wasn't old enough. 7.12.1.17.1(2)c says: "Establish a qualified replacement plan per IRC 4980(d). Follow the processing procedures in IRM 7.12.1.17.1.2 (5), Reversion of Excess Assets." I think that also seems to indicate that IRS views transfer to a QRP like a reversion from the perspective of plan provisions. If you look at pre-approved plan language, the options are allocate to participants or revert to employer, so transfer to a QRP needs to fit under one or the other, and it has to be reversion.

A Qualified Replacement Plan (QRP) need not be a new plan, it can be an existing plan.

I agree. If you Google "is a person on leave considered employed" you'll get their AI Overview and a lot of snippets, all of the opinion that such a person is still considered employed. If the only choices are employed or terminated, then clearly the answer is employed. However, be sure that the plan document does not otherwise address this in some other fashion.

Great question and now very relevant as more "specialized" investments appear headed for 401(k) plans, like hedge funds and crypto.

or ignored what they were likely told at the start (assuming the plan termination process was fully explained at the onset)

Better call Saul.

Interesting. Thinking about Berkshire Hathaway and all it's wholly owned subsidiaries. I'm sure they have teams of attorneys, internal and external, who are experts at the control group, affiliated service group, and QSLOB rules. Guess I shouldn't complain when a colleague asks me to opine on a control group question!

Flattered, I occasionally get things right, you know, blind squirrel!

Isn't that trillion? The 7-9 zeros are the millions with 10-12 then billions so next comes trillions.

IRC Section 401(a)(4) is a very brief paragraph that says contributions and benefits cannot discriminate in favor of HCEs. The regulations start similarly and then say (I'm paraphrasing) that a 401(k) plan satisfies 401(a)(4) by passing the ADP test and a 401(m) plan satisfies 401(a)(4) by passing the ACP test. In that regard, 401(a)(4) is all encompassing, if you will, for nondiscrimination. The 5500-SF instructions ask if plan was permissively aggregated to pass coverage and then state if so, must also be aggregated for nondiscrimination. If you have to aggregate a 401(k) and/or 401(m) component to satisfy coverage then clearly you need to answer yes. Even though the legal requirements include the converse, the instructions do not explicitly mention that scenario. One could argue that since you aggregated to satisfy nondiscrimination that you had to aggregate for coverage and you get to the same place, but I can also see the flip side. The reality of the matter is that if two plans would satisfy coverage individually but were aggregated for nondiscrimination, they're certainly going to satisfy coverage in the aggregate. The 5500 question appears to be concerned with coverage rather than nondiscrimination, so maybe aggregating an ADP and/or ACP test doesn't warrant a yes for that. I'd be interested in other opinions on that.

Agreed. If the income does not flow through to Schedule SE (which references K1 box 14) and is not subjected to SECA taxes then it cannot be earned income from self-employment.

The requirement is that if you aggregate plans to satisfy coverage you must also satisfy nondiscrimination testing (ADP, ACP and/or general 401(a)(4) as applicable) for that aggregated "plan" and vice versa. In both instances you describe you would check yes.