C. B. Zeller

Need an EIN. Do not use a SSN. From the instructions to 5500-EZ

Or better yet, if the tool were open source and its code could be examined and vetted by a range of industry professionals.

If the TPA works mostly (or exclusively) with plans on daily investment platforms, they may have little to no need to deal with 1099-Rs, as those would be handled by the platform. The TPA might be further insulated from the process if they utilize a service like Penchecks for distributions from non-platform plans.

I don't have any experience with this exact situation, but I wonder if you could accomplish it using an automatic contribution arrangement? Obviously it wouldn't meet the requirements for an EACA or QACA but that wouldn't be the goal anyway. The ACA would only apply to the employees acquired as part of this transaction, and the default contribution rate would be equal to the employee's last contribution rate in effect in the acquired company's plan. It might be an issue if anybody in the prior plan had a dollar amount election instead of a percentage of pay election, since I believe an ACA has to use a percentage of pay and not a dollar amount as the default. You might also have to generate customized notices for each employee to specify their default contribution rate. I think you would also be forced to put them in a QDIA, if that wasn't already the plan.

Same to you - enjoy your weekend! And don't forget, happy 48th birthday to ERISA!

Yes, but moreso that H is participating in the management of W's business. I think the fact that they have to have an accountant determine whether it is even reasonable for H's business to pay W's businesses is an indication that the two businesses may not be actually be managed independently. If the accountant determines it is not reasonable, then W's business would be providing services for free, which most rational business owners would not do, in the absence of some outside factors.

Best source I am aware of is the EFAST2 FAQ 33a: (https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf) I don't know if you are focusing solely on signatures required of the plan administrator but, the enrolled actuary's signature on the Schedule MB/SB must be manual, from the Form 5500 instructions: Now I have a question for you - let's say I load a PDF of a document onto my tablet, which has support for a digital pen, and I sign that document using the digital pen on the tablet. If the document requires a "manual" or "handwritten" signature, but states no requirement for ink-on-paper, does my pen-on-tablet signature satisfy that requirement?

Interesting, I will admit I have not scrutinized that section. Still, I wouldn't expect the DOL to have copies of returns that were filed solely with the IRS, for example a paper 5500-EZ that was mailed to Ogden. Is anyone familiar with the process to request a copy of a 5500-EZ from the IRS?

5500-EZ filers are exempt from the requirements of Title I, including the SAR and the public disclosure.

I agree that an individual does not have to be an employee in order to have ownership attributed to them or to have their ownership attributed to another person.

What was involved in checking? If you mean you looked them up on the DOL's website, you won't find them there, because it does not show 5500-EZs. If you believe that the Form 5500-EZ was not filed for one or more years for which it was required, then file the missing forms as soon as possible under the IRS relief program. https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers

Your numbers appear to be off - 47% + 47% + 16% = 110%. Attribution under sec. 318, used for determining who is a 5% owner for HCE, Key employee, and RMD purposes, among other things, goes from grandchild to grandparent but not from grandparent to grandchild. In your example (notwithstanding the inconsistent total), both Grandma and Mom would be deemed 94% owners (since they are each attributed the other's ownership) and grandkid would be deemed 47% owner (attributed Mom's ownership only).

I think there is a good chance that this activity would invalidate the spousal non-involvement exception, and there would be a controlled group.

I see two issues that you need to address: 1. Coverage test. The employee had presumably satisfied minimum age and service conditions prior to the start of the year. However, because they terminated prior to the effective date of the plan, they had no opportunity to make a cash or deferred election, and therefore would not be considered benefiting for the coverage test. However, I think you can solve this by relying on the daily testing method for the coverage test, as on each day prior to the effective date, there were no HCEs benefiting, and on each day after, HCEs were the only employees. 2. Discriminatory timing. This is a facts-and-circumstances test, but the IRS says that if a plan is adopted, amended, or terminated in such a way that the timing of it has the effect of discriminating against current or former NHCEs, then you have a problem. Adopting a new plan right after the sole NHCE is fired could look discriminatory in the eyes of the IRS. Using a short initial plan year, or an off-calendar plan year, might be beneficial here as that way the former employee was not an employee at any point during the plan year. It's hard to say though because there are no clear rules as to what is discriminatory. Using a short or off-calendar plan year would also let you avoid needing to do a safe harbor plan.

No. Yes.

While you can do this, it's asking for trouble. What will happen is the business owner will sign a 401(k) plan on 12/31 and then go and issue themselves special payroll with some 401(k) deferrals on it. Presumably no one else gets the opportunity to receive some extra pay that they can all of a sudden contribute to the plan. Even if you cook up a way to pass the ADP test (like the one Lou described using prior year testing), you still have a nondiscrimination failure on the availability of the deferral feature. If you are going to put in an 11th hour 401(k) plan, make sure you get deferral elections out to employees, and early enough that they have an effective opportunity to defer.

Agree the existence of an ASG seems unlikely without some common ownership. However, also consider whether or not the doctor might still really be the employer of his former employees. If he is still responsible for hiring, training, assigning tasks, and supervising these people, and if he still has the power to fire them, then he might still be their employer, regardless of who signs their checks.

You can't really "fail" the top heavy test. The plan is either top heavy or not top heavy. If the plan is top heavy, then you have minimum allocation and vesting requirements for non-key employees. That's it. So when you said you are "failing" top heavy, what do you mean? Is your system telling you that the minimum allocation requirement isn't being satisfied? If so, did the report from the system identify which non-key participant(s) are not receiving the minimum allocation? How is the 18% of pay contribution calculated? Are there any exclusions on compensation (including pre-entry compensation)? The top heavy minimum is 3% of total annual compensation without any exclusions.

You can't shift contributions between the ADP and ACP tests unless both tests are using the same method. Since the ADP test is being satisfied by the safe harbor non-elective contribution (regardless of whether the ADP test would have passed without the safe harbor), I think that prevents you from shifting contributions.

Safe harbor counts the same as profit sharing. Here is an article from ASPPA from a few years back: https://www.asppa.org/sites/asppa.org/files/PDFs/GAC/ASAPs/13-05.pdf

I have to disagree with Bird on this. The compensation used to determine the 25% deduction limit takes into account only those participants who actually receive an allocation other than elective deferrals. If an employee's only contributions for the year were their deferrals then you do not count their compensation when determining the deduction limit.

There are many factors to consider here, and you are not likely to get a simple yes/no answer on this board. If the leasing company were my client, I would advise them to have a lawyer make this determination. If you have access to "Who's the Employer" by S. Derrin Watson, read chapter 4 to get a good understanding of the issues involved and to understand how to go about analyzing the situation. IRC 414(n), Notice 84-11, and Rev Proc 2002-21 are all required reading for this topic.

I think the original question is being posed backwards, and the fiduciary relationship is possibly being misunderstood by members of the US Senate. Selection of retirement plan service providers is a fiduciary decision; for selection of an investment provider, the fiduciary needs to consider (among other factors) the investment alternatives offered by the provider. If Fidelity's offering is not prudent, then the fiduciary has a duty to select a different provider. If the fiduciary lacks the experience to determine whether the investment menu is suitable for the plan's participants, then they should retain an investment advisor or other professional who is qualified to help them make that decision.

A major disincentive to allowing all employees to participate immediately is that if the plan is top heavy (or becomes top heavy in the future) then those employees would be entitled to a top heavy minimum contribution, even if they would not otherwise be eligible for employer contributions under the plan. 401(k)(15)(B)(ii) provides that employees who are eligible solely because of 401(k)(2)(D)(ii) may be excluded from the top heavy minimum. It remains to be seen how the IRS will interpret the word "solely" in this context. It could mean that an employer who restricts their employees' eligibility to the minimum allowed under the LTPT rules may come out better in terms of their required top heavy minimum contribution than an employer who allows their employees to participate immediately.

Not quite. EPCRS permits a plan to correct a 401(a)(30) failure, because 401(a)(30) is a qualification requirement. If the limit was not exceeded in a single plan, or within plans in the same controlled group, then there was no qualification failure and hence no opportunity to correct under EPCRS. Mechanically, the way it works is that the participant is limited to a deduction of $19,500 (assuming under age 50) on their 2021 tax return. Therefore, any amount contributed in excess of that is effectively an after-tax contribution. However, when it is distributed in retirement, it will be taxable as a normal distribution from a pre-tax account. So it will have been taxed twice - both going in and coming out.