C. B. Zeller

I agree with the other commenters that there is no way this is ok. The excise tax under IRC 4972 is on non-deductible contributions, defined as contributions made in excess of the limit under IRC 404. Choosing not to take a deduction for a contribution does not make it a nondeductible contribution, if it does not exceed the 404 limit. Furthermore, even if you did actually make a nondeductible contribution, you still have to allocate it to the extent possible. You could carry forward an allocation if, for example, all participants were at their 415 limits.

Are you talking about a management group? The definitions of A-org and B-org both reference an ownership interest in the FSO. I agree that the bullet points I mentioned earlier fail to account for management groups.

Mistake of fact is usually a minor typographical or arithmetic error. If they meant to put in $10,000 and but typed an extra zero by accident, that would be one thing. But I would have a hard time believing they didn't notice $90,000 missing for over 8 months! Check the plan document. I bet it says that the contributions will be allocated to participants.

I agree with ERISApedia and Who's the Employer. Your group of employees who satisfied the maximum age and service conditions of 410(a) will satisfy ADP by way of the safe harbor contribution. Your non-410(a) group will be subject to the ADP test; even though some employees in that group are receiving safe harbor contributions, it does not satisfy the ADP safe harbor because not all employees in that group who are eligible to defer are getting them. Hopefully all of your otherwise excludables are NHCEs, so testing that group will be satisfied easily.

I don't think that increasing the force out limit would be an additional benefit, right, or feature, since it would remove certain participants' rights (the right to defer their distribution). I think you could treat this as failure to obtain participant consent to the distribution, and correct using the method in Appendix A.07. Basically, give them the option to repay the distribution back to the plan.

The lifetime income amount is equal to the account balance divided by the annuity purchase rate (APR). The APR is calculated actuarially and is based on the age, survivor benefit, assumed interest rate, and assumed mortality. Your valuation software may be able to calculate the APR from these inputs. For example here is a screenshot showing the calculation of the 100% J&S factor using the 2021 417(e) table and the 10-year treasury rate as of 8/2/2021 in ASC: If the participant's account balance was $100,000 as of the 8/31/2021 statement, the J&S lifetime income amount would be 100,000 / 252.208 = $396.50.

To get back to the original question, the extension of the self-correction period under Rev Proc 2021-30 should mean you can now use SCP.

The plan document should address the match computation period.

You can do it, but watch your coverage test. From the way you describe it, it sounds like most of the people subject to the 2-year eligibility are going to be NHCEs.

Could such a clause have the effect of causing the plan to violate IRC 401(a)(14) or 401(a)(9)?

Presumably he reports the 1099 income on Schedule C of his 1040, and he can use Schedule C income as plan compensation.

You cannot use the 2 year of service rule with a 401(k) plan (or the 401(k) feature of a profit sharing plan).

Wow, talk about thread necromancy. I was a senior in high school when this thread was posted. This thread is almost as old as some of the people working at my company. I agree with Bill, you can never add deferrals retroactively. They could add deferrals for 2021. As long as the deferral feature is effective no later than 10/1/2021, they can also be safe harbor for 2021. If you want to talk about testing options, I would recommend making a new post with more details in either the DB forum or the testing forum.

There is a rule in the 401(a)(4) regulations that prohibits discriminatory timing of plan amendments. There isn't a mathematical test, it is just a facts-and-circumstances deal. Whatever you end up doing, be careful that it doesn't have the effect of discriminating in favor of HCEs.

Since a sole proprietor's income isn't known until their tax return is completed, they are not required to deposit their deferrals until their income is known. However they are still required to make an election to defer before the end of the plan year.

If it ever becomes law, section 320 of the Securing a Strong Retirement Act would permit exactly this. However the fact that it is a provision in a new bill is a clear indication that it is not permissible under current law. https://www.congress.gov/bill/117th-congress/house-bill/2954/text?s=1#toc-H1C6C2AD2785149CFA7E8B441E3DC0C7E

If they filed and used the extension for their tax return, then the extended due date applies for plan adoption.

The excluded class here is the employees of the second employer, which is a member of the same controlled group as the plan sponsor but which has not adopted the plan. Is that a reasonable classification? I don't know for sure, but it doesn't seem unreasonable on its face.

The regulations under IRC 430 do provide sex-distinct mortality tables for funding purposes. However there is no guidance on how to apply them - how do you determine whether a participant is male or female? It's one of those questions that's easy to answer until it isn't. A reasonable approach (not supported by any authority that I know of, just my own speculation) might be to assume a 50% chance that the male table applies and a 50% chance that the female table applies. It just so happens that the unisex table, aka the 417(e) table, is just that - a 50/50 weighting of the male and female combined funding tables. So if you use the unisex table for funding, you are essentially saying that you don't know which table should apply to the participants and you have to assume equal probability that they might be male or female. As mentioned, you always have to use unisex tables for benefits.

I don't think you're going to find anything documented, but the only thing I can think of would be to estimate q_62.45 by assuming either UDD or constant force and interpolating between q_62 and q_63. Then calculate D_62.45 and N_62.45 to determine your annuity factor.

If they did not extend their tax return for 2020 then it is too late to adopt a plan for 2020. IRC 401(b)(2) references the deadline of the employer's tax return, including extensions. If there was no extension for the tax return then there is no extension for the deadline to adopt a plan.

It is not entirely clear whether adding a member of a controlled group to an existing plan that is already sponsored by another member of the controlled group counts as an amendment or a plan adoption. If it is a plan adoption, then you should be able to do it retroactively under the new 401(b)(2) as added by the SECURE Act. If it is not a plan adoption, then it is an amendment, and it should be able to be adopted retroactively under the rules of 1.401(a)(4)-11(g) for purposes of correcting a failed coverage test. Either way I think you should be able to do it. About the ABT, read your plan document carefully. Even with the failsafe language, you might not be precluded from satisfying the coverage test using the ABT. If the plan allows discretionary profit sharing contributions, then you may not even need to use a QNEC.

IRC 4975, if it is a prohibited transaction (which it sure sounds like to me). It also may be a violation of IRC 401(a)(2) which is disqualifying. If the plan is subject to Title I, then it is also likely a violation of ERISA 404(a)(1) and the trustee may be personally liable for a fiduciary breach.

From what you described, it certainly sounds like the plan should have been covered. The PBGC charges both interest and a penalty on late payments. Interest rates are found here and late payment charges are found in the instructions for each year's premium filing. However the late payment charge, by law, cannot exceed 100% of the missed premium for that year. If the plan has always been well-funded, and there was no variable-rate premium, then you can use the flat rate premium multiplied by 4 (for the 4 participants) as an upper bound for the late payment charge. Historic premium rates are published by the PBGC, for a list see the table on page 43 here. You might want to contact the PBGC in advance and see if they have any suggestions.

They must merge. The successor plan rule prevents company A (which is now the sponsor of two plans) from terminating the B plan while continuing to maintain the A plan. If company B had terminated their plan before the merger, it would not have been an issue, but it is now too late.