C. B. Zeller

You do not have to include them for the gateway test. You do have to include them for the rate group test.

Check rev proc 2019-19 for how to fix errors relating to excess amounts. You are past the end of the 2-year period for self-correction so this is likely VCP territory.

You mean that thing that was cancelled this year? You are probably right and I'm sure thepensionmaven actually meant ASPPA All Access which replaced it. Still I have to wonder if inventing a new abbreviation and the added confusion that comes along with it was worth saving the effort to type "nnual onference." Don't mind me, just grumpy this morning. A plan using the ACP safe harbor is "permitted to" exclude the safe harbor matching contributions when performing the ACP test on voluntary contributions (1.401(m)-2(a)(5)(iv)). Therefore it follows that you are permitted to include them in the test as well.

Disregarding the "how many" question, since as RatherBeGolfing points out, it is basically meaningless, and focusing instead on the real question here - should I quit my job? This is not an easy question, and ultimately only you can decide what to do. There are countless posts on this board complaining about the quality of plans sold by payroll companies, and I think it's clear why - those companies tend to be solely focused on sales volume and not interested in providing their employees with the training or resources they need to do proper administration. There are always going to be stressful times of year in this field, no matter who you work for or what you do. In our firm, sales and ongoing administration are separate departments - for admin, the most stressful time of year is October 15. Different people respond differently to stress, and jobs with this sort of annual cycle are not for everyone. That said, having a good team makes all the difference when you know you are all in it together. I would start sending out resumes if I were in your position. If you haven't updated it recently, do it now; with 7 years experience working on plans you probably have a lot to add. I wouldn't suggest leaving your current job until you have something new lined up though.

Put in a de minimis accrual for the other owner, use 3-year cliff vesting and disregard vesting service prior to the effective date.

The ASG is treated as a single employer for purposes of 401(a)(26). Since plans may not be aggregated for 401(a)(26), any plan put into place would have to cover at least 40% of the ASG members (or if there are only 2 members, both members).

What is AC? Can you link to whatever source you're referring to? A corrective distribution may not be treated as a COVID distribution. From Notice 2020-50:

The fiduciary loses 404(c) protection. There's nothing to fix except to provide the correct disclosures as soon as possible. And hope the participants aren't feeling litigious.

Participants will need to be provided at least 30 days in advance with an updated fee disclosure that explains the fees which may be charged against their account.

I don't see any problem applying the new eligibility requirements to participants who have not yet entered the plan.

Is the plan participant directed? Are you looking to take fees from forfeiture or from participant accounts? Did the participant fee disclosure state that TPA fees might be paid from their accounts?

From the instructions to 5500-EZ (2019, but safe to assume the same will apply for 2020 and 2021): Who Does Not Have To File Form 5500-EZ You do not have to file Form 5500-EZ for the 2019 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2019 plan year does not exceed $250,000, unless 2019 is the final plan year of the plan. For more information on final plan years, see Final Return, later. Final Return All one-participant plans and all foreign plans should file a return for their final plan year indicating that all assets have been distributed. Check box A(3) if all assets under the plan(s) (including insurance/annuity contracts) have been distributed to the participants and beneficiaries or distributed or transferred to another plan. The final plan year is the year in which distribution of all plan assets is completed

Generally you would need to use the latest normal retirement age under the plan. See the definition of "testing age" in 1.401(a)(4)-12 for more info. Since the DB plan has the earlier NRA, it's going to get messy. You still need to convert the hypothetical pay credit to a benefit accrual at age 62 using the plan's interest crediting rate and definition of actuarial equivalence, but then you will need to normalize that benefit accrual to age 65 using the testing assumptions before you can aggregate it with the EBAR from the DC plan. It will make your life much easier if you can amend the plans to have the same definition of NRA. The DC plan will be easier to amend.

Do you need to revise any of the dates in your post? In general, the definition of compensation used for allocations does not need to be the same definition used for testing.

The rule is that it has to be for repair of damage to the participant's principal residence due to a casualty loss that would be deductible under sec. 165, but without regard to whether it was located within a federally declared disaster area. The situation you described sounds to me like it would qualify but I am not an expert on section 165.

Do DFVCP now. The fee to file is small enough that it shouldn't even be a question. Admit the mistake to the client and explain that you are going to eat the costs since it was your mistake. Consider yourself lucky that you caught it before the client did, or worse yet, the IRS or DOL.

If I were the fiduciary in this case, I would invest in the manner of a prudent person familiar with such matters. Furthermore I would diversify the investments in order to reduce the risk of a large loss. For real though, there is no reason that the ages of the participants need to dictate the plan's investment strategy. Assuming that the plan provides that gains and losses will be allocated to each participant's account in the same manner, then the fiduciary needs to decide what constitutes an appropriate level of risk and return for the plan and invest accordingly. Any age-based investment strategy (e.g. higher risk for younger participants and lower risk for those closer to retirement) would by design be counter to the interests of certain segments of the plan population. A particularly sophisticated fiduciary might seek to use an immunization strategy to hedge against investment losses. This is typically more applicable to a defined benefit plan where the plan has fixed liabilities that it can anticipate, but the concept could apply to a DC plan as well. However the costs of doing so may be prohibitive for a small plan.

Good call Peter. Here is some more reading material on the topic from Ms. Ferenczy if you are so inclined: https://ferenczylaw.com/flashpoint-surprise-you-are-or-are-not-a-professional-and-you-are-or-are-not-covered-by-the-pbgc/

The 401(k) portion of the plan has to be in effect for at least 3 months in the first plan year. They would have to adopt by 9/30/2021 if they want to be safe harbor for 2021.

The SECURE Act didn't change anything with respect to safe harbor match notices. It still has to be provided within a reasonable amount of time before the beginning of the plan year. 30 days before the beginning of the plan year is automatically considered reasonable for this purpose.

I don't see a problem here. As long as no HCE is getting a higher rate of match than an NHCE, taking into account both the discretionary and fixed contributions, it should be fine. It sounds like the intention of this design is to allow them to satisfy the ADP safe harbor and then have the option to make or not make a match for the HCEs each year. Am I missing something?

Your question could be worded a little better. However what I think you meant to ask is, "Under what circumstances would a plan which covers only the substantial owner(s) of a business and their spouse(s) not be exempt from PBGC coverage under the substantial owners exemption?" This might shed some light on the question: https://www.pbgc.gov/prac/other-guidance/insurance-coverage#substantial If spousal attribution only applies in the case of a corporation, then in the case of a partnership, the spouse must themselves directly or indirectly own more than 10% of the profits or capital interest (since spousal attribution doesn't apply, I am not sure what it would mean to "indirectly" own an interest in a partnership, I am thinking community property maybe). In the case of a sole proprietorship, the spouse could never be a substantial owner. If the business is a professional service employer, then they could still be exempt even if the spouse is not considered a substantial owner.

#1 and #3, definitely yes. #2 probably also yes, but there might be a nondiscrimination issue if the group of actives is predominantly HCE. There are some rules about how nondiscrimination applies to former employees that I don't know off the top of my head. Actually come to think of it there might be nondiscrimination issues with #1 depending on the number of HCEs and NHCEs who are eligible for each vesting schedule. If they go with #1 or #2, this may sound silly but make sure they know what to do with forfeitures. Since the plan is currently 100% vesting they probably have never had to do a forfeiture allocation before. If they go with #2, what happens if one of the former employees is re-hired?

No way. DB plans are subject to the minimum participation rules of 401(a)(26). At least 40% of the employees (or 50, if less) have to get a meaningful benefit in the plan.

1.414(c)-4(b)(5)(ii) An individual shall not be considered to own an interest in an organization owned, directly or indirectly, by or for his or her spouse on any day of a taxable year of such organization, provided that each of the following conditions are satisfied with respect to such taxable year: (A) Such individual does not, at any time during such taxable year, own directly any interest in such organization; (B) Such individual is not a member of the board of directors, a fiduciary, or an employee of such organization and does not participate in the management of such organization at any time during such taxable year; (C) Not more than 50 percent of such organization's gross income for such taxable year was derived from royalties, rents, dividends, interest, and annuities; and (D) Such interest in such organization is not, at any time during such taxable year, subject to conditions which substantially restrict or limit the spouse's right to dispose of such interest and which run in favor of the individual or the individual's children who have not attained the age of 21 years. The principles of §1.414(c)-3(d)(6)(i) shall apply in determining whether a condition is a condition described in the preceding sentence. Since Bob is an employee of Betty's Enterprises, the exception to spousal attribution does not apply and Bob is deemed to own 100% of his wife's ownership interest. Therefore all 4 businesses are part of the same group under common control.