C. B. Zeller

The plans may be optionally (the word in the reg is "permissively") aggregated for coverage and nondiscrimination. If they pass separately, then they do not need to pass combined. If the plans are aggregated for either coverage or nondiscrimination, they must be aggregated for both. In other words, you have to use the same options for both coverage and nondiscrimination. All plans of the employer must be aggregated for the average benefits percentage test. If both plans cover a Key employee, then they are part of a required aggregation group for top heavy purposes.

Yes, that's exactly the kind of design that lends itself to disaggregating otherwise excludable employees.

I assume the plan has an eligibility fail-safe that says a part-time employee who actually completes 1000 hours in a year will enter the plan. Otherwise you have an illegal service-based eligibility requirement. So, all employees who have completed 1000 hours of service would be eligible for the plan. Therefore, you can use the option to disaggregate the otherwise excludable employees, and as long as there are no HCEs who have never completed 1000 hours, it should pass at 100%.

I put your request into Google Gemini and this is what it produced: Pre-USERRA Veterans' Reemployment Rights: A Diachronic Survey Prior to the Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994, veterans' reemployment rights were primarily governed by state laws and federal regulations that were often inconsistent and lacked comprehensive protection. This resulted in significant disparities in the treatment of veterans returning to civilian employment. Early 20th Century: World War I: While there were no specific federal laws, some states implemented laws to protect the rights of veterans returning from service. World War II: The Servicemen's Readjustment Act of 1944 (the GI Bill) provided veterans with educational benefits and loans, but did not explicitly address reemployment rights. Post-World War II: The Korean War and Vietnam War: Federal laws were enacted to provide veterans with certain benefits and protections, but these laws were often limited in scope and did not fully address reemployment issues. The Vietnam Era Veterans' Readjustment Assistance Act of 1974: This law provided veterans with a broader range of benefits, including job training and counseling, but it did not guarantee reemployment rights. Key Challenges Prior to USERRA: Inconsistent state laws: Different states had varying laws regarding veterans' reemployment rights, leading to confusion and uncertainty. Lack of federal oversight: There was no federal agency or law specifically tasked with enforcing veterans' reemployment rights. Limited protections: Existing laws often did not provide adequate protection for veterans returning to civilian employment, particularly in terms of seniority, benefits, and promotions. Impact on Vesting and Benefit Accrual: Inconsistent treatment: Veterans' vesting and benefit accrual rights varied widely depending on state laws and employer policies. Loss of benefits: In some cases, veterans returning to civilian employment faced difficulties in maintaining or regaining their previous benefit entitlements. Discrimination: Veterans were sometimes subject to discrimination in terms of benefits and promotions, particularly if they had been away from their jobs for extended periods. The passage of USERRA in 1994 significantly improved the protections afforded to veterans returning to civilian employment. The act established a federal standard for reemployment rights, including provisions related to seniority, benefits, and promotions. This helped to address many of the challenges faced by veterans prior to USERRA.

A brother-sister controlled group requires 80% or more common control. It doesn't sound like that exists here.

Yes

Section 350 of SECURE 2 provides generous corrections for failures related to auto enrollment. The exemptions to 414A for new and small businesses don't expire immediately. It's 3 years for new businesses and the end of the year after the year in which they normally employ more than 10 employees for small businesses. So there should be plenty of time to get the plan amended once the status changes.

If the failure arose from a casualty, such as a storm, earthquake, etc., then I agree they would qualify. If the system failed due to normal wear and tear it would not be a casualty loss.

In order to be a safe harbor definition of comp, it has to include 125 deferrals as well as 401(k) deferrals. Box 5 is grossed up for 401(k) deferrals but not for 125 deferrals.

The short answer is that the participant must commence distribution of 100% of their accrued benefit no later than their required beginning date. However this is a very complicated topic and there are a lot of pitfalls and nuances to it. Mary Ann Rocco did an excellent 2-part webcast on this topic recently, it's available on-demand from ASEA if you want to learn more. https://www.asppa-net.org/asea/events/webcasts/on-demand/

My first thought is to say, if the transaction is closing on 10/1 for example, then amend the plan to say that for the 2024 plan year, employees who were employed by A on 9/30/2024 are eligible for the contribution. But there are a lot of unanswered questions here. Is A's plan being terminated before the sale? Or is it being merged into B's plan? Does B even have a plan? Will B's employees be eligible in A's plan after the transaction?

If I'm understanding you correctly, your question is about the application of entry dates when determining who is an otherwise excludable employee. The Chief Counsel memo that you referenced essentially says that, in the context of 410(b) and 401(k)(3) (and presumably 401(m)(2) and 401(a)(4) as well, although not explicitly stated), there is more than one way to apply it, so anything reasonable is fine. I don't see why it would be any different for 416, and in the absence of explicit guidance, I am perfectly comfortable using the same interpretation.

You're overthinking it. Nothing in SECURE 2 says that top heavy is "tested separately" and to be honest I don't know where this common misunderstanding is coming from. The top heavy determination is still done based on all participants in the plan. There is no disaggreation for determining the top heavy ratio. What section 310 of SECURE 2 says is that, for plan years starting in 2024 and later, otherwise excludable employees no longer have to receive the defined contribution top heavy minimum. That's it.

The citation in the law is at ERISA 105(a)(1)(A)

I'm not sure if I agree. The definition of the universal availability rule in 1.414(v)-1(e) only requires that all catch-up eligible participants have the opportunity to make the same dollar amount of catch-up contributions. It does not require that a plan permit participants to make the maximum amount of catch-up contributions permitted under the law. So a plan could say that catch-ups are allowed, but we are limiting catch-ups to $1000. And if they could do that, it seems like they should be able to limit catch-ups to the regular (50-59,64+) catch up limit as well.

For plan years beginning in 2023, the 5500-EZ uses the 250 returns rule. For 2024 it switches to 10. https://www.irs.gov/forms-pubs/about-form-5500-ez The 2023 instructions linked on that page state:

No. You check "Automatic Extension" in the same section.

A safe harbor match can not require hours in order to receive it on a year-by-year basis, but it can have a service requirement for initial eligibility. No, you can have different eligibility for deferrals and safe harbor match. The major consequence of this design is the loss of the top heavy exemption, as Bri noted earlier. Under this design you are technically doing an ADP test for the disaggregated portion of the plan covering otherwise excludable employees, since that group is not covered by the safe harbor match. It is unlikely that there would be any otherwise excludable HCEs, so that group should always pass the test automatically. But it's something to be aware of. No, you can have a service (hours or elapsed time) for initial eligibility for matching contributions, including safe harbor matching contributions. If your document uses a checkbox-style adoption agreement, there are probably options for this. A plan that consists solely of deferrals and matching contributions which satisfy the ADP and ACP safe harbors is exempt from top heavy. This is determined based on the contributions that are actually made to the plan on a year-by-year basis. A plan can permit non-elective contributions but will not lose its top heavy exemption unless non-elective contributions are actually made (or forfeitures allocated) in a given year. Likewise, making non-safe harbor matching contributions will also cause the plan to lose its top heavy exemption.

Could the plan pass using the average benefits test? Are we talking about the deferrals, match, or profit sharing portion of the plan? Does the plan document address what will happen in the event of a coverage failure?

It's based on the total account balance, not the amount of the loan. See 1.401(a)-20 Q&A-24

You were taught wrong. The due date of the contribution is the due date of the employer's tax return, including extensions. See IRC 404(a)(6).

With regard to question #2, I don't know of a specific authority in ERISA, however this kind of modification was specifically contemplated in IRS regulations and is one of the permitted exceptions to the general rule that annuity payments may not increase once they have begun.

Notice 2024-02 describes several situations involving plan mergers and indicates that if the surviving plan includes a pre-enactment qualified CODA, then the plan is not subject to the automatic enrollment mandate. In this case there is no plan merger, simply another adopting employer. So it seems to me that since there is only one plan involved, and that plan includes a pre-enactment qualified CODA, that the plan is not subject to the automatic enrollment mandate.

Self-employed individuals have to complete a deferral election before the end of the plan year. Whatever they put on that election will determine how much their deferral is. The safe harbor non-elective contribution will be 3% of their net earned income. That will be a circular calculation, so it's not generally possible to know exactly how much it will be before the end of the year. If earned income is expected to be well above the 401(a)(17) limit then it might be reasonable to use that. Assuming profit sharing is discretionary, it will be whatever amount the employer decides to allocate, within the constraints of sections 404, 401(a)(4), and 415.

Is everyone who is eligible to defer (regardless of whether or not they elected to) also eligible to receive the safe harbor match? In other words, is the eligibility the same for deferrals and safe harbor match? Or do they have (for example) immediate eligibility for deferrals, but 1 year of service for match? If everyone who could defer would be eligible to receive the match if they deferred, then you are good on the top heavy exemption. However if there is anyone who is eligible to defer but not covered by the match then the plan is not exempt from top heavy, even if no contributions other than deferrals and safe harbor match are actually made. However however if the only employees who are eligible to defer but not receive a match are long-term part-time employees (who are eligible solely because they met the LTPT eligibility criteria) then the plan retains its safe harbor top heavy exemption.