EBP

The OP didn't say the employer was going to declare bankruptcy so thoughts about relief under that may be premature. If the employer is just closing down, amend the plan immediately to stop safe harbor prospectively under economic loss (but it can't be effective until 30 days after date employees are notified) and issue a 30-day notice to participants saying the same. Company will still be on the hook for matching contributions on deferrals made from beginning of plan year to date of cessation of safe harbor contributions under amendment and notice. And ADP/ACP testing will be required for the year. As soon as company declares bankruptcy (if it does), everything about terminating and wrapping up the plan gets exponentially harder. We're currently dealing with a case. First time in 38 years of practice and never want to do it again. I'd give you details, but you really need bankruptcy counsel and ERISA special counsel (which needs to be appointed by bankruptcy court first). The whole process is frustrating, takes a long time, and is different from the normal plan rules.

No. I filed a VCP application on March 1, 2023, and received a Compliance Statement on February 18, 2025. By contrast, I filed a different application on December 7, 2020, and received a Compliance Statement on January 28, 2021. Both were nonamender failures.

I don't know the answer to your question about whether other distributions should be included, but I agree with Paul I that you should check the plan document for the language regarding "mandatory" cashouts. I know that we as practitioners use this terminology regularly, but I question whether it's accurate. As an example, our document (pre-approved NS plan) does not mandate cashouts. It gives the plan administrator discretion to cash out if they choose to. Some of our clients don't force out small distributions even though they have the discretion to do so. Others likely have an automatic cash out process set up with their recordkeeper (but even if they do, the plan document does not require it). This gives the plan administrator maximum flexibility and if they don't do it, they're still following the terms of the plan. If your document does not mandate cashouts, then I think the obvious answer is that you answer no on the Form 5500, at least with regard to cashouts.

I believe the submission period for Cycle 1 403(b) pre-approved plans ended 4/30/2014 and opinion letters were issued on or around 3/31/2017, so no, it doesn't seem like a 2014 opinion letter would be correct.

As others say, check the plan document first. However, if the IRS safe harbor financial need reasons have been adopted, I don't see how you can say this situation meets any of those reasons. Unfortunately, I'm guessing we've all had clients we want to help out in this area, depending on the story, but we can't rely on our own emotions to make the determination. I don't think IRS would buy it.

And remember that in order to eliminate the SH match by giving employees a 30-day notice, the language allowing the employer to do so must have been in the safe harbor notice for the year.

Yes, I think it could. FWIW, our Cycle P3 nonstandardized pre-approved language says: "After the end of the plan year, and from time to time during the plan year in the employer's discretion, the matching contributions will be recalculated, using compensation for the plan year, and any additional amount due as a result of the recalculation will be contributed as soon as practicable after the recalculation." I understand your concern, but since employer contributions may be made during or after the end of the plan year, I don't know why matching contributions would be any different.

We are a law firm offering our own nonstandardized pre-approved plans. We have until now used a customized database built by an internal IT employee to keep track of plans and plan information (plan name, plan nos., EINs, plan type, some plan features, whether we're responsible for plan document, trustee, third-party providers, etc.). Our IT employee is retiring and we're looking at other options. Does anyone have suggestions for useable databases they use for this purpose? The most important feature is being able to identify which plans we're responsible to restate during the next pre-approved adoption cycle. Thanks in advance for any suggestions or ideas.

I was taught the same as you - get a separate EIN for the trust - and I did so for many years. However, the firm I joined ten years ago never got separate numbers and I know others who never did. We had a lot of discussion about this, and we did get some separate numbers, but I don't think this is such a big deal anymore. These days, the big recordkeepers issue 1099s under a separate number that they maintain, so it's not a concern as far as differentiating the employer number from the trust number. As others point out, I've never seen it be an issue either.

To answer a) - See Appendix A., Schedule of User Fees in Rev. Proc. 2024-4, .05. There is a user fee of $300 for "(2) Assumption of sponsorship of a pre-approved plan, without any amendment to the plan document, by a new entity, as evidenced by a change of employer identification number, per basic plan document." I haven't done it, but I would guess you'd submit an application using IRS Form 4461 and answer Yes to 9.d. This is not advice as I haven't done it, but perhaps it will point you in the right direction. To answer b) - I don't know that most employers even know there is a list unless their advisers tell them, although it might be incumbent on the provider in this case to disclose that.

Is it possible the policy could be rolled over to an IRA?

In addition to agreeing with others' comments, if the plan's safe harbor notice contained the language allowing suspension or reduction of safe harbor contributions mid-year with proper prior notice, I would suggest they at least amend the plan to suspend contributions prospectively (with at least 30 days' notice to participants and an effective date of the amendment that coincides with the expiration of the 30 days) to stop the bleeding in 2024, so to speak. They'd still be on the hook for the 2023 contribution and the 2024 contribution through the suspension date, but not for the rest of 2024 and not on an ongoing basis. And it sounds like they shouldn't have a safe harbor plan in the future anyway as they obviously don't understand it and aren't willing to comply with the requirements. On the downside, I suppose giving participants a notice highlights the fact that they were supposed to get a contribution. Side note - I assume that not making the contribution subjects them to ADP/ACP testing. Do they pass testing? If not, does the cost of fixing the ADP test mitigate the cost of SH contributions? I don't do testing, so thinking out loud about another possible approach.

You may amend the plan under Notice 2020-52 to prospectively eliminate the contribution for highly-compensated employees. A 30-day notice is required. A safe harbor contribution is still required to be made on compensation earned before the amendment is adopted. Example: Amendment adopted 2/15/24 that eliminates contribution for compensation earned after 3/15/24. Notice given to HCEs on 2/15/24 notifying them of change. Safe harbor contribution made for HCEs for compensation earned through 3/15/24. No safe harbor contribution made for HCEs for compensation earned 3/16/24 - 12/31/24 or after.

Let me guess - the doctor never engaged counsel (ERISA or corporate) to review the agreement he signed with the larger organization because why would he need one? What could go wrong? Why would he spend the extra money? This is why.

You need to amend the plan to prospectively suspend safe harbor contributions (date must be at least 30 days out), terminate the plan as of a certain date (not earlier than the date of suspension of the safe harbor contributions), and update the plan to comply with current law. You must give a notice of suspension of the safe harbor contribution to participants at least 30 days before the suspension of safe harbor contributions is effective. The owner will be required to make safe harbor contributions based on 2024 compensation until the date of suspension of the safe harbor contributions. Example: Adopt suspension and termination amendment on 1/15/24, effective 2/15/24. Give participants notice on 1/15/24, telling them safe harbor contributions are being suspended effective 2/15/24. Make 2024 safe harbor contributions for compensation through 2/15/24. There are best practices with regard to the language in the termination amendment, but those aren't different when you're terminating a safe harbor plan vs. a non-safe harbor plan.