FORMER ESQ.

The calculation of interest for DFVC filings is a settlor expense. How would this be different?

You are correct that the interest itself is a settlor expense, but so is the cost of calculating the interest (late contributions and missed deferral opportunity) and preparing the 5330. Not payable by plan assets.

Plan Doc: Thank you for your response, and my apology for the typo above: It should read "type" as opposed to "time", but I think you figured it out. Moving on to your specific question: Under your factual scenario (no plan termination but reduction or suspension of safe harbor matching contributions), I believe that 1.401(k)-3(g) provides your answer. The reduction or suspension is permissible if S is operating at an economic loss or the more likely scenario (the SH notice for S' plan had "maybe not" language). If so and assuming that the other requirements of 3(g) are met, such as notice, etc... the S plan would still have to pass the ADP test for that year. So, in the sense that you will not be able to preserve SH status for 2023.

Is B's plan a SH plan of the same time as S's plan?

It's prospective only. The 2022 unpaid RMD would be subject to the 50% excise, not the 25% excise tax or 10% excise tax.

I think consulting with an attorney on this specific issue is a good idea. Myself excluded, you can contact me directly, if you would like some recommendations based on where you are located. This is because I know of other ERISA attorneys around the country who have looked into this before in detail.

AlbanyConsultant: Non-union pay to union employees is surprisingly, in my experience, something that happens frequently. It presents an additional compliance challenge as Paul I alluded to: Mainly, to the extent these employees are receiving non-union pay, they cannot be excluded from the non-union plan's 410(b) testing, unless another plan exception applies (i.e., 410(b)'s statutory exclusions). In practice, this means that you will need to convert their non-union pay into hours of service for purposes of determining eligibility, benefits, etc... I have not found much guidance on how to do this, but one possible method is below: Example: if total W-2 compensation (definition of compensation under the plan) is $100,000, and the non-union portion is only $5,000, then about 5% of their hours of service (however that is measured under the plan) would be counted as hours of service for eligibility/benefits/vesting under the non-union portion of the plan. I am sure there are other methods, but the above is purely on my experience.

The question that Plan Doc is asking is not necessarily a 410(b) issue, although it is related. Rather, the issue is whether the eligibility classification (exclusion) for interns passes muster under 410(a). The argument being that the exclusion of interns could be seen as an indirect exclusion based on hours worked, which violates 410(a). I believe that the failsafe language you are referring to does work according to the IRS. Furthermore, I don't see how different eligibility criteria presents a BRF problem under 401(a)(4). If there is a "problem" with different eligibility criteria (assuming the criteria passes 410(a), then it will be "caught" under 410(b), not 401(a)(4) BRF.

It's correct that the CPA would have to confirm that the employment is legitimate. However, I hope that the CPA (for his or her own good) would seek legal counsel on this issue because applicable state laws on minimum employment age are not always clear cut.

Profit sharing contributions are not subject to ACP testing. They are subject to non-discrimination testing under 1.401(a)-4. Your last sentence is correct, though. If the PS formula meets a safe-harbor formula under the 1.401(a)-4 regs, then you pass.

Sorry, but I respectfully disagree on your point about the CPA. This is actually a legal matter-specifically the various employment statutes in the state.

Always trust that gut feeling. Look into the Child Labor laws in the State where the 10 year old is being "employed." I would imagine that employing a 10 year old (at least during school hours) is likely not allowed. But, I don't know the specifics of your facts. I would caution you to be very careful. If you have any doubts, ask this potential client to get an opinion of an employment attorney on this matter.

Yes, the eligibility requirements in this case may be retroactively corrected by amendment under SCP.

Does this sound like its trustee directed?

Why is no one responding to CuseFan's concern--if the plan 3 participants are not being given the right to also invest in the LPs, you will need to show that the BRF is non-discriminatory. The right to make an investment decision is a "right or feature" under the 1.401(a)(4)-4 Regs.

What the Notice is saying, although not clearly, is that demographic failures cannot be self-corrected. If the plan is failing 401(a)(4) or 410(b) for a particular plan year, and the plan sponsor choses to timely correct the violation through an 11(g) amendment, there is technically no "demographic failure" because the violation was corrected through the code.

It seems to me that if you are going to retroactively become an S-Corp for 2022 (and show W-2 income), then the rules for W-2 employees should also apply for 2022: Did the individual make a proper deferral election in 2022 with respect to the compensation deferred prior to earning this compensation? If the answer is yes, then you can amend the W-2 to show the 401(k) contribution. If the answer is no, can we recharacterize the 22k as a profit sharing contribution for 2022?

Has this individual received any pay during this period?

Agree.

Because Roth contributions count towards the ADP test, and because this is a SH plan intended to be exempt from ADP testing, I would hesitate to make a change to the Roth feature of the plan mid-year.

Assume we want to aggregate two SH 401(k) plans. Both of them provide a matching formula. Plan A's match formula is 100% of first 3% deferred and 50% of the next 2% deferred. Plan B's match formula is 100% of first 3% deferred and 60% of the next 2% deferred. SH matching contributions are made to NHCE only. Could these plans be aggregated for 410(b) testing? I read the Regs as saying yes, because there are no HCE that are getting a SH match. What bothers me is that some NHCE are getting a better match than other NHCE. What is the issue here?

Which is why I asked. If the answer is yes, then no reason why this cannot be 404(c) compliant.

Depends on the plan document language. I normally see plan language that says that if an allocation/contribution to a participant's account would otherwise causes it to exceed the participant's 415 limit, the allocation/contribution is reduced to not exceed the limit. With language like this, you don't need to make the matching contribution if you know the 415 limit will be exceeded. Bottom line is to look at plan document language.

Can they change their investments in the money market funds at least once per quarter?

Represented a plan/plan sponsor with somewhat similar facts in Federal District Court in Northern California. Guess how the court ruled on the fiduciary liability issue?