Nate S

Since the restatement is required to maintain the Plan's tax-qualified status, which benefits the participants, it's administrative and may be charged to the Plan.

Why terminate the original Plan at all? Establish two new Plans for each trustee and do two spinoffs. Then Sponsor of new Plans is new Sponsor, existing plan changes effective with the incorporation application. Simple, clean, no hoops.

Otherwise, can we all acknowledge that Keogh's sunset in 1984 (TEFRA '82), were laid to rest in 2000 (IRS Publication 560), and officially expired in 2002 (EGTRRA '01)? This is in some ways worse than the "Solo-401(k)" naming convention.

Did the sponsor "amend" that provision when he signed the other doc pages and forgot to send you the updated version of that page??

Yes, it would be tested at the earliest applicable age which generates the MVAR.

We've covered the issue before that the effective date of the Plan can pre-date the effective date of the sponsoring entity.

@BG5150 Don't forget to check that the document doesn't define a month as 30 days regardless of the calendar, for some providers there is no difference. And does it count a full month, or give credit based on a certain number of days?

Similar office argument, how do you interpret the phrase, "rounded to the next highest $1", if the % doesn't result in any rounding? For example, AA election is 80%, TWB for '22 would be $117,600. Office leader argued that it should be interpreted as $117,601 so as to use the 5.7% integration level. My reply was that it divides evenly so there is nothing to round, you have to use at least 80.01% in your document. I saw the rounding language as anachronistic to the covered compensation table language.

@metsfan026 Consider adding an early retirement date of 55 for those eligible before the amendment, and keep the 100% vesting at early and normal attainment.

If flat dollar allocations pass ratio coverage, and you aren't using components, then no further testing; gateway is ignored and a(4) mirrors the ratio. As long as your document provides for individual allocation groups then you would just need the deposit for the rest of the eligible nonHCE's. The fact that an HCE got an early deposit is likely offset by recent market losses for BRF purposes.

Agree with the above suggestions, usually limit to 50% of the prior valuation balance, and maybe up to the deferral basis amount so that the ER isn't holding employee monies for any extended time. But barring a significant withdrawal, usually try to avoid interim valuations.

Typically owner-only plans make up 10-20% of the TPA book, with multiple owner entities comprising about 20% of them, usually partnerships or a successors arrangement with a younger minority arrangement. Almost all will have a financial advisor involved; but usually SDBA accounts with each owner engaging his own advisor. Biggest issue is lack of formal Plan Document, too many brokerages make it seem like their account application will cover the doc requirements in these arrangements. As a TPA, my focus is on providing services centered around ERISA and related IRS/DOL regulations; state law is only considered specific to particular divorce and maybe probate benefit situations when invoked. Even where ERISA may not apply, I'll lean on those precepts for guidance and shape my communication accordingly.

So the Plan has only ever been deferral and match? Seems odd that the ER would suddenly give a PS allocation... Maybe he "meant" to give a $1000 bonus to everyone and "mistakenly" payroll processed it as deferral and put it in the Plan??? The ER might not like the extra FICA tax, but probably a lot simpler to back it out of the Plan and reprocess those amounts as 2022 bonus payroll, same as the other non-account holders recieved. No amendment, corrective action, 402g issues, amended w2 or tax filings...

Low risk/return investments, loans, and early access are the three biggest things employees do to erode their own retirement future. I applaud any employer effort to keep participant monies safe and out of their hands before actual termination/retirement.

Correct & correct.

Otherwise, have the recordkeeper produce a copy of the plan document and termination amendment. 28k pro-rated suggests 6/15 termination date, that means 140k prorated compensation limit, if participant earned at least that, then sh match is 5.6k, meaning 14.4k profit sharing, >12%. Not that profit sharing couldn't be that high, it would just be unusual in a sale & termination situation.

Assuming it is factually a 415 excess; once corrected it is then disregarded for 402(g), 415, ADP, and ACP. So his year-to-date 2022 deferrals are currently $5000.

Yes, you can do it anytime.

CuseFan and B's TPA are correct, a spin-off can occur for any or no reason whatsoever; you just have to have a definitely determinable group of employees, easily satisfied by the divisional group dealt with here. B's Plan will execute the spin-off and resolution, A's will execute the merger and resolution. Just have to ensure that vested account balances are preserved and any joint & survivor benefits are protected. Otherwise its an administratively simple transfer. A will need to make sure their Plan will accept the transfer of loans if any.

Yes, this is actually the recommended correction for early entry issues. It is always allowed for NHCE's; if an HCE is involved then the amendment must be non-discriminatory, to the extent there are affected NHCE'S. For example, if the HCE is the only ineligible, then no issue with bringing him in early. But, if you have ineligible NHCEs who were hired before the HCE, or will attain similar terms of service during the plan year, then you would have to bring them in too.

Maybe, but that would imply it's tied to payroll, and again that would be on the basis of compensation paid, so it shouldn't be possible to exceed. @justatester can you help us with some details?

You're good!

Why are there 415 excess amounts? Did the Plan termination explicitly change the limitation period? Only 401(a)(17) would be pro-rated, but that still wouldn't reduce deferrals since the compensation to date is what was deferred upon. This insinuates significant employer discretionary allocations, but most current plan documents prevent the allocation of employer discretionary amounts if it would result in a reduction of the employee deferrals. Something is strange here, can you please share more about the 415 limit determination?

The group term life is added to W-2 compensation for Plan purposes. W-2 also normally includes fringe benefits so if the document doesn't exclude them then they're in. However, the spousal travel reimbursement doesn't strike me as something to add on as a fringe since it's not initially taxable to the participant; the Sponsor would have to know the level at which it became deductible to the participant to start counting it for Plan purposes, and personal taxes are no business of the employer.

that depends upon the actual definition of compensation per the Plan Document, 415, W-2, or 3401(a); and if fringe benefits are excluded. BTW, what is spousal travel and how is it paid, as an expense reimbursement or payroll income?