One owner DB and 401a26 issue

Hi

Owner only DB plan. Hard frozen in 2021 before any benefit accrual. No income for 2021 and 2022. Also terminating in 2022.

Plan is slightly underfunded.

Software states fails 401a26. No PBGC coverage. Never had any employees.

As no key is benefitting, should pass 401a26 automatically, correct?

Thank you

Under 401(a)(26)(A)(ii)(II), if there is only one employee, it doesn't have to have 2 benefiting. Under 1.401(a)(26)-2(b), a frozen plan is deemed to satisfy 401(a)(26), assuming it passes the prior benefit structure test.

If there have never been any employees, I don't see how it could fail. But I'm not a DB person, so maybe someone else comes up with a different result somehow?

You're good, ignore the software.

9 hours ago, CuseFan said:

You're good, ignore the software.

You also might want to ask your software vendor the reason for stating that the plan fails 401(a)(26).  Could be useful in the future.

Oh, they know

LMAO @ Oh, they know