"Consider a self-employed husband and wife, each deferring $19,500 (2020) Their compensation turns out to be $65,000. Oh, and they have an employee that should have been eligible 7/1/20, but was overlooked an that was the only NHCE. It's too late for a refund, so a QNEC is required. The HCE ADP percentage is 64.93% : NHCE is 0%. 62.93%. QNEC would be over $28,000. This would be higher than the Section 402(g) limit. My inclination would be to limit the QNEC to $19,500, but I can't be sure that this is right. A seemingly paradoxical situation is that had the NHCE deferred $19,500, it still would not pass ADP. Is there a way out of this dilemma?"

"For off-calendar year plans that use anniversary year for the first eligibility computation period (ECP) and plan year thereafter, when is the first date an employee could become eligible as a LTPT employee? Example: 9/30 plan year end, ECP switches to PY after the first ECP, semi-annual entry for LTPT EEs. Participant hired 7/1/2021. ECP 1 = 7/1/2021 -- 6/30/2022. ECP 2 = 10/1/2021 -- 9/30/2022. ECP 3 = 10/1/2022 -- 9/30/2023. Assuming Participant had at least 500 HOS in each ECP above, should this participant have entered on 10/1/2023? Do off-calendar year plans need to use anniversary year for 2021-2023 to avoid this result?"

"Suppose you have a Safe Harbor 401(k) Plan sponsored by a partnership with 12 partners and 6 employees. The plan has a December 31 year end. The plan provides a 3% Safe Harbor Non elective contribution to only non-key employees. Suppose a non-key employee becomes a 5.5% partner in December (i.e. they are only key for one month of the plan year). Would they be required to receive a 3% Safe Harbor contribution for that plan year?"

"Suppose you have a 401(k) plan that is sponsored by a partnership of corporations. Each corporation then adopts the plan to become a participating employer. This is often the case with a group of physicians. If each corporation only employs one physician, is that physician automatically considered a key employee because he/she owns 100% of their corporation? What if they own 100% of their corporation but their corporation only owns 4.5% of the partnership? Does that then make them a non-key participant?"

"Client / Seller (founder / owner) sold her private company to large company earlier this year in an asset deal. Deal has closed and seller received funds now held in her shell company. Business had 25 or so employees who all were hired by Buyer and are now employees of a sub in Buyer's group. Seller did not provide any transaction or sale bonuses to employees at closing -- had no plan / contractual obligations to do so and failed to build bonuses into the transaction (whereby part of the purchase price might basically have been earmarked for employee bonuses to be paid out by Buyer as part of a post-closing bonus / retention plan, etc.). Seller regrets failing to arrange some sort of bonuses and feels strongly about getting something to former employees. Seller would like to do that in a tiered way so a few very long-term employees get significant amounts.... Seller wonders if there could be a deferred compensation plan of some sort set up by the Seller Company with the bonus amounts contributed to an irrevocable trust and the bonuses distributed over a period of years to the former employees on a schedule the Buyer would not object to as potentially impacting employee retention ... with all amounts due accelerated upon death or disability. Seller would be fine in having the amounts contributed to trust so they never revert back to Seller and any forfeitures would get allocated among remaining employees and any ultimate remainder ... going to a charity.... [It] is unclear to me Seller's company would be entitled to an immediate tax deduction (this year) on the amount transferred to an irrevocable trust for distribution to former employees over multiple years. And, even if that did work somehow, it seems such an arrangement would clearly fail to qualify as a top hat plan since it would cover all former employees (few of whom are highly compensated or management employees). Seller is not really interested in setting up anything governed by ERISA (if that could even be done) for covering former employees."

"My firm was recently contacted by Winklevoss. They advised us our license fee would be increasing by 50% effective 1/1/24. Has this happened to anyone else?"

"Have a scenario where an employee became a partner of the firm sponsoring a 401(k) plan on 1/1/2022. However, they became sick just before 1/1/2022, and left the firm 3/15/2022. During 2022 they worked 0 hours but had $86,000 of ordinary income also considered self-employment income. Would they be entitled to a 2022 SHNE contribution for 2022? As an employee, she was eligible for the plan. Apparently, the firm paid her disability payments of $86,000 between 1/1/2022 and 3/15/2022. I know there cannot be an hours requirement (like 1,000 hours etc.) to receive a SHNE contribution. Just wonder if someone working 0 hours would even be considered eligible to receive a SHNE contribution. The plan document does not seem to address this."

"Company A acquired Company B -- Stock Purchase. Each passed coverage at the time of acquisition. Plan has taken advantage of the Transition Rule. The transition rule ends 12/31/2023. As of 1/1/2024 the employees under the prior company will know be enrolled in the surviving plan. Company B will be a participating employer in Company A's Plan. The recordkeeper of Company B will not liquidate the assets until 1/15/2024. Funds will be transferred to Company A's plan. Question: The fact the assets transfer after the end of the transition period does not negatively impact the transition rule -- correct? The transition rule relates to the 410(b) testing and transferring the assets after the end of the transition period should not be an issue."