"A new company's inception is 9/1/2025. There is one employee, the S-Corp owner. First tax year runs 9/1/2025 to 12/31/2025. Owner wants to adopt a calendar year profit sharing only plan for 2025, adding 401(k) for 1/1/2026. W2 comp for the period 9/1/2025 to 12/31/2025 will exceed $350,000. In the EOB it seems to indicate that it is possible for the effective date of the plan to begin prior to the inception date of the company. The EOB indicates that the IRS informally expressed this view at benefit conferences. It also notes that the employer can highlight the issue in the plan's determination letter request which seems to indicate that this wording has been in the EOB for a long time. Is this an acceptable approach? If not, and the plan year must be a short plan year (9/1/2025 to 12/31/2025) to run as a calendar year plan, are we then prorating the compensation limit to $116,667 (4/12ths) and in turn using that pro-rated limit to determine the max deductible amount of $29,167 (25% of prorated limit)."

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"This client owns a business and is going to open another business (both in the financial arena). I can use the same plan document for both plans.... using the joinder agreement option.... it's a control group. IF the client wants to max out the ER, does it matter which business ponies up the money? OR.... if the client earns $100K from company A then company A needs to pony up $25K (and so on with Company B)."

"Often, when there are late deferrals to a plan, TPAs are using the DOL VFCP calculator to determine lost earnings. I understand that's only allowable if the Sponsor is filing under VFCP. And if not submitting, they must use EPCRS to determine the earnings. The first and best option is to calculate actual earnings for everyone involved. Than can get hectic if there are more than a few participants involved, or multiple payrolls. Hectic and pricey--we charge by the hour, and the cost can easily overtake any benefit to the participants. We may have a way to calculate the Rate of Return (RoR) individually for each payroll, rather than exact earnings. My question is this: Is that enough? Using the RoR per participant (and if unavailable, the RoR for the during the same timeframe?) The DOL calculator determines not only lost interest, but the interest on the interest. Would I need to do TWO calculations? First determine lost interest from payroll date to deposit and then another from deposit until 'today'? How do you guys do it? Several colleagues at other firms just take the path of least resistance and still use the DoL calculator. I haven't heard anyone getting in trouble for doing it that way. Have you?"

"New solo 401(k) Plan was signed/adopted 5 years ago. No contributions have ever been made. Only filing ever done was to create a Trust EIN. 'Plan Sponsor' would like to 'disappear' the plan and start a SEP this year. I'm just processing what steps to take."

"So, every day I find something that I thought I knew and now question my entire life. Most of our safe harbor plans we write with no hours or last day requirement for the new comparability profit sharing to allow for flexibility (they have to get the gateway anyway for SHNEC). I am now questioning a safe harbor match plan with new comparability PS. We sometimes don't give the PS to HCEs (spouses, non-owners) and terminated employees. As long as it passes, we figure it's ok. I went down a rabbit hole today with ChatGPT and he/she/it told me that if the SPD is explicit in saying they will receive a PS, then they have to receive it.

This is what the SPD says:

Discretionary Employer Contribution formula. We will decide each year how much, if any, we will contribute to the Plan. Since this Employer Contribution is discretionary, we may decide not to make an Employer Contribution for a given year. We may decide to give a different contribution to each eligible participant under the Plan. The Employer Contribution may be determined as a percentage of compensation or as a dollar amount. We will inform you of the amount of your Employer Contribution once we determine how much we will be contributing for the year. Employer Contributions. Under the Plan, as amended, you do not have to satisfy any additional allocation conditions under the Plan. Thus, you will be entitled to share in any Employer Contributions we make to the Plan if you satisfy the eligibility conditions applicable to Employer Contributions regardless of how many hours you work during the year or whether you terminate employment during the year.

If this is a SHM plan - do we have to give a PS to terminated participants OR HCEs as long as we pass the required testing (401(a)(4), 410(b), TH)?"