"Company A and Company B each sponsor their own 401(k) plan. Both entities are owned 50/50 by Tommy and Cooper. Both plans have the same plan year (fiscal year-end), testing method (current year), and neither is a safe harbor plan. No employer contributions are made to either plan for the year in question.

Plan A:

• Participants: Tommy and Cooper only (the only employees/participants)

Plan B:

• Tommy and Cooper are employees of Company B (and eligible participants in Plan B) but do not make elective deferrals.
• There are 16 HCEs total (including Tommy and Cooper)
• There are 79 NHCEs eligible to participate (2 are otherwise excludable, 77 are not)

"How are these plans required to be tested for 410(b) coverage and ADP testing? Specifically:

• Are the two plans required to be aggregated for testing purposes due to common ownership/controlled group rules, or may they be tested separately?
• If aggregation is required, how does that affect coverage and ADP results in this fact pattern?
• If separate testing is permitted, under what circumstances would that apply?
• Are there any other issues or traps in this structure that we should be aware of?"

"Has anyone thought about the permissibility of escheat in the context of annuity contracts issued under a terminated defined benefit plan?

"Field Assistance Bulletin No. 2025-01 currently permits escheat from a qualified plan only for benefits of less than $1,000 (among other conditions). However, we are now dealing with a terminating defined benefit plan which is seeking an insurer to provide the annuities required in the case of a terminated plan. Several of the companies have provisions in their contracts saying that they will escheat benefits of missing participants in accordance with state law (with no cap on the amount that may be escheated). When questioned, they say that the insurance company is not subject to ERISA and thus need only comply with state law.

'"My concern here is that even if the insurer is not subject to ERISA, the plan is. And if the plan cannot directly escheat benefits of missing participants, is the plan violating its fiduciary duties if it signs a contract to purchase an annuity that explicitly states that benefits may be escheated? What are other plans doing in this situation?"