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for The Angell Pension Group, Inc. (Remote)View the full text of this job opportunity

Even if there is no doubt that the signature on the plan documents is true, was a plan ever established? If one assumes a plan was established, and if the plan sponsor’s written act provides the plan’s discontinuation, termination, and final distribution, would anything preclude delivering to the one participant a certificate of the distributee’s rights under the plan? Might the plan’s administrator or trustee in good faith find that the value of that distribution is $0.00? Might a Form 1099-R tax-information report state the amount distributed as $0.00? If a plan was established, always was a one-participant plan, and always had plan assets no more than $250,000, might a Form 5500 report and return have been excused for all years other than the plan-termination year? Might the plan’s administrator file a zeroes Form 5500-EZ return for the year that includes the distribution of the participant’s rights? After considering the expense of those or other steps, might the plan’s sponsor or administrator reconsider one’s analysis about whether a plan was established? If a third-party administrator believes the plan sponsor’s analysis is incorrect, might that not matter because the TPA might not be associated with any tax return that includes an incorrect position? (And the TPA won’t have provided incorrect advice.) This is not advice to anyone.

for Accelefund, Inc. (Remote / Lenexa KS)View the full text of this job opportunity

The gateway may not be tested using component plans. See 1.401(a)(4)-9(c)(3)(ii)

Thank you!!

Absolutely. My guess is that somewhere in the doc it would address self employed individuals, but not certain

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)? I Thanks!

Many if not all of our clients that utilize this are self employed, so there's no pay to be withheld from. But that is something I had never thought of. Thanks for bringing that up.

I believe it's because they don't need or want the tax deduction for the company. They make the deposit and then immediately convert it to Roth and it doesn't affect their W-2/Sched C or K-1. On a few of these it was because their wages were enough to go up to the max 415 limit but not enough to fully take advantage of the 404 limit. So, they do the max def, PS and then the rest is after tax. For example, comp is $80,000 - then they can only have $20,000 in employer and wouldn't be able to max out the 415 limit. But they could do $31,000 in def, $20,000 PS and $19,500 after tax to get to $77,500. We have a few that are using the employer designated Roth but again if their wages are not enough, then they can't max. So, going back to your comment above, if there were no deferrals - could the after tax be funded for the full 415 limit PLUS catch-up or because there is no pretax/roth, it's limited to $70,000 for 2025?

https://www.plansponsor.com/blines-ask-experts-410b-coverage-testing-firms-401k-403b/ I had a few minutes before I am heading out for dinner :). This should help!

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.

Should be able to. Note the rules cited cover changes to the vesting schedule. Under the proposal, with regard to terminated participants with account balances, the vesting schedule will not be changing. With regard to current participants the vesting schedule will be changing but as stated going from a 6-year vest to a 5-year vest provides better vesting each year. As far as providing an election to retain the old vesting, the regs state: "no election need be provided for any participant whose nonforfeitable percentage under the plan, as amended, at any time cannot be less than such percentage determined without regard to such amendment." Just my thoughts.

That helps! at least it keeps me motivated knowing there is something out there! Thanks @austin3515

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 jsut 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? (Is this a grand conspiracy between the DOL and the Ferenczy law firm to drum up revenue? lol)

if the two testing groups are in the same plan, yes overall gateway must be met if one is tested on an accrual basis. Answer might be different it it is actually two separate plans being permissively tested together, and each plan covers two different sets of people (not the same people). Like a plan for division or Company A, and a different plan for division or Company B, assuming A and B are a control group or some such. i don't know for sure the answer in that scenario.

Yes. both sub-plans still need to satisfy the overall gateway.

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) Thanks

Thanks Belgarath. Peter, this is a brand new corporation started 9/1/2025. The owner worked for an unrelated company prior to 9/1/2025 and started his own business 9/1/2025. He deferred the max into his prior employer's plan in 2025 which is why no 401k needed for 2025 in the new corp's plan. I was trying to see if there was a way to set up the plan so that proration was not needed. Based on Belgarath's comments it appears the plan is not the issue, but rather the short corporate tax year is the issue.

Consider: Did the corporation decide some of its employee’s compensation to be paid in the last four months of 2025 based on the now-employee’s before-incorporation work as an organizer? When does the employer pay its employee? If a corporation’s only employee also is the corporation’s shareholder, might the employer pay wages as infrequently as once a year? “No proration required for participation for less than a full plan year. Notwithstanding paragraph (b)(3)(iii)(A) of this section, a plan is not treated as using compensation for less than 12 months for a plan year merely because the plan formula provides that the allocation or accrual for each employee is based on compensation for the portion of the plan year during which the employee is a participant in the plan. In addition, no proration is required merely because an employee is covered under a plan for less than a full plan year, provided that allocations or benefit accruals are otherwise determined using compensation for a period of at least 12 months. Finally, notwithstanding paragraph (b)(3)(iii)(A) of this section, no proration is required merely because the amount of elective contributions (within the meaning of § 1.401(k)-6, matching contributions (within the meaning of § 1.401(m)-5, or employee contributions (within the meaning of § 1.401(m)-5 that is contributed for each pay period during a plan year is determined separately using compensation for that pay period.” 26 C.F.R. § 1.401(a)(17)-1(b)(3)(iii)(B) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(17)-1#p-1.401(a)(17)-1(b)(3)(iii)(B). This is not advice to anyone.

I had this scenario and had them set up a safe harbor match plan for this reason. There is a special rule about coverage testing for the match for 403bs and 401ks,. Someone else might be able to tell you the site, but there is something so make sure you find it!

Is this true? Often in component testing, one group (the one with the young HCE) is tested on a contributions basis and the other one(s) tested on accrual basis. Does the contributions basis 'plan' have to satisfy the gateway? It's its own 'plan' after all.... 'Tis been a few years since I last did one of these 'boutique' calculations as a former employer used to put it. (And I kind of remember that the combined sub-plans, if you will, must satisfy the ABT? I'd have to dredge up my notes....

I would add one thing to C.B. Zeller's comment. To be deemed not top-heavy, the plan must consist solely of deferrals and safe harbor contribution AND the eligibility requirements for both deferrals and the safe harbor contribution must be the same.

@justanotheradmin for the win! @Mleech this is excellent advice in each of those posts.

Arggh. Going from memory only, (so don't trust me) the problem is less about the plan year (if you subscribe to the theory that the plan year can begin prior to company being formed - we've done it, and upon audit IRS never questioned it) than it is the short taxable year. With a short taxable year, the 404(a)(3) limit is based on compensation for that short period, and the compensation limit is prorated to calculate the deduction limit. Hopefully someone with a sharper memory can point out corrections to the above...

Similar Question - Non profit and For profit are clearly a control group (Non profit owns the for profit). Non- Profit has a large 403(b) plan with several hundred participants. For profit does not have a plan but would like one, small employer. There are a few HCE. The for profit cannot participate in the 403(b), but if they start their own 401(k) plan, I think testing would fail? They do not want a 401(k) plan to cover both entities, the non profit likes their 403(b). My understanding is 403(b) and 401(k) plans cannot be aggregated for testing, but if I'm wrong, could someone tell me? Am I thinking of this clearly? Issues: 401(k) with a 403(b) in the same testing group Different entity types in the same testing group Anyone have suggestions? My apologies if this would be better in a separate post of its own, it just seemed like a good place to ask about a similar scenario.