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CAFA, is your question about health coverage that is insured or "self-insured" (that is, not provided by a health insurance contract)? Also, what method (if any) beyond a participant's statement would the employer/administrator use to discern whether a participant's spouse has an availability of coverage (other than Medicare) elsewhere?

To help the seller evaluate possibilities and probabilities of outcomes about a demand, an arbitration, or a court proceeding seeking a return of what the seller might assert was a mistaken contribution, the seller might want its lawyer’s evaluation. An important issue could be whether the seller’s ostensible belief or mistaken assumption was a mistake of fact. What fact was not known to the seller and would not have become known had the seller used reasonable diligence? Including (at least) reading all documents of the organization and of the transactions? If the seller might ground a claim on the receiving plan’s § 15.02(b), might such a claim be inchoate until the seller has filed an income tax return that claims a deduction for the contribution and the IRS has somehow “disallowed” the deduction? Or, might the receiving plan’s fiduciary be persuaded by a reasoning that the seller’s knowing that it must not file a tax return that would claim a deduction the taxpayer knows it is not entitled to is tantamount to the IRS’s disallowance. If, when the contribution was made, the seller was the or an employer regarding the participants (and their beneficiaries) who are the subject of the contribution, how confident are you that the contribution is not deductible? What consequences result from relevant acts having transpired in 2023? Although $250,000 might matter to the seller, might professionals’ fees and other expenses outweigh the probability-discounted recovery? This is not advice to anyone.

Those rules are very particular, and "I thought I could deduct but my accountant told me no" (or some other facsimile) I don't think qualifies as a mistake of fact. CB contributions - minimum required and maximum deductible - should have been calculated by a knowledgeable actuary. Following bad advice, ignoring good advice, or not getting advice is not a mistake of fact. Mistake of fact is like having the actuarial calculations based on materially incorrect data such that the contribution range is materially incorrect. Maybe that is the case here, but you don't provide details. If so, and a refund was requested from the trustee within a year of the contribution then there could be actionable cause, in which case I'd recommend lawyering up and following through on the litigation threat as it seems the seller has been ghosted. Note the amount available for return is limited to the excess over what could have been contributed had the mistake leading to the error not occurred. Disallowance of deduction is specific to IRS action and you don't mention that as a relevant event here.

As all said - dig into document details carefully. Without knowing how those plan provisions are laid out, my opinion given how you describe them is the person should get a match equal to the lesser of 50% of their deferrals ($4,900) or 5% (50% x 10%) of match plan compensation ($4,136.33). I don't see any logical way for method 1 to apply.

Recognizing the practical limits of language, there can be differences between a businessperson’s consumer-facing or intermediary-facing sales label and terms or expressions a practitioner might use. And even law-defined or technical terms can have aspects of imprecision, misdescription, or confusion. I remember wincing when lawyers used “profit-sharing” to describe a nonelective contribution of a charitable organization that by law cannot have a profit to share with anyone. Even if that usage might have followed relevant tax law, I wouldn’t use it with my client’s customers because it would only confuse them. Perhaps especially if the employer provided a contribution for a period in which the organization had negative income. Or imagine a retirement plan in which no employee is a participant and hundreds of partners are participants. According to the executive agencies’ Form 5500 instructions, that is a one-participant plan. For the arrangement many people call a “self-directed brokerage account”, why do we say self-directed? When a plan that provides participant-directed investment limits a directing participant’s, beneficiary’s, or alternate payee’s investment alternatives to designated investment alternatives is that not self-directed by the individual? And if what we mean is an antonym or other-than of a plan’s designated investment alternatives, should we call it a Nondesignated Investment Alternatives Account? BenefitsLink neighbors could go on with many illustrations about how difficult it is to invent a short phrase that perfectly describes what fits a concept, rule, or arrangement.

Absolutely perfect!

I have an issue I have not come across before. A (new) client sold his home healthcare company in 2023 in a membership interest sale. The business offered a Cash Balance Benefit Plan to its employees. The Benefit Plan was to continue after the sale. The seller made (on bad information) a high dollar value ($250k) contribution to the Benefit Plan after the sale was completed. The parties did not complete the paperwork to make the change of the trustee and employer under the benefit plan until the end of 2023. For the purposes of the Plan, when the contribution was made, the seller/contributor was still the "employer" under the Plan. The Plan contains a provision stating: 15.02 Return of Employer Contributions. Upon written request by the Employer, the Trustee must return any Employer contributions provided that the circumstances and the time frames described below are satisfied. The Trustee may request the Employer to provide additional information to ensure the amounts may be properly returned. Any amounts returned shall not include earnings but must be reduced by any losses. (a) Mistake of fact. Any Employer contributions made because of a mistake of fact must be returned to the Employer within one year of the contribution. (b) Disallowance of deduction. Employer contributions to the Trust are made with the understanding that they are deductible. In the event the deduction of an Employer contribution is disallowed by the IRS, such contribution (to the extent disallowed) must be returned to the Employer within one year of the disallowance of the deduction. Seller believed he could deduct the contribution but was mistaken about this. He has since demanded the return of the funds many times. Buyer has not responded to the demands and threats of litigation. Although the sale of the business included the Cash Benefit Plan, that contribution was not in the Plan at the time of the sale and was not bargained for in the transaction. The Buyer has failed to comply with regulations and was dropped by the third party administrator as a result, about 1 year after the sale of the business. Client's previous attorney sent a demand letter and received no response. I did the same and was told they would be responding, and since have received no further response. If anyone has dealt with anything remotely similar or has any suggestions on proceeding, I would be grateful.

And if the documents governing the plan refer to the Internal Revenue Code or Treasury rules interpreting or implementing the Internal Revenue Code, consider those sources too. Does your nondiscrimination-testing software provide any ordering or guidance about your question?

Same question, any responses since 2011?

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Be very careful in reading the plan document, particularly where there is an Adoption Agreement and a Basic Plan Document. Typically, the capitalized terms in the Adoption Agreement is a clue that there is a formal definition elsewhere in the AA or BPD that provides a more detailed description of what is or isn't considered where the term is used. Where the plan documentation allows for alternative definitions of a term like "Plan Compensation", it effectively is creating multiple, separate terms like "Plan Compensation for Deferrals", "Plan Compensation for Match", "Plan Compensation for NEC". After wading though the plan terms in fine detail, the step through the calculations. In the OP, it may be the case that 50% match rate is applied to the actual dollar amount of the deferrals, but the 10% maximum may be based on the deferral rate or may be based on the Plan Compensation for Match. If ultimately the plan is silent or ambiguous, then the Plan Administrator will need to provide guidance and document that guidance for posterity.

4/1/27 is the latest date to take his 2026 RMD. He still needs to take a 2026 RMD.

Terminology comes and goes. Two things are are most important. One is that the terminology is used broadly enough that there is a shared understanding of what is meant by it. The other is that the terminology does not conflict with its shared understanding within government agencies that oversee the industry. How many people today would understand what was meant by a Keogh plan or an H.R. 10 plan? How many know that today's hot Roth trend is named after William Roth, the Senator from Delaware that came up the Roth IRA in 1989 that in 2001 morphed into the Roth 401(k)? How many know that the concept of 401k deferrals was used in plans in the 1950s, frowned upon by the IRS, but then validated when section 401(k) was added in 1978? Interestingly, in the late 1970s people started out calling the 401(k) plan as salary reduction plans, and that terminology was not well received by employees. Today, solo-k generically is recognized as a one-person plan as does the IRS https://www.irs.gov/retirement-plans/one-participant-401k-plans. Some pre-approved plan document providers have products that basically are pared down adoption agreements of their 401(k) documents. These products use the term "owners only plan". Given the many ways that one-person plans get into regulatory trouble, maybe we should refer to owners only plans as "OOPs"!

Plans limiting pre-tax catch-up contributions for employees not subject to section 414(v)(7). The rules of paragraph (b)(3)(i) of this section also apply to a plan that includes a qualified Roth contribution program and, in accordance with an optional plan term providing for aggregation of wages under § 1.414(v)-2(b)(4)(ii), (b)(4)(iii), or (b)(4)(iv)(A), does not permit pre-tax catch-up contributions for one or more employees who are not subject to section 414(v)(7). The bolded part makes all the difference here. Normally, you do not aggregate wages from multiple employers to deterimine if an employee is subject to mandatory Roth catch-up - even if the employers are part of a controlled group or otherwise aggregated for other plan purposes. However, the referenced sections provide for optional aggregation of wages if the companies are using common paymaster, are aggregated under 414(b), (c), (m) or (o), or in the year of an asset purchase. If the plan is optionally aggregating wages under one of those provisions, then you may end up with some employees who would not normally be subject to mandatory Roth catch-up, but who are solely because of the aggregation. What the quoted paragraph is saying is that a plan can restrict those employees to Roth catch-up even though strictly speaking they are not subject to 414(v)(7).

I believe your Plan Administrator gets the final call on the interpretation of plan terms. Especially if it's not totally spelled out in the document. Maybe check references in the allocations section of the BPD how they as document authors expect the match to be determined. (My guess-off-my-head is that you'd use match comp for calculating match contributions even if it's a higher ADR to the participant, so your method 2.)

Maybe I'm just being picky. If the vendor uses the term "solo-K", is it time to find another vendor?

I'd like to get the group's opinion on how the Actual Deferral Rate is calculated in a 401(k) Plan has a discretionary matching formula of 50% up to 10%, when different exclusions apply for match than for deferrals, defined below. We have a differing of opinions on how the match should be calculated. Method #1 calculates the ADR based on deferrals and plan comp for deferrals. Method #2 calculates the ADR on deferrals and plan comp for match. Method #2 produces a higher % which increases the match amount but doesn't exceed the maximum match available based on 5% of match comp. Method #1: Plan compensation for deferral: W-2 excluding fringe etc ($124,124.00) Plan compensation for match: W-2 excluding fringe etc, bonus, overtime, commission. ($82,726.58) Employee Deferral: $9.800. ADR 7.9% ($9,800.00/$124,124.00) Total match: $3,265.76. ACR 3.95% ($3,265.76/82,726.58) Maximum match available: $4,136.33 ($82,726.58 * 5%). Method #2: Plan compensation for deferral: W-2 excluding fringe etc ($124,124.00) Plan compensation for match: W-2 excluding fringe etc, bonus, overtime, commission. ($82,726.58) Employee Deferral: $9.800. ADR 11.85% ($9,800.00/$82,726.58) Total match: $4,136.33. ACR 5.0% ($3,265.76/82,726.58) Maximum match available: $4,136.33 ($82,726.58 * 5%). Questions: Which method is correct? Method #1 - bases the ADR on deferrals/deferral plan comp where Method #2 bases the ADR on deferrals/match plan comp. Is there any flexibility in how the ADR is calculated for allocation purposes when the plan document defines match comp differently? I understand the testing implications (ACP, 414(s), BRF) are separate issues here. Thank you in advance for your feedback.

Has to take it this year when the plan terminates.

By quoting (and hyperlinking to) a paragraph from a Treasury rule, I don’t suggest it as support for or against any interpretation. Rather, I suggest only that an interpreter (perhaps one like the webinar speaker WCC described) might consider it in forming one’s interpretation. That said, few interpreters are ready to pursue an interpretation contrary to Treasury’s explanation in the rules’ preamble.

I'm sure this has been asked. I have an owner who is terminating his small 4-employee Profit Sharing plan, and turns 73 in 2026. typically we would make sure that a participant takes their (generally already existing annual) RMD prior to rolling the remaining funds, however he technically has until 4/1/27 for the 1st RMD. Is it ok to let him defer and allow all monies to transfer to an IRA now? this is assuming he may want to defer, and I'd like to have an answer ready, partly for myself and any future scenarios. He may not care and want it this year. He has a significant balance so may not want two taxable required distributions in 2027. thanks in advance for any insight!

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I believe it would be Code 7. Under the applicable regulations, excess designated Roth contributions are taxed twice if not timely corrected. Treas. Reg. § 1.402(g)-1(e)(8)(iv) provides, if not corrected by April 15 of the following year, the distribution from a Roth account of the excess Roth contribution and the attributable earnings are taxable no matter when they are later distributed, subject to the normal limitations on distribution of elective deferrals, despite the fact that the distribution is from a Roth account. Treas. Reg. § 1.402(g)-1(e)(8)(iv) regarding distributions after the correction period states: So it seems that while a normal distribution from a Roth 401(k) is not taxed at distribution at all, an over contribution is taxed in the year received.